X   QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

OR

Commission file number   0-17480

(Exact name of registrant as specified in its charter)

          Indicate by checkmark 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.

Indicated by checkmark whether the registrant is an accelerated filer as defined in Rule 12b-2 of the Exchange Act.

          Indicate by checkmark whether the registrant has filed all documents and reports to be filed by Section 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.

          There were 39,806,014 shares of $0.01 par value common stock outstanding as of July 30, 2004.

PART I - FINANCIAL INFORMATION

Item 1. Unaudited Condensed Consolidated Financial Statements

CROWN RESOURCES CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

See Notes to Unaudited Condensed Consolidated Financial Statements.

CROWN RESOURCES CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

See Notes to Unaudited Condensed Consolidated Financial Statements.

CROWN RESOURCES CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

See Notes to Unaudited Condensed Consolidated Financial Statements.

CROWN RESOURCES CORPORATION

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

General

          The accompanying condensed consolidated financial statements of Crown Resources Corporation ("CRC") and its subsidiaries (collectively "Crown") for the three and six months ended June 30, 2004 and 2003 are unaudited, but in the opinion of management, include all adjustments, consisting only of normal recurring items, necessary for a fair presentation. Interim results are not necessarily indicative of results that may be achieved in the future.

          These financial statements should be read in conjunction with the financial statements and notes thereto which are included in Crown's Annual Report on Form 10-K for the year ended December 31, 2003. The accounting policies set forth in those annual financial statements are the same as the accounting policies utilized in the preparation of these financial statements, except as modified for appropriate interim financial statement presentation.

          Crown Resources Corporation and its subsidiaries ("Crown") engage principally in the acquisition, exploration and development of mineral interests, which presently exist in the western United States. Prior to Crown's distribution of Solitario Resources Corporation ("Solitario") discussed below in Note 9, Crown owned 37.1% of Solitario, which was included in the financial statements of Crown on a consolidated basis prior to October 2000. Since that date, Crown's investment in Solitario has been accounted for under the equity method of accounting. Solitario operates as a precious and base metals exploration company in the United States, Brazil, Bolivia, and Peru.

          On November 20, 2003 Crown executed a definitive agreement to merge with Kinross Gold Corporation ("Kinross"), a Canadian corporation, as more fully described in Note 2 (the "Merger"). The Merger is subject to the approval of Crown's shareholders and customary closing conditions. Crown currently has no source of recurring revenue and Crown anticipates any future recurring revenue would only occur after the successful development of its Buckhorn Mountain Project. The successful development of the Buckhorn Mountain Project is dependent on several factors, many of which are beyond the control of Crown. Crown cannot provide any assurance that the Merger with Kinross will be completed as planned, or that it will be able to successfully permit and develop the Buckhorn Mountain Project in the event the Merger is not completed.

          Crown has historically derived its revenues principally from interest income and the option and sale of property interests. Crown currently has limited financial resources and, accordingly is not engaged directly in any significant exploration or development activity other than at its Buckhorn Mountain Project. Crown's current objective is to complete the permitting process for development of the Buckhorn Mountain Project in conjunction with Kinross. Unless Crown is successful in these objectives, it is unlikely that Crown will be in a position in the foreseeable future to pursue additional exploration or development projects. Furthermore, in the event the Merger with Kinross is not consummated, Crown will need significant additional financial resources to develop the Buckhorn Mountain Project and Crown cannot provide assurance that it will be able to obtain such financial resources. Crown currently estimates the initial capi tal cost for the Buckhorn Mountain Project will require up to $32.6 million. Based upon Crown's current business plan, Crown estimates its current financial resources are sufficient to fund its operations through 2005.

          Crown accounts for certain awards under the Crown Resources Corporation 2002 Stock Incentive Plan (the "2002 Plan") as variable in accordance with Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees", ("APB 25"). Under the terms of the 2002 Plan, the exercise price of options issued to employees and directors equals the market price of the stock on the date of grant. Crown previously had a 1988 Stock Benefit Plan (the "1988 Plan") and a 1991 Stock Incentive Plan (the "1991 Plan"). As a result of repricing options under Crown's 1988 Plan and the 1991 Plan in 1998 and 1999, Crown began to account for those option grants using variable plan accounting as of July 2000. In July 2002, Crown's Board of Directors granted 3,375,000 options under the 2002 Plan. Of these, 2,600,000 were deemed replacement options for cancelled options awards with variable plan accounting. Accordingly, Crown accoun ts for increases and decreases in the intrinsic value of the 2,600,000 options as compensation expense in accordance Financial Accounting Standards Board ("FASB") interpretation No. 44 "Accounting for Certain Transactions Involving Stock Compensation (an interpretation of APB Opinion No. 25)." Crown recorded a credit to compensation expense of $656,000 and $601,000, respectively, for the three and six months ended June 30, 2004 related to a decrease in the intrinsic value of these option awards. Crown recorded compensation expense of $189,000 and $605,000, respectively, for the three and six months ended June 30, 2003 related to an increase in the intrinsic value of these option awards. As of June 30, 2004 and December 31, 2003, Crown had recorded $824,000 and $2,149,000, respectively, of unearned compensation expense related to the intrinsic value of these variable plan accounting options. All of Crown's outstanding options were exercised subsequent to June 30, 2004, see Note 9.

          Crown computes pro forma information as if Crown had accounted for its stock options under the fair value method of Statement of Financial Accounting Standards "(SFAS") No. 148 "Accounting for Stock-Based Compensation Transition and Disclosure" and SFAS No. 123 "Accounting for Stock-Based Compensation." Other than 87,500 options exercised on March 12, 2004 and 4,000 options exercised on May 12, 2004, there were no options awards granted, modified, exercised or cancelled during the three and six months ended June 30, 2004 or 2003. The following pro forma information is provided for the fair values of options outstanding during these periods.

          Stock options, warrants outstanding and their equivalents are included in diluted EPS computations through the "treasury stock method" unless they are antidilutive. Convertible securities are included in diluted EPS computations through the "if converted" method unless they are antidilutive. Potentially dilutive common shares are excluded from the computations in loss periods, as their effect would be antidilutive.  As of June 30, 2004 Crown had notes convertible into 10,485,714 common shares, warrants which could be exercised for 13,380,953 common shares and stock options which could be exercised for 3,292,500 shares or a total of 27,159,167 potentially dilutive securities that have been excluded from the weighted-average number of common shares outstanding for the diluted net loss per share computations for the six months ended June 30, 2004, as they are antidilutive. The calculation of basic and diluted earnings per share is presented below:

          Stock options, warrants and convertible debt securities that could potentially dilute earnings per share but were excluded from the computation of per share amounts for the three and six months ended June 30, 2003 as their inclusion would have been anti-dilutive, were approximately 44,715,000 shares. The calculation of earnings per share is detailed below:

          In January 2003, the FASB issued FASB Interpretation No. 46, "Consolidation of Variable Interest Entities" ("FIN 46") and in December 2003 issued FIN 46R. FIN 46 requires the consolidation of variable interest entities which have one or both of the following attributes (1) the equity investment at risk is not sufficient to permit the entity to finance its activities without additional financial support from other parties which is provided by other parties that will absorb some or all of the expected losses of the entity, (2) the equity investors lack controlling financial interest as evidenced by (i) the ability to make decisions regarding the entity's activities through voting or similar rights (ii) the obligation to absorb expected losses, which make it possible for the entity to finance its activities and (iii) the right to receive expected residual returns of the entity if they occur, which is the compensation for absorbing the expected losses. FIN 46 was immediately effective for variable interest entities formed after January 31, 2003. FIN 46R requires the adoption of either FIN 46 or FIN 46R in financial statements of public entities that have interests in structures that are commonly referred to as special purpose entities for periods ending after December 15, 2003. Application for all other types of variable interest entities is required in financial statements for periods ending after March 15, 2004. The adoption of FIN 46 and FIN 46R did not have an effect on Crown's financial position or results of operations.

          In April 2004, the EITF issued EITF Issue No. 04-3 "Mining Assets: Impairment and Business Combinations" ("EITF No. 04-3") which evaluated certain issues related to values in mining properties beyond proven and probable reserves (VBPP) and the effects of anticipated fluctuations in the future market price of minerals. The EITF reached a consensus that fair value of mining properties generally includes both VBPP and the effects of anticipated fluctuations in the future market price of minerals and that entities should generally include both in determining the fair value allocated to mining assets in a purchase price allocation and in the cash flow analysis (both discounted and undiscounted) used for determining whether a mining asset is impaired. The consensus reached by the EITF should be applied prospectively in the periods after March 31, 2004, but early application is permitted in periods for which financial statements have n ot been issued. Crown adopted EITF No. 04-3 on April 1, 2004 and it did not have a have any impact on its financial position, results of operations, or cash flows.

          On November 20, 2003, Crown executed the Merger Agreement with Kinross whereby each of the outstanding shares of common stock of Crown will be exchanged for 0.2911 shares of Kinross common stock at closing (the "Merger"). The Merger is subject to the approval of two thirds of Crown's shareholders and customary closing conditions. Until the Merger is completed, Crown is required to operate its business in the ordinary course, and is restricted from engaging in certain significant business and financing transactions, or changes in corporate structure.

          The Merger Agreement contemplates that all outstanding stock options to purchase Crown common stock will either be exercised or terminated prior to the effective time of the Merger. Between July 7 and July 12, 2004 all remaining options were exercised and as of July 30, 2004, Crown has no remaining stock options outstanding. Additionally, holders of unexercised warrants to purchase shares of Crown common stock will be allowed to elect to exchange the warrant for 0.2911 shares of Kinross common stock for each share of Crown common stock that would have been issued on the exercise of the warrant immediately prior to the effective time of the Merger on a cashless basis, or absent making this election, the warrant will represent the right to acquire Kinross common shares in accordance with the terms and conditions of the warrant as amended pursuant to the Merger Agreement.

          The Merger Agreement may be terminated by either party if the transaction has not been consummated by September 30, 2004 subject to certain conditions, by mutual written consent, or upon the failure of Crown to obtain the approval of its shareholders. Both Crown and Kinross may also terminate the Merger Agreement upon the occurrence of a material breach of the agreement by the other party as defined in the Merger Agreement. Should Crown fail to complete the Merger as a result of receiving a superior proposal within six months of the date of the Merger Agreement, Crown will be obligated to pay Kinross a termination fee of $2.0 million plus Kinross' documented, reasonable third-party, out-of-pocket expenses in connection with the Merger Agreement. Crown has further agreed to use its commercially reasonable efforts to amend or redeem its outstanding convertible notes prior to the effective date of the Merger.

          On March 8, 2002, Crown filed a voluntary petition for protection under Chapter 11 of the United States Bankruptcy Code (the "Bankruptcy") in the United States Bankruptcy Court for the District of Colorado (the "Court"). As part of the Bankruptcy Crown filed a Plan of Reorganization (the "Plan") and a Disclosure Statement with the Court on March 25, 2002. On May 30, 2002, the Court confirmed the Plan, which became effective on June 11, 2002 (the "Effective Date"). As part of the Plan, Crown restructured its existing $15 million 5.75% Convertible Subordinated Debentures due August 2001 (the "Debentures").

          The restructuring was completed through an exchange of outstanding Debentures, including any accrued interest thereon for the following consideration: (i) issuance of $1,000,000 in cash, (ii) $2,000,000 in 10% Convertible Secured Notes (the "Secured Notes") convertible into Crown common shares at $0.35 per share, (iii) $4,000,000 of convertible unsecured subordinated notes (the "Subordinated Notes") convertible into common stock of CRC at $0.75 per share, and (iv) warrants, which expire in October 2006 that entitle the holders the right to purchase, in the aggregate, 5,714,285 shares of CRC common stock at an exercise price of $0.75 per share. The interest on the Secured and Subordinated Notes was payable in cash or shares of Crown common stock at the conversion price at Crown's election. In November 2003, all Subordinated Notes were automatically converted into shares of Crown common stock. In December 2003, substantially al l Secured Notes were converted into shares of Crown common stock. See Note 4.

          In order to effect the Plan on the Effective Date, Crown entered into a Custody and Disbursing Agreement with Wells Fargo Bank, Minnesota N.A. (the "Disbursing Agent") as well as trust indentures with Deutsche Bank Trust Company, Americas, as Trustee on the Secured Notes and with Wells Fargo Bank Minnesota, N.A. as Trustee on the Subordinated Notes. As of July 30, 2004, $245,000 in Debenture certificates have not been presented. If all of these Debentures are presented, the disbursing agent will distribute $16,000 in cash, 93,333 shares of Crown common stock from the converted Secured Notes (plus accrued interest since June 11, 2002), 87,111 shares of Crown common stock from the converted Subordinated Notes (plus accrued interest since June 11, 2002), and warrants to acquire 93,333 shares of Crown common stock with an exercise price of $0.75 per share. The Debenture holders have until June 2007 to present their certificates, at which time any undistributed cash, stock and warrants will revert to Crown.

Senior Notes

          In October 2001 Crown issued $3,600,000 of 10% convertible secured promissory notes due in October 2006 (the "Senior Notes"). The Senior Notes were secured by all of the assets of Crown on a pari-passu basis with the Secured Notes. The assets consist primarily of Crown's interest in the Buckhorn Mountain Project and its wholly-owned subsidiary, Crown Resource Corp. of Colorado, whose assets consisted primarily of an equity interest in Solitario Resources Corporation ("Solitario").

          The Senior Notes had a five-year term and carry a 10% interest rate, payable quarterly in cash or Crown common stock at the conversion prices of $0.35 and $0.2916 per share at the election of Crown. Originally, proceeds of $3,250,000 from the Senior Notes were placed in escrow pending restructuring of the Debentures (the specific Senior Notes related to the proceeds placed in escrow are also referred to as "Escrowed Notes"). Solitario invested $650,000 in these Escrowed Notes. The Escrowed Notes are convertible into Crown common shares at a conversion price of $0.35 per share, subject to adjustment. In addition, the Escrowed Note holders have been issued a five-year warrant for every share into which the Escrowed Notes are convertible, which warrant will be exercisable into a Crown common share at $0.75 per share, subject to adjustment. Solitario also invested in a separate Senior Note, (referred to as the "Solitario Note") for the remaining $350,000 of the Senior Notes. These funds were made immediately available to Crown for general corporate purposes. The Solitario Note is convertible into Crown common shares at a conversion price of $0.2916 per share, subject to adjustment. In addition, Solitario has been issued a five-year warrant to acquire 1,200,000 shares of Crown common stock at $0.60 per share, subject to adjustment. The terms of the Solitario Note and the related warrant are otherwise identical to the terms of the Escrowed Notes and warrants. On July 14, 2004 holders of Crown's $3,600,000 10% Convertible Senior Notes converted all of the outstanding notes into 10,744,249 shares of Crown common stock (which include 258,535 shares for accrued interest through the date of conversion). As of July 30, 2004 Crown has no Senior Notes outstanding.

          On the date of issuance, the warrants described above had an estimated value of $379,000, which was recorded as a discount to the Senior Notes and credited to additional paid-in capital. This warrant discount is being amortized over the life of the Senior Notes and charged as capitalized interest costs, using the effective interest method. Upon conversion of the Senior Notes in July 2004, the remaining unamortized warrant discount will be charged as capitalized interest costs. See Note 9 below.

          Under generally accepted accounting principles, any intrinsic value of the conversion feature (market price of the stock less the effective conversion price) of the Senior Notes, commonly known as a beneficial conversion feature, must also be recorded as a discount to the Senior Notes. On the date of issuance, there was no intrinsic value associated with the conversion feature of the Senior Notes and no discount was recorded thereon. However, when the Bankruptcy Court approved the Plan of Crown on May 30, 2002, the terms of the Senior Notes were effectively changed, since the conversion price remained unchanged despite a 1 for 5 reverse split of Crown's common stock as required by the Plan. Based upon these revised terms, the intrinsic value of the conversion feature of the Senior Notes as of their issuance date was $3,221,000. Effective May 30, 2002, this amount has been recorded as a discount to the Senior Notes and credited to additional paid-in capital. This conversion feature discount is being amortized over the remaining life of the Senior Notes and charged as capitalized interest cost. Upon conversion of the Senior Notes in July 2004, the remaining unamortized discount will be charged as capitalized interest costs. See Note 9 below.

Secured Notes

          As discussed above in Note 3, Crown issued $2,000,000 in 10% convertible Secured Notes as part of the corporate reorganization. The Secured Notes carried a 10% interest rate payable quarterly in cash or Crown common stock at the conversion price at the election of Crown. The Secured Notes were convertible into Crown common shares at $0.35 per share. The Secured Notes were secured by all of the assets of Crown on a pari-passu basis with the Senior Notes. Crown recorded a discount to the Secured Notes for the intrinsic value of the conversion feature on May 30, 2002 of $1,257,000 and credited additional paid-in capital for that amount. This conversion feature discount was being amortized over the remaining life of the Secured Notes as of May 30, 2002 and charged as capitalized interest cost.

          On November 21, 2003 the Secured Notes were called for redemption, and all but $6,000 of outstanding Secured Notes were converted into 5,679,142 shares of Crown common stock as of December 31, 2003, with the remainder being redeemed for cash. The remaining unamortized discount of $940,000 was charged to capitalized interest cost during 2003 upon conversion of the Secured Notes.

Subordinated Notes

          As discussed above in Note 3, Crown issued $4,000,000 in 10% convertible Subordinated Notes as part of the corporate reorganization. The Subordinated Notes carried a 10% interest rate payable quarterly in cash or Crown common stock at the conversion price at election of Crown. The Subordinated Notes were convertible into Crown common shares at $0.75 per share.

          In October 2003 and November 2003 a total $839,331 of Subordinated Notes was converted into 1,119,108 shares of common stock prior to the automatic conversion on November 5, 2003. On November 5, 2003 the remaining $3,160,669 of Subordinated Notes were automatically converted into 4,214,225 shares of common stock. The automatic conversions were in accordance with the provisions of the Subordinated Notes whereby the Subordinated Notes automatically convert into common stock if the price of the common stock trades above 233% of the conversion price of $0.75, or $1.75, for twenty consecutive days. The shares related to the automatic conversion are deemed issued and outstanding as of the date of the automatic conversion.

Subordinated B Notes

           On February 21, 2003, Crown issued $2,705,000 of 10% Convertible Subordinated Promissory Notes due 2006, Series B (The "Subordinated B Notes"). The Subordinated B Notes were convertible into common stock of Crown at $0.75 per share. There was no beneficial conversion feature for the Subordinated B Note as the market price was below the conversion price at issuance. The Subordinated B Notes paid interest at 10% in stock or cash at Crown's option, and mature in October 2006. Solitario invested $400,000 in the Subordinated B Notes on the same terms as all other investors.

          On November 5, 2003, $2,705,000 of Subordinated B Notes were automatically converted into 3,606,667 shares of common stock. The automatic conversions were in accordance with the provisions of the Subordinated B Notes whereby the Subordinated B Notes automatically convert into common stock if the price of the common stock trades above 233% of the conversion price of $0.75, or $1.75, for twenty consecutive days. The shares related to the automatic conversion are deemed issued and outstanding as of the date of the automatic conversion.

Keystone Note

          In July 2001, as part of the termination of its joint venture on the Buckhorn Mountain Project with Newmont Mining Corporation, Crown assumed a note with a face value of $250,000 due February 22, 2002 (the "Keystone Note"). Crown recorded the Keystone Note at its discounted fair value of $237,000. On December 18, 2001 Crown amended the terms of the Keystone Note, by paying the holders of the Keystone Note $30,000 and extending the term of the Keystone Note for a period of four years, with a payment, including interest, of $20,000 due in June 2002 and four annual payments, including interest, of $50,000 beginning in December 2002. As a result of this amendment to the terms of the Keystone Note, Crown recorded a discount of $41,000 to its recorded value of the Keystone note for the present value of the remaining payments, and other income of the same amount. This discount is being amortized to capitalized interest cost over the remaining term of the note. During the three and six months ended June 30, 2004, Crown recorded capitalized interest cost of $2,000 and $5,000, respectively which represented amortization of its discount on the Keystone note. During the three and six months ended June 30, 2003, Crown recorded capitalized interest cost of $3,000 and $6,000, respectively which represented amortization of its discount on the Keystone note. At June 30, 2004 and December 31, 2003, the current portion of the Keystone Note was $50,000 and $49,000 respectively.

Interest

          Interest costs are capitalized on mineral properties and mineral interest under development. Interest is capitalized by applying a weighted average interest rate to the average capitalized costs during a period, up to a maximum of total interest costs incurred during the period. Crown capitalized all of its interest costs of $182,000 and $350,000, respectively, for the three and six months ended June 30, 2004, respectively. Crown capitalized all of its interest costs of $703,000 and $1,115,000 for the three and six months ended June 30, 2003, respectively. At June 30, 2004 and December 31, 2003 a total of $14,235,000 and $13,885,000, respectively, of interest costs have been capitalized as mineral property at the Buckhorn Mountain Project.

          Crown may pay interest on the Senior Notes in cash or Crown common shares, at its election, and prior to their conversion, could pay interest on the Secured Notes, the Subordinated Notes and the Subordinated B Notes in cash or Crown common shares, at its election. Crown accrues interest at the nominal rate of 10% during the period the notes are outstanding. For interest paid in Crown common shares, capitalized interest cost is adjusted on the interest payment date to the market value of the common shares issued on that date.

          Crown recorded the following amounts to capitalized interest cost related to long-term debt:

      For the three and six months ended June 30, 2004, interest income of $2,000 and $7,000, respectively has been recorded in Crown's consolidated statements of operations. For the three and six months ended June 30, 2003, interest income of $8,000 and $13,000, respectively has been recorded in Crown's consolidated statements of operations.

          The following presents the future minimum payments on long-term debt at June 30, 2004:

 ¹ All remaining Senior Notes were converted into shares of Crown common stock in July 2004.

5.          Investment in Solitario Resources Corporation:

          Crown accounts for its investment in Solitario under the equity method of accounting. The fair value, based on the quoted market price, of Crown's 9,633,585 shares of Solitario common stock was approximately $12,909,000 and $13,198,000 at June 30, 2004 and December 31, 2003, respectively. Condensed financial information of Solitario is as follows:

          The following is a reconciliation of Solitario's reported stockholders' equity to amounts reported by Crown as its investment in Solitario:

          The following is a reconciliation of Solitario's reported net loss to amounts reported by Crown as its equity in loss of Solitario:

(1) The weighted average interest of Crown in Solitario's net loss for the three and six months ended June 30, 2004 reflects the dilution of Crown's ownership interest resulting from Solitario's sale of its common stock upon the exercise of options. These transactions reduced Crown's investment in Solitario from 38.7% as of December 31, 2003 to 37.1% as of June 30, 2004.

          For purposes of calculating its investment in Solitario and its equity in Solitario's earnings and losses, Crown has excluded the amounts reported by Solitario with respect to its investment in Crown warrants and Crown common stock.

          During the six months ended June 30, 2004, holders of Solitario options exercised options for a total of 1,021,000 Solitario common shares. The additional shares reduced Crown's percentage ownership of Solitario to 37.1% at June 30, 2004 from 38.7% at December 31, 2003. Crown's proportionate interest in this issuance of Solitario shares, net of taxes, has been recorded as an increase in Crown's investment in Solitario, and an increase in additional paid-in capital.

          On October 8, 2003 Crown announced that it intended to distribute its holdings of 9,633,585 shares of Solitario's common stock to its stockholders prior to the completion of the proposed Merger with Kinross. This distribution was completed on July 26, 2004. See Note 9 below.

The following represents comprehensive income (loss) and its components:

          On July 26, 2004, Crown completed a spin-off of Solitario's shares to its shareholders, whereby each Crown shareholder received 0.2169 shares of Solitario common stock for each Crown share they owned. As part of the spin-off, Crown retained 998,306 Solitario shares for the benefit of Crown's warrant holders who will receive those shares when the warrant holders exercise their warrants. Crown has no beneficial ownership interest in those retained shares. In addition Crown retained 92 Solitario shares, from fractional shares, which it intends to sell. After the disposition of the Solitario shares retained for warrant holders and fractional shares, Crown will no longer own any shares of Solitario.

          In October 2001, Solitario invested in two 10% convertible secured promissory notes ("Senior Notes") totaling $1,000,000 out of $3,600,000 Senior Notes issued by Crown. The first Senior Note (the "Solitario Note") of $350,000 has a conversion price of $0.2916 per share and the second Senior Note of $650,000 has a conversion price of $0.35 per share. The independent Board members of Crown and Solitario approved the investment in the Notes. Solitario was paid $25,000 and $50,000, respectively, in cash as interest income under the Senior Notes for the three and six months ended June 30, 2004. Solitario was paid 83,133 and 160,196 Crown shares, respectively, as interest income under the Senior Notes for the three and six months ended June 30, 2003. On July14, 2004, Solitario converted its $1,000,000 face value of Crown Senior Notes into 3,132,509 shares of Crown common stock (which included 75,367 shares issued for accrued inter est through the date of conversion on the Senior Notes). See Note 9 for further discussion.

          As part of the investment in the Senior Notes, Solitario also received two warrants. The first warrant gives Solitario the right to purchase 1,857,143 shares of Crown for $0.75 through October 2006 and the second warrant gives Solitario the right to purchase 1,200,000 shares of Crown at $0.60 through October 2006. On July 12, 2004, Solitario exercised the two Crown warrants on a cashless exercise basis per the terms of the warrants. Solitario received a total of 1,973,626 shares of Crown common stock from the exercise of these warrants.

          Solitario entered into a Voting Agreement dated as of April 15, 2002 among Zoloto Investors, LP ("Zoloto") and Crown. Zoloto and Solitario are both shareholders of Crown (the "Signing Shareholders"). Pursuant to the Voting Agreement, Zoloto and Solitario agreed that each would vote Crown's owned shares during the term of the Voting Agreement for the election of three designees of Zoloto and one designee of Solitario (the "Designee Directors") to the Board of Directors of Crown. The Signing Shareholders agreed that any shares received by either Signing Shareholder would be subject to the Voting Agreement during its term and any successor, assignee or transferee of shares from either Signing Shareholder would be subject to the terms of the Voting Agreement during its term. The Voting Agreement terminates on June 25, 2006. As of June 30, 2004, the Signing Shareholders collectively held 1,733,866 shares or approximately 7.7% of the outstanding shares of Crown. During July 2004, the Signing Shareholders exercised warrants and converted Crown convertible debt so that at July 30, 2004 they collectively held 12,695,186 shares or 31.9% of the outstanding shares. In addition the Signing Shareholders hold warrants which could be exercised for an additional 5,714,285 shares or a total of 18,409,472 of our shares or 38.0% of our then outstanding shares.

          On February 21, 2003, Solitario invested $400,000 in Crown's 10% convertible subordinated promissory notes due 2006 Series B (the "Subordinated B Notes"). On November 5, 2003, Crown's Subordinated B Notes were automatically converted into 533,333 shares of Crown common stock.

          As of June 30, 2004 Solitario owns 965,491 shares of Crown common stock. Solitario entered into a stockholder and voting agreement with Kinross, along with several Crown directors, Crown executive officers and entities affiliated with these directors and officers (collectively the "Signatories"), pursuant to which the Signatories agreed, among other things, to convert any Senior Notes held by them to common shares prior to the record date for the special meeting, to vote, or cause to be voted, all of the shares of Crown common stock owned by them, as set forth in the stockholder and voting agreement, as well as all shares of Crown common stock acquired by them, as set forth in the stockholder and voting agreement, in favor of the approval of the plan of merger, and against the acquisition of Crown by any person other than Kinross. As of June 30, 2004, 2,012,458 shares of Crown common stock were subject to the stockholder and vot ing agreement, representing approximately 9% of the outstanding shares of Crown common stock entitled to vote at the Crown special meeting. Additionally, at June 30, 2004, the Signatories held $3,000,000 of Senior Notes which they agreed to convert prior to the vote into 8,771,429 shares and hold at June 30, 2004 options to acquire 1,917,500 shares, which could be exercised prior to the record date for the shareholders' meeting, for a total of 12,701,387 shares, which would represent 36.5% of the then outstanding Crown shares. In July 2004, the Signatories converted debt and exercised warrants and at July 30, 2004 hold 14,891,278 shares of Crown common stock, which represents 37.4% of the outstanding Crown shares. Additionally, as of July 30, 2004, the Signatories hold warrants for 5,714,286 Crown shares, which could be exercised prior to the vote for a total of 20,605,564 Crown shares or approximately 42.5% of the then outstanding Crown shares.

          After conversion of the Senior Notes and exercise of Crown warrants discussed above, as of July 30, 2004, Solitario owns 6,071,626 shares or approximately 15.3% of Crown common stock from (i) conversion of Crown Senior Notes, (ii) exercise of Crown warrants, (iii) automatic conversion of Crown Subordinated B Notes and (iv) stock received as interest on the Crown Senior and Subordinated B Notes.

          Subsequent to the issuance of Crown's unaudited condensed consolidated financial statements for the quarter ended June 30, 2003, Crown determined it had not properly (i) capitalized interest costs related to the development of its Buckhorn Mountain Project; (ii) recorded Crown's equity interest in certain adjustments made by Solitario required by SFAS No. 142; and (iii) recorded a gain on the restructuring of its Keystone Note as a discount to be amortized over the remaining life of the Keystone Note when the note was renegotiated in December 2001, as discussed below.

(i)      Crown's Buckhorn Mountain Project has been in development since Crown acquired the project in 1989. Since August 1991 Crown has been incurring interest costs on long-term debt, which had not been capitalized as required by Statement of Financial Accounting Standards No. 34, "Capitalization of Interest Cost" ("SFAS No. 34"). SFAS No. 34 requires capitalization of interest costs utilizing a weighted average rate on outstanding debt and applying that rate to the average outstanding balance of capitalized costs on projects in development, up to the total interest cost for the period.

(ii)      Subsequent to the issuance of Solitario's unaudited consolidated financial statements for the quarter ended June 30, 2003, Solitario determined that it had not properly adopted the provisions of SFAS No. 142 in relation to the classification of assets as intangible mineral interests, and had not recorded the related amortization of those intangible assets and that Solitario had capitalized certain costs that should have been expensed as incurred.

(iii)      Subsequent to the issuance of Crown's unaudited condensed consolidated financial statements for the quarter ended June 30, 2003, Crown determined that it should have accounted for the renegotiation of the Keystone Note as a debt extinguishment and recognized a gain it its 2001 statement of operations, to the extent of the difference between the present value of the Keystone Note payments before and after the renegotiation and amortize that discount to interest cost over the remaining term of the note.

          As a result, the accompanying condensed consolidated financial statements for the three and six months ended June 30, 2003 have been restated from the amounts previously reported. A summary of the significant effects of the restatement is as follows:

STATEMENT OF OPERATIONS INFORMATION

          Between July 7 and July 12, 2004 holders of Crown options for 3,287,500 shares exercised their options by paying a total of $1,318,000 to Crown. As of July 30, 2004, Crown had no outstanding stock options.

          On July 14, 2004 holders of Crown's warrants exercisable into 947,140 shares exercised the warrants on a cash basis into 947,140 shares of Crown common stock by paying a total of $710,000 to Crown. On July 12, 2004 holders of Crown warrants exercisable into 3,771,428 shares of common stock exercised their warrants on a cashless basis and received 2,398,319 shares of Crown common stock. As of July 30, 2004 Crown has warrants outstanding which are exercisable for up to 8,662,384 shares with an exercise price of $0.75 per share and which expire in October 2006.

          On July 26, 2004 Crown distributed its entire holding of 9,633,585 shares of Solitario common stock except for 998,306 Solitario shares it is contractually obligated to deliver to holders of Crown warrants when those warrants are exercised. Crown has no beneficial interest in the Solitario shares to be distributed to its warrant holders. In addition Crown retained 92 Solitario shares from fractional shares not distributed, which Crown intends to sell. Upon the disposition of these shares, Crown will have no interest in Solitario.

          As a result of the above conversions of Crown Senior Notes, and the exercises of Crown Options and Crown Warrants the number of outstanding shares since June 30, 2004 has increased as follows:

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

          The following discussion should be read in conjunction with the consolidated financial statements of Crown for the years ended December 31, 2003, 2002 and 2001, and Management's Discussion and Analysis contained in Crown's Annual Report on Form 10-K for the year ended December 31, 2003. Crown's financial condition and results of operations are not necessarily indicative of what may be expected in future periods.

          As discussed in Note 8 to the consolidated financial statements, our financial statements for the three and six months ended June 30, 2003 have been restated. The following discussion and analysis of our financial condition and results of operations gives effect to the restatement.

(a.) Business Overview

          We are a precious metals exploration company operating in the western United States. As of June 30, 2004, we owned 37.1% of Solitario Resources Corporation ("Solitario"). Our investment in Solitario is accounted for under the equity method of accounting. Solitario operates as a precious and base metals exploration company in the United States, Brazil, Bolivia and Peru.

          Our principal expertise is in identifying properties with promising mineral potential, acquiring these properties and exploring them to an advanced stage. Our goal is to advance our properties and mineral interests, either on our own or through joint ventures, to the feasibility study stage and thereafter to pursue their development, typically through a joint venture with a partner that has expertise in mining operations. We have in the past recognized, and expect in the future to recognize, revenues from the option and sale of our properties and mineral interests to joint venture partners and from the sale of our share of metals produced from our mineral interests.

          Our capitalized mineral property and mineral interests relate entirely to our Buckhorn Mountain Project, located in the State of Washington. We are currently developing the Buckhorn Mountain Project, which includes permitting efforts to build and operate an underground mine and to truck the ore extracted from the Buckhorn Mountain Project to the Kettle River mill, located approximately 52 miles from the Buckhorn Mountain Project. Kinross Gold Corporation, a Canadian corporation ("Kinross") owns the Kettle River mill. In December 2003, we entered into a toll-milling agreement with Kinross to facilitate the processing of the Buckhorn Mountain Project ore. As of June 30, 2004, our mineral reserves at the Buckhorn Mountain project, pursuant to a feasibility study prepared by an independent mining consulting firm, are 3,075,000 tons of ore at a grade of 0.32 ounces of gold per ton, for a total reserve of 991,000 ounces of gold. T he vast majority of our current and near-term efforts are related to this development effort at the Buckhorn Mountain Project as well as the completion of the Merger and Spin-off, discussed below.

          On November 20, 2003 we executed a definitive agreement to merge with Kinross (the "Merger"). The Merger is subject to the approval of two thirds of our shareholders and customary closing conditions.

(b.) Recent Financing Transactions

          On July 14, 2004 holders of Crown's $3,600,000 10% Convertible Senior Notes converted all of the outstanding notes into 10,744,249 shares of Crown common stock (which include 261,535 shares for accrued interest through the date of conversion) and as of July 30, 2004 Crown has no Senior Notes outstanding.

          Between July 7 and July 12, 2004 holders of Crown options for 3,287,500 shares exercised their options by paying a total of $1,318,000 to Crown and as of July 30, 2004, Crown has no outstanding stock options.

          On July 14, 2004 holders of Crown's warrants exercisable into 947,140 shares exercised the warrants on a cash basis into 947,140 shares of Crown common stock by paying a total of $710,000 to Crown. On July 12, 2004 holders of Crown warrants exercisable into 3,771,428 shares of common stock exercised their warrants on a cashless basis and received 2,398,319 shares of Crown common stock. As of July 30, 2004 Crown has warrants outstanding which are exercisable for up to 8,662,384 shares with an exercise price of $0.75 per share and which expire in October 2006.

          On July 26, 2004 Crown distributed its entire holding of 9,633,585 shares of Solitario common stock except for 998,306 Solitario shares it is contractually obligated to deliver to holders of Crown warrants when those warrants are exercised. Crown has no beneficial interest in the Solitario shares to be distributed to its warrant holders. In addition Crown retained 92 Solitario shares from fractional shares not distributed, which Crown intends to sell. Upon the disposition of these shares, Crown will have no interest in Solitario.

          As part of the Corporate Reorganization in 2002, we issued $2,000,000 in 10% convertible Secured Notes and $4,000,000 in convertible Subordinated Notes. On November 21, 2003 the Secured Notes were called for redemption, and prior to December 31, 2003, $1,994,000 of Secured Notes were converted into 5,679,142 shares of our common stock, with the remainder being redeemed for cash. On October 31, 2003 and November 5, 2003 a total of $839,331 of Subordinated Notes were converted into 1,119,108 shares of our common stock. On November 5, 2003 the remaining $3,160,669 of Subordinated Notes were automatically converted into 4,214,225 shares of our common stock.

          On February 21, 2003, we issued $2,705,000 of 10% Convertible Subordinated B Notes. On November 5, 2003, $2,705,000 of Subordinated B Notes automatically converted into 3,606,667 shares of our common stock.

(c.) Corporate Reorganization

          On March 8, 2002, we filed a voluntary petition for protection under Chapter 11 of the United States Bankruptcy Code (the "Bankruptcy") in the United States Bankruptcy Court for the District of Colorado (the "Court"). As part of the Bankruptcy we filed a Plan of Reorganization (the "Plan") and a Disclosure Statement with the Court on March 25, 2002. On May 30, 2002, the Court confirmed the Plan, which became effective on June 11, 2002 (the "Effective Date"). As part of the Plan, we restructured our existing $15 million 5.75% Convertible Subordinated Debentures due August 2001 (the "Debentures").

          The restructuring was completed through an exchange of outstanding Debentures, including any accrued interest thereon for the following consideration: (i) issuance of $1,000,000 in cash, (ii) $2,000,000 in 10% Convertible Secured Notes (the "Secured Notes") convertible into Crown common shares at $0.35 per share, (iii) $4,000,000 of convertible unsecured subordinated notes (the "Subordinated Notes") convertible into common stock of CRC at $0.75 per share, and (iv) warrants, which expire in October 2006 that entitle the holders the right to purchase, in the aggregate, 5,714,285 shares of CRC common stock at an exercise price of $0.75 per share. The interest on the Secured and Subordinated Notes was payable in cash or shares of Crown common stock at the conversion price at our election. In November 2003, all Subordinated Notes were automatically converted into shares of Crown common stock. In December 2003, substantially all Se cured notes were converted into shares of our common stock.

          In order to effect the Plan on the Effective Date, we entered into a Custody and Disbursing Agreement with Wells Fargo Bank, Minnesota N.A. (the "Disbursing Agent") as well as trust indentures with Deutsche Bank Trust Company, Americas, as Trustee on the Secured Notes and with Wells Fargo Bank Minnesota, N.A. as Trustee on the Subordinated Notes. As of July 30, 2004, $245,000 in Debenture certificates have not been presented. If all of these Debentures are presented, the disbursing agent will distribute $16,000 in cash, 93,333 shares of our common stock from the converted Secured Notes (plus accrued interest since June 11, 2002), 87,111 shares of our common stock from the converted Subordinated Notes (plus accrued interest since June 11, 2002), and warrants to acquire 93,333 shares of our common stock with an exercise price of $0.75 per share. The Debenture holders have until June 2007 to present their certificates, at which ti me any undistributed cash, stock and warrants will revert to us.

(d.) Results of Operations

          Limited Revenue Sources

          We currently have no source of recurring revenue and we anticipate any future recurring revenue would only occur after the successful development of the Buckhorn Mountain Project. The successful development of the Buckhorn Mountain Project is dependent on several factors, many of which are beyond our control. Although we are in the late stages of the process of securing the necessary permits for the development of the Buckhorn Mountain Project, we cannot provide any assurance we will be successful in these efforts.

          We have historically derived our revenues from the option and sale of property interests, interest income and to a lesser extent from payments on royalty interests and the sale of our share of gold produced on our properties. Revenues from the option and sale of property interests have consisted of a small number of relatively large transactions. Such transactions have occurred, and in the future are likely to occur, if at all, at irregular intervals and have a significant impact on operating results in the periods in which they occur. In the past, our exploration and development expenditures, including those of Solitario, have constituted the bulk of our activities.

          Three months ended June 30, 2004 compared to June 30, 2003

          For the three months ended June 30, 2004 we had a net income of $158,000, or $0.01 per basic share and $0.00 per diluted share, compared to net loss of $(271,000), or $(0.06) per basic and diluted share for the three months ended June 30, 2003. The increase in the net income in 2004 primarily related to a reduction in variable stock option compensation expense, which in turn is directly affected by changes in the underlying price of our common shares. This reduction in variable stock option compensation expense was partially offset by increases in general and administrative costs, associated with our Kinross merger related costs and an increase in our equity in the loss of Solitario during the three months ended June 30, 2004 compared to the same period in the prior year. The change in the relative per share amount is primarily due to additional shares outstanding from debt conversions and warrant exercises in the fo urth quarter of 2003. Each of these items is discussed in more detail below.

          Exploration expense of $6,000 during the three months ended June 30, 2004 related to certain property tax and option payments. There were no similar payments during the three months ended June 30, 2003.

          General and administrative expenses increased to $189,000 in the three months ended June 30, 2004 from $156,000 in the same period of 2003, primarily as a result of increased professional services fees for legal and accounting related to our pending merger with Kinross. Legal and accounting costs were $78,000 in the three months ended June 30, 2004, compared to $32,000 in the three months ended June 30, 2003. Amounts charged to Solitario for management fees during the three months ended June 30, 2004 increased to $108,000 from $89,000 in the three months ended June 30, 2003 primarily as a result of higher activity in Solitario, compared to the prior year. Other general and administrative costs, including salaries and other personnel related costs, were comparable during the second quarter of 2004 and 2003. If our pending Merger with Kinross is not completed, we expect our 2004 full-year general and administrative costs to be c omparable to 2003 as a result of ongoing professional service costs related to the Merger, which we have incurred during the first six months of 2004 and the last three months of 2003.

          Variable stock option compensation expense decreased significantly to a credit of $(656,000) in the three months ended June 30, 2004 compared to $189,000 in the same period of 2003, primarily as a result of an decrease in the intrinsic value of stock options due to a decrease in the value of our common stock from $2.26 per share at March 31, 2004 to $1.75 per share at June 30, 2004.

          Our equity in the loss of Solitario was $221,000 in the three months ended June 30, 2004, compared to $115,000 in the same period of 2003. The increase resulted from Solitario's increased net exploration expense, higher general and administrative costs, and decreased interest income during 2004. Solitario's increased net exploration expense related to the majority of Solitario's exploration costs on its Pedra Branca Project in Brazil being paid by its joint venture partner on the Project. Solitario's net exploration cost increased from $55,000 in the three months ended June 30, 2003 to $310,000 in the three months ended June 30, 2004. In addition in 2004, Solitario also focused some of its exploration efforts in the first three months ended June 30, 2004 on newly-acquired projects which also contributed to the increase in the three months ended June 30, 2004 compared to the same period of 2003. Additionally, Solitario had higher general and administrative costs, which were $209,000 in the three months ended June 30, 2004 compared to $71,000 in the three months ended June 30, 2003 as a result of increased legal and accounting costs related to Solitario's filing of its Form 10 registration statement with the United States Securities and Exchange Commission. As a result of the disposition of our holdings in Solitario during the third quarter of 2004, we will eliminate our investment in Solitario and will eliminate treasury stock for the shares of our stock that are owned by Solitario.

          We recorded an income tax expense of $81,000 in the three months ended June 30, 2004 compared to an income tax benefit of $139,000 during the same period of 2003. The change was related to the level of pre-tax income in both periods. Although we expect the Spin-off of our interest in Solitario to our stockholders to be a taxable transaction, this will not result in current tax due to the utilization of net operating losses. If our pending Merger with Kinross is not completed, we anticipate offsetting any operating losses incurred in 2004 against our existing deferred tax liabilities at the statutory rate resulting in a tax benefit.

          Six months ended June 30, 2004 compared to June 30, 2003

          For the six months ended June 30, 2004, we had a net loss of $199,000, or $0.01 per basic and diluted share, compared to net loss of $694,000, or $0.15 per basic and diluted share for the six months ended June 30, 2003. The relative change in net loss per share is primarily due to additional shares outstanding as a result of debt conversion and warrant exercises in the fourth quarter of 2003. The reduction in the net loss in 2004 primarily related to a reduction in variable option compensation expense, which in turn is directly affected by changes in the underlying price of our common shares. This reduction in variable option compensation expense was partially offset by increases in general and administrative expenses, associated with our Kinross merger related costs and an increase in our equity in the loss of Solitario during the six months ended June 30, 2004 compared to the same period in the prior year. Each of these items is discussed in more detail below.

          Exploration expense of $10,000 was recorded during the six months end June 30, 2004 related to certain property tax and option payments. There were no similar payments during the six months ended June 30, 2003.

          General and administrative expenses increased to $472,000 in the six months ended June 30, 2004 from $289,000 in the same period of 2003, primarily as a result of increased professional services fees for legal and accounting related to our pending merger with Kinross. Legal and accounting costs were $278,000 in the six months ended June 30, 2004, compared to $71,000 in the six months ended June 30, 2003. Amounts charged to Solitario for management fees during the six months ended June 30, 2004 increased to $197,000 from $186,000 in the six months ended June 30, 2003 primarily as a result of higher activity in Solitario, compared to the prior year. Other general and administrative costs, including salaries and other personnel related costs, were comparable during the six months ended June 30, 2004 and 2003. If our pending Merger with Kinross is not completed we expect our 2004 full-year general and administrative costs to be co mparable to 2003 as a result of ongoing professional service costs related to the Merger, which we have incurred during the first six months of 2004 and the last three months of 2003.

          Variable stock option compensation expense decreased significantly to a credit of $(601,000) in the six months ended June 30, 2004 compared to $605,000 in the same period of 2003, primarily as a result of a decrease in the intrinsic value of stock options due to a decrease in the value of our common stock from $2.58 per share at December 31, 2003 to $1.75 per share at June 30, 2004. Under variable plan accounting, which initially resulted from the re-pricing of existing options in 1999 and 1998, changes in the intrinsic value of the stock options are charged (credited) to expense over the service period (the vesting period) of the related options. Variable plan accounting continues until options are exercised, cancelled or expire. All of our stock options were exercised during July 2004.

          Our equity in the loss of Solitario was $423,000 in the six months ended June 30, 2004, compared to $215,000 in the same period of 2003. The increase resulted from Solitario's increased net exploration expense, higher general and administrative costs, and decreased interest income during 2003. Solitario's increased net exploration expense related to the majority of Solitario's exploration costs on its Pedra Branca Project in Brazil being paid by its joint venture partner on the Project. Solitario's net exploration cost increased from $64,000 in the six months ended June 30, 2003 to $495,000 in the six months ended June 30, 2004. In addition in 2004, Solitario also focused some of its exploration efforts in the first six months ended June 30, 2004 on newly-acquired projects, which also contributed to the increase in the six months ended June 30, 2004 compared to the same period of 2003. Additionally, Solitario had highe r general and administrative expenses, which were $393,000 in the six months ended June 30, 2004 compared to $144,000 in the six months ended June 30, 2003 as a result of increased legal and accounting costs related to Solitario's filing of its Form 10 registration statement with the United States Securities and Exchange Commission.

          We recorded an income tax benefit of $104,000 in the six months ended June 30, 2004 compared to an income tax benefit of $356,000 during the same period of 2003. The change was related to the level of pre-tax income in both periods. If our pending Merger with Kinross is not completed, we anticipate offsetting any operating losses incurred in 2004 against our existing deferred tax liabilities at the statutory rate resulting in a tax benefit.

(e.) Liquidity and Capital Resources

          Due to the nature of the mining business, the acquisition, exploration and development of mineral properties require significant expenditures prior to the commencement of production. We have in the past financed our activities through the sale of debt and equity securities, joint venture arrangements (including project financing) and the sale of interests in our properties. To the extent necessary, we expect to continue to use similar financing techniques.

          Our exploration and development activities and funding opportunities, as well as those of our joint venture partners, may be materially affected by gold price and mineral commodity levels and changes in those levels. The market price of gold and mineral commodities is determined in world markets and is affected by numerous factors, all of which are beyond our control.

          On February 21, 2003, we issued $2,705,000 of 10% Convertible Subordinated B Notes. On November 5, 2003, all $2,705,000 of Subordinated B Notes automatically converted into 3,606,667 shares of our common stock.

          Six months ended June 30, 2004 compared to June 30, 2003

          Net cash used in operating activities increased to $706,000 in the first six months of 2004 compared to $500,000 in the first six months of 2003. The increase of $206,000 in net cash used in operating activities from the six months ended June 30, 2004 compared to the six months ended June 30, 2003 was primarily due to increase in general and administrative costs for legal and accounting work associated with the Kinross Merger. In addition during 2004, we incurred cash expenditures for exploration, which we did not incur during 2003. These increased expenditures were reduced by a net increase in current liabilities over current assets during 2004 compared to 2003.

          Net cash used in investing activities increased to $635,000 in the six months ended June 30, 2004 compared to $517,000 during the six months ended June 30, 2003 as a result of our increased efforts at the Buckhorn Mountain Project during the six months ended June 30, 2004. During the six months ended June 30, 2004 we expended $635,000 on non-interest costs in development of our Buckhorn Mountain Project compared to $514,000 during the same period of 2003. In 2004, we incurred costs for permitting and engineering services on the Buckhorn Mountain Project utilizing the Kettle River Mill pursuant to our toll-milling agreement with Kinross. The expenditures during 2003 included work performed to analyze on-site milling and tailings facilities, a study of our underground mining plan and costs to completion of a drilling program, all three of which were necessary to complete the Buckhorn Mountain Project feasibility study, which was pr epared by Steffen Robertson and Kirsten, an independent mining an consulting firm ("SRK") during 2003. We capitalized interest paid in cash during the six months ended June 30, 2004 of $180,000 compared to no capitalized interest paid in cash during the six months ended June 30, 2003, as all interest costs during the six months ended June 30, 2003 were related to a combination of amortization of note discounts of $190,000 and shares of our common stock issued as interest of $925,000. If our pending Merger with Kinross is not completed, we expect our 2004 net cash used in investing activities to increase compared to 2003 as we have budgeted approximately $1,400,000 for permitting and development at our Buckhorn Mountain Project in 2004.

          All interest costs, including non-cash interest costs, for the six months ended June 30, 2004 and 2003 have been capitalized as part of our development of the Buckhorn Mountain Project. We capitalized interest costs of $350,000 for the six months ended June 30, 2004 compared to and $1,115,000 for the six months ended June 30, 2003. Interest costs decreased significantly during the six months ended June 30, 2004 compared to 2003 as a result of a reduction in interest costs of $393,000 due to the conversion of our Subordinated, Subordinated B and Secured Notes at the end of 2003. Additionally, we recorded $352,000 of capitalized interest costs during the six months ended June 30, 2003 related to the issuance of shares of our common stock as interest at market prices above the conversion price, which is charged as interest cost, and there were no similar charges in the six months ended June 30, 2004, as we paid our interest costs related to our Senior Notes in cash during 2004. We recorded discount amortization charges to capitalized interest of $170,000 and $190,000 in the six months ended June 30, 2004 and 2003, respectively. We expect our interest costs to significantly decline for the full year for 2004 from 2003 as a result of conversion of our Senior, Secured, Subordinated and Subordinated B Notes.

          Net cash provided by financing activities during the six months ended June 30, 2004 was $37,000, related to proceeds from the exercise of options compared to cash provided of $2,697,000 in the same period of 2003 primarily resulting from the issuance of $2,705,000 Subordinated B Notes in February 2003. During the third quarter of 2004, we anticipate recording $2,028,000 in cash from investing activities related to the exercise of options and warrants.

(f.) Contractual obligations and planned expenditures

          We have budgeted $1,400,000 for permitting and development expenditures in 2004, which will be fully expended by us only if our pending Merger with Kinross is not completed. The bulk of these costs will be for completion of a supplemental draft environmental impact statement related to the currently filed amended plan of operations for the Buckhorn Mountain Project. This plan assumes the ores from the Buckhorn Mountain Project will be trucked to Kinross' Kettle River Mill and will be processed in accordance with our toll milling agreement with Kinross. Additionally, we will pay certain maintenance and legal expenses to maintain our interest in the Buckhorn Mountain Project. The capital costs of the Buckhorn Mountain Project, through initial production, are currently estimated to be approximately $32.6 million, assuming the toll milling discussed above. If the pending Merger is not completed, we will require significant new fi nancial resources in order to develop the Buckhorn Mountain Project, which may be in the form of a joint venture, project or debt finance, or issuance of equity. There is no assurance we will be able to obtain the necessary financial resources on acceptable terms.

          Future contractual obligations and cash commitments at June 30, 2004 include the payment of: Senior Notes, long-term debt, unpatented mining claim payments, and operating leases, as follows:

 ¹ All remaining Senior Notes were converted into shares of our common stock in July 2004.

          In January 2003, the FASB issued FASB Interpretation No. 46, "Consolidation of Variable Interest Entities" ("FIN 46") and in December 2003 issued FIN 46R. FIN 46 requires the consolidation of variable interest entities which have one or both of the following attributes (1) the equity investment at risk is not sufficient to permit the entity to finance its activities without additional financial support from other parties which is provided by other parties that will absorb some or all of the expected losses of the entity, (2) the equity investors lack controlling financial interest as evidenced by (i) the ability to make decisions regarding the entity's activities through voting or similar rights (ii) the obligation to absorb expected losses, which make it possible for the entity to finance its activities and (iii) the right to receive expected residual returns of the entity if they occur, which is the compensation for absorbing the expected losses. FIN 46 was immediately effective for variable interest entities formed after January 31, 2003. FIN 46R requires the adoption of either FIN 46 or FIN 46R in financial statements of public entities that have interests in structures that are commonly referred to as special purpose entities for periods ending after December 15, 2003. Application for all other types of variable interest entities is required in financial statements for periods ending after March 15, 2004. The adoption of FIN 46 and FIN 46R did not have an effect on our financial position or results of operations.

          In April 2004, the EITF issued EITF Issue No. 04-3 "Mining Assets: Impairment and Business Combinations" ("EITF No. 04-3") which evaluated certain issues related to values in mining properties beyond proven and probable reserves (VBPP) and the effects of anticipated fluctuations in the future market price of minerals. The EITF reached a consensus that fair value of mining properties generally includes both VBPP and the effects of anticipated fluctuations in the future market price of minerals and that entities should generally include both in determining the fair value allocated to mining assets in a purchase price allocation and in the cash flow analysis (both discounted and undiscounted) used for determining whether a mining asset is impaired. The consensus reached by the EITF should be applied prospectively in the periods after March 31, 2004, but early application is permitted in periods for which financial statements have n ot been issued. The adoption of EITF No. 04-3 did not have any impact on our financial position, results of operations, or cash flows.

Item 3. Quantitative and Qualitative Disclosure About Market Risk

          (a.) Interest Rate Risks 

          The Senior Notes are subject to market risk because they have a fixed interest rate and a repayment amount payable either in cash or shares of our common stock. We do not use financial or other derivative instruments to manage market risk. There have been no material changes in market risks since December 31, 2003. A hypothetical change of one percent in the interest rate earned on short-term investments during the six months ended June 30, 2004 would have resulted in an increase or decrease of less than $20,000 in net income.

          (b.) Fluctuations in Commodity Prices

          We are also exposed to commodity price risks for changes in the price of precious and base metals insofar as such changes may affect the economic viability of our exploration and development projects. A change of 10% in the price of gold, silver or zinc would not have had a material change in our assets, liabilities or net income. Given that our feasibility study for the Buckhorn Mountain Project utilized a gold price of $350 per ounce, and that the closing gold price on July 30, 2004 was $391per ounce, a 10% downward change in the price of gold would not require a revision of our reported reserves, or capitalized costs.

          Even an effective internal control system, no matter how well designed, has inherent limitations including the possibility of the circumvention or overriding of controls. Therefore, our internal control over financial reporting can provide only reasonable assurance with respect to the reliability of our financial reporting and financial statement preparation. Our disclosure controls and procedures are working at a reasonably effective level.

Safe Harbor

          The information set forth in this report includes "forward-looking" statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, and is subject to the safe harbor created by those sections. Factors that could cause results to differ materially from those projected in the forward-looking statements include, but are not limited to, the timing of receipt of necessary governmental permits, the market price of gold, results of current exploration activities and other risk factors detailed in Crown's Annual Report on Form 10-K for the year ended December 31, 2003.

PART II - OTHER INFORMATION

Item 1. Legal Proceedings

          None

Item 2. Changes in Securities

          None

Item 3. Defaults Upon Senior Securities

          None

Item 4. Submission of Matters to a Vote of Security Holders

          None

Item 5. Other Information

          None

Item 6. Exhibits and Reports on Form 8-K

(a)      Exhibits:

Exhibits

(b)      Reports on Form 8 K:

          None

CROWN RESOURCES CORPORATION