UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)

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 40,014,132 shares of $0.01 par value common stock outstanding as of November 18, 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") as of and for the three and nine months ended September 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. As discussed in Note 5 below, prior to Crown's distribution of Solitario Resources Corporation ("Solitario") on July 26, 2004, Crown owned 37.1% of Solitario, which had 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.

          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). As of September 30, 2004, Crown has no Senior Notes outstanding.

          Between July 7 and July 12, 2004, holders of Crown options representing 3,287,500 shares exercised their options by paying a total of $1,318,000 to Crown. As of September 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 $711,000 to Crown. On July 12, 2004 Solitario exercised warrants for 3,771,428 shares of common stock on a cashless basis and received 2,398,319 shares of Crown common stock. On August 11, 2004 holders of Crown warrants exercisable into 419,049 shares exercised the warrants on a cashless basis and received 208,118 shares of Crown common stock. As of September 30, 2004, Crown has warrants outstanding which are exercisable for up to 8,243,335 shares with an exercise price of $0.75 per share and which expire in October 2006. See discussion of the unexercised warrant liability in Note 6 below.

          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, on July 26, 2004, Crown retained 998,306 shares of Solitario common stock (the "Retained Shares") for the benefit of Crown's warrant holders who will receive those shares when the warrant holders exercise their warrants. During the three months ended September 30, 2004, Crown distributed 48,293 Retained Shares upon the exercise of warrants and at September 30, 2004, had 950,013 Retained Shares. Crown carries its investment in the Retained Shares at fair value with changes in the fair value recorded in the statement of operations. During the three and nine months ended September 30, 2004, Crown recorded a gain on its investment in Retained Shares of $1,030,000. Crown has recorded a liability for its entire investment balance, which is included in its unexercised warrant liability, see Note 6 below. In addition, Crown retained 93 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.

          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 during the third quarter has increased as follows:

          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." Holders of options representing 3,287,500 and 3,379,000 shares, respectively, exercised their options during the three and nine months ended September 30, 2004. Of these options exercised during the three and nine months ended September 30, 2004, options for 2,452,500 and 2,544,000 shares, were accounted for with variable plan accounting. Holders of options for 5,000 and 35,000 shares exercised their options during the three and nine months ended September 30, 2003, all of which were accounted for with variable plan accounting. 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 September 30, 2004 Crown had warrants which could be exercised for 8,243,335 common shares, that could potentially dilute earnings per share but were excluded from the computation of per share amounts for the three and nine months ended September 30, 2004, as their inclusion would have been anti-dilutive. At September 30, 2003 Crown had stock options, warrants and convertible debt securities of approximately 44,740,000 shares that could potentially dilute earnings per share but were excluded from the comput ation of per share amounts for the three and nine months ended September 30, 2003, as their inclusion would have been antidilutive.

          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 is to be applied prospectively in the periods after March 31, 2004, but early application is permitted in periods for wh ich financial statements have not 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 September 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. Any warrants not exercised prior to the merger 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.

          As a result of an extension of the previous termination date from September 30, 2004 until December 31, 2004, during the third quarter of 2004, the Merger Agreement may be terminated by either party if the transaction has not been consummated by December 31, 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.

          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 Crown 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 Crown 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, substantiall y all 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 November 5, 2004, $180,000 in Debenture certificates have not been presented. If all of these Debentures are presented, the disbursing agent will distribute $12,000 in cash, 68,571 shares of Crown common stock from the converted Secured Notes (plus accrued interest since June 11, 2002), 64,000 shares of Crown common stock from the converted Subordinated Notes (plus accrued interest since June 11, 2002), and warrants to acquire 68,571 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 September 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 was 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 of $179,000 was charged as capitalized interest cost.

          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 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 addition al 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 of $2,925,000 was charged as capitalized interest cost.

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 the election of Crown. The Subordinated Notes were convertible into Crown common shares at $0.75 per share.

          In October 2003 and November 2003 $839,331 of Subordinated Notes were 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 nine months ended September 30, 2004, Crown recorded capitalized interest cost of $2,000 and $7,000, respectively which represented amortization of its discount on the Keystone note. During the three and nine months ended September 30, 2003, Crown recorded capitalized interest cost of $3,000 and $9,000, respectively which represented amortization of its discount on the Keystone note. At September 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 $3,531,000 and $3,881,000, respectively, for the three and nine months ended September 30, 2004, respectively. Crown capitalized all of its interest costs of $697,000 and $1,812,000 for the three and nine months ended September 30, 2003, respectively. At September 30, 2004 and December 31, 2003 a total of $17,766,000 and $13,885,000, respectively, of interest costs have been capitalized as mineral property at the Buckhorn Mountain Project.

          Prior to their conversion, Crown could pay interest on the Senior Notes, the Secured Notes, the Subordinated Notes and the Subordinated B Notes in cash or Crown common shares, at its election. Crown accrued interest at the nominal rate of 10% during the period the notes were outstanding. For interest paid in Crown common shares, capitalized interest cost was 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 nine months ended September 30, 2004, interest income from Crown's interest bearing cash and short term investments of $8,000 and $15,000, respectively has been recorded in Crown's consolidated statements of operations. For the three and nine months ended September 30, 2003, interest income of $6,000 and $19,000, respectively has been recorded in Crown's consolidated statements of operations.

Future minimum payments

          At September 30, 2004, future minimum payments on long term debt consist of two $50,000 payments on the Keystone note in due December 2004 and 2005.

5.          Equity Method Investment in Solitario Resources Corporation:

          Crown accounted for its investment in Solitario under the equity method of accounting.  On July 26, 2004 Crown distributed its holdings of 9,633,585 shares of Solitario's common stock to its stockholders. See Note 1 above. The fair value, based on the quoted market price, of Crown's 9,633,585 shares of Solitario common stock was approximately $11,271,000 at July 26, 2004 and $13,198,000 at December 31, 2003.

\Reconciliation of Solitario's stockholders' equity to Crown's investment in Solitario

Reconciliation of Solitario's net (loss) income to Crown's equity in loss of Solitario 

* Operations during the period from July 1, 2004 to July 26, 2004, the date of the spin-off.

** Operations during the period from January 1, 2004 to July 26, 2004, the date of the spin-off.

          The distribution of Crown's equity-method investment in Solitario was accounted for at the recorded amount of the non-monetary assets distributed, pursuant to Accounting Principles Board Opinion No. 29, "Accounting for Non-monetary Transactions" ("APB No. 29"). Accordingly, on July 26, 2004, Crown reduced its equity method investment in Solitario by the recorded value of $1,355,000, reduced its investment in treasury stock $699,000 for shares of Crown stock held by Solitario and increased other comprehensive income $26,000 for Crown's share of Solitario's loss on marketable equity securities. As a result of retaining the 998,306 Retained Shares, on July 26, 2004, Crown recorded an investment in Solitario of $214,000, which represents the proportional amount of Crown's historical cost investment as a result of the retaining the Retained Shares. Crown charged accumulated deficit $1,866,000 for the disposit ion of its equity-method investment in Solitario less the recorded investment in retained shares of Solitario. Crown also offset the increase to other comprehensive income by $9,000 for the related deferred tax benefit.

          Subsequent to the spin-off, upon the exercise of any remaining warrants, Crown will reduce its investment in the Retained Shares with a proportional reduction in its $214,000 historical cost investment based upon the number of Retained Shares distributed by a charge to accumulated deficit. Any accumulated gain and loss related to the fair value of the Retained Shares distributed will be charged against the unexercised warrant liability. See Note 6 below for a discussion of Crown's unexercised warrant liability related to the Retained Shares.

          Although the spin-off of Crown's interest in Solitario to its stockholders is expected to be a taxable transaction, it will not result in current tax due to the utilization of net operating losses. However, because the spin-off of Crown's holdings of Solitario is taxable at the fair market value of the shares distributed, rather than the recorded cost of its investment, Crown recorded an increase in its deferred tax liability of $1,066,000 with an offsetting charge to income tax expense for the estimated tax related to the anticipated tax gain. In addition, Crown recorded the reversal of $2,068,000 previously recorded deferred tax benefits related to the difference between Crown's book and tax basis in Solitario as a charge to income tax expense. The existing deferred tax liability is expected to be offset in the future by existing net operating losses.

          On July 1, 2004, as a result of declaring, as a dividend, the distribution of Crown's 9,633,585 shares of Solitario common stock, the classification of Crown's warrants changed from an equity derivative instrument to that of a liability derivative instrument in accordance with SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities". As a result, Crown recorded an unexercised warrant liability of $16,107,000 for the fair value of the securities to be delivered to the warrant holders upon the exercise of their warrants, with a corresponding charge to additional paid-in capital. All subsequent increases and decreases in the fair value of the warrant, including those related to the Retained Shares, are recorded in the statement of operations as gain or loss on derivative instruments. Upon exercise of the warrants, Crown reduces its investment in retained shares of Solitario for the fair value of any Retained Shares distributed, records the fair value of any shares of Crown common stock issued as stockholders' equity and reduces the unexercised warrant liability by the fair value of the Retained Shares distributed and the Crown common stock issued. During the quarter ended September 30, 2004, Crown recorded a loss on derivative instrument of $3,253,000, related to the increases in the fair value of the unexercised warrants. On July 12, 2004, Solitario exercised warrants for 3,771,428 on a cashless basis and received 2,398,319 shares of Crown common stock. On July 15, 2004, warrant holders exercised warrants for 947,140 shares for cash by paying $711,000 and received 947,140 shares of Crown common stock. Crown reduced its unexercised warrant liability by $6,284,000 and credited stockholders' equity by the same amount for the fair value of the Crown stock issued related to those warrant exercises. On August 16, 2004, a warrant holder exercised a warrant for 419,049 shares on a cashless basis and rece ived 208,118 shares of Crown common stock and 48,293 Retained Shares. Crown reduced its investment in retained shares of Solitario $49,000 with a $10,000 charge to accumulated deficit for the proportional share of the historical cost equity method investment and by $39,000 by a charge the unexercised warrant liability for the accumulated gain related to the fair value of the Retained Shares distributed on the date of exercise. Crown also reduced its unexercised warrant liability by $368,000 and credited stockholders' equity by the same amount for the fair value of the shares of Crown common stock issued. At September 30, 2004, the remaining fair value of the securities to be issued under the warrants was $12,659,000. All fair values for both the Retained Shares and the Crown shares of common stock issuable under the warrants have been determined using a Black-Scholes option-pricing model.

The following represents comprehensive 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, on July 26, 2004, Crown retained 998,306 Retained Shares for the benefit of Crown's warrant holders who will receive those shares when the warrant holders exercise their warrants. During the three months ended September 30, 2004, Crown distributed 48,293 Retained Shares upon the exercise of warrants and at September 30, 2004, had 950,013 Retained Shares. Crown carries its investment in the Retained Shares at fair value with changes in the fair value recorded in the statement of operations. During the three and nine months ended September 30, 2004, Crown recorded a gain of $1,030,000 on its investment in retained shares of Solitario. Crown recorded a liability for its entire investment balance, which is i ncluded in its unexercised warrant liability. See Note 6 above. In addition Crown retained 92 shares, from fractional shares, which it intends to sell. After the disposition of the Retained Shares 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 $50,000 in cash as interest income under the Senior Notes for the nine months ended September 30, 2004. Solitario was paid 89,522 and 249,718, respectively, Crown shares as interest income under the Senior Notes for the three and nine months ended September 30, 2003. On July 14, 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 interest through the date of conversion on the Notes.

          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. See Note 6 above.

          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 will vote its 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 September 30, 2004, the Signing Shareholders collectively held 12,695,186 shares or 31.7% of the outstand ing Crown shares. In addition the Signing Shareholders hold warrants which could be exercised for an additional 5,714,285 Crown shares or a total of 18,409,472 or 38.1% of the then outstanding Crown shares.

          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 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 September 30, 2004, 14,891,278 shares of Crown common stock were subject to the stockholder and voting agreement, representing approximately 37.2% of the outstanding shares of Crown common stock entitled to vote at the Crown special meeting. Additionally, as of September 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 42.7% of the then outstanding Crown shares.

          As of September 30, 2004, Solitario owns 6,071,626 shares of Crown common stock or approximately 15.2% of the outstanding shares of Crown.

          Subsequent to the issuance of Crown's unaudited condensed consolidated financial statements for the quarter ended September 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 September 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 September 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 nine months ended September 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

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 9 to the condensed consolidated financial statements, our financial statements for the three and nine months ended September 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. 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 September 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 ounc es of gold. The 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 our $3,600,000 10% Convertible Senior Notes converted all of the outstanding notes into 10,744,249 shares of our common stock (which include 261,535 shares for accrued interest through the date of conversion) and as of September 30, 2004, we have no Senior Notes outstanding.

          Between July 7 and July 12, 2004, holders of our options representing 3,287,500 shares exercised their options by paying a total of $1,318,000 to us and as of September 30, 2004, we have no outstanding stock options.

          On July 14, 2004, holders of our warrants exercisable into 947,140 shares exercised the warrants on a cash basis into 947,140 shares of our common stock by paying a total of $711,000 to us. On July 12, 2004, Solitario exercised warrants exercisable into 3,771,428 shares of common stock on a cashless basis and received 2,398,319 shares of our common stock. As of November 5, 2004, we have warrants outstanding which are exercisable for up to 8,243,335 shares with an exercise price of $0.75 per share and which expire in October 2006. See Note 6 and 8 to our unaudited financial statements.

          On July 26, 2004, we completed a spin-off of Solitario's shares to our shareholders, whereby each of our shareholders received 0.2169 shares of Solitario common stock for each Crown share they owned. As part of the spin-off, on July 26, 2004, we retained 998,306 Retained Shares for the benefit of our warrant holders who will receive those shares when the warrant holders exercise their warrants. During the three months ended September 30, 2004, we distributed 48,293 Retained Shares upon the exercise of warrants and at September 30, 2004, had 950,013 Retained Shares. We carry our investment in retained shares of Solitario at fair value with changes in the fair value recorded in the statement of operations. During the three and nine months ended September 30, 2004, we recorded a gain of $1,030,000 on our investment in the Retained Shares and have recorded a liability for our entire investment balance, which is included in unexerc ised warrant liability, see Note 6 to our unaudited financial statements. In addition, we retained 93 Solitario shares, from fractional shares, which we intend to sell. After the disposition of the Retained Shares and fractional shares, we will no longer own any shares of 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 Crown 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 Crown 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 al l Secured 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 November 5, 2004, $180,000 in Debenture certificates have not been presented. If all of these Debentures are presented, the disbursing agent will distribute $12,000 in cash, 68,571 shares of our common stock from the converted Secured Notes (plus accrued interest since June 11, 2002), 64,000 shares of our common stock from the converted Subordinated Notes (plus accrued interest since June 11, 2002), and warrants to acquire 68,571 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 time 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 September 30, 2004 compared to September 30, 2003

          For the three months ended September 30, 2004 we had a net loss of $5,568,000, or $0.15 per share, compared to net loss of $813,000, or $0.15 per share for the three months ended September 30, 2003. The increase in the net loss in 2004 primarily related to (i) a$3,253,000 loss on derivative instruments related to the increase in the fair value of our warrants, (ii) income tax expense of $3,203,000 related to a reversal of previously recorded temporary differences between the book and tax basis of Crown's investment in Solitario upon the spin-off and recognition of a liability for anticipated tax gain as well as (iii) an increase in variable stock option compensation expense, which in turn is directly affected by changes in the underlying price of our common shares. We also recorded increases in general and administrative costs, associated with our Kinross merger related costs during the three months ended September 30 , 2004 compared to the same period in the prior year. These increases in expenses were partially offset by both a reduction in our equity in loss of Solitario which we ceased including in our results after July 26, 2004, the date of the spin-off, and a gain on the investment in retained shares of Solitario. The change in the relative per share amounts are primarily due to additional shares outstanding from debt conversions and warrant exercises in the third quarter of 2004. Each of these items is discussed in more detail below.

          Exploration expense of $20,000 and $28,000 during the three months ended September 30, 2004 and 2003, respectively, related to certain property tax and option payments.

          General and administrative expenses increased to $175,000 in the three months ended September 30, 2004 from $165,000 in the same period of 2003, primarily as a result of increased professional fees for legal and accounting services related to our pending merger with Kinross. Legal and accounting costs were $63,000 in the three months ended September 30, 2004, compared to $58,000 in the three months ended September 30, 2003. Amounts charged to Solitario for management fees during the three months ended September 30, 2004 increased to $96,000 from $89,000 in the three months ended September 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 third quarter of 2004 and 2003.

          Variable stock option compensation expense increased significantly to $1,119,000 in the three months ended September 30, 2004 compared to $848,000 in the same period of 2003. This increase was the result of an increase in the intrinsic value of our stock options of $295,000 due to a net increase in the value of our common stock from $1.75 per share at June 30, 2004 to an average of $1.88 per share in July 2004. In addition, all of the options under variable plan accounting were vested and exercised, resulting in recognition of deferred compensation of $824,000 during the period. 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 unexercised stock options were exercised during July 2004.

          Our equity in the loss of Solitario was $52,000 in the three months ended September 30, 2004, compared to $139,000 in the same period of 2003. The decrease resulted from Crown's distribution of its holdings of Solitario's shares on July 26, 2004 and no longer including Solitario's expenses beyond that date in the third quarter of 2004.

          On July 1, 2004, as a result of declaring, as a dividend, the distribution of our 9,633,585 shares of Solitario common stock, the classification of our warrants changed from an equity derivative instrument to that of a liability derivative instrument. As a result we began accounting for changes in the fair value of the securities to be issued or distributed upon the exercise of those warrants as a gain or loss in the statement of operations. Additionally, we recorded any changes in the fair value of the Retained Shares as a gain or loss in the statement of operations. During the three months ended September 30, 2004, we recorded a gain on the investment in retained shares of Solitario of $1,030,000 related to the increase in the fair value of the Retained Shares. This increase in the fair value of the Retained Shares was offset by a related increase in the fair value of the unexercised warrant liability related to changes in t he fair value of the Retained Shares to be distributed. During the third quarter of 2004 we recorded loss on derivative instrument of $3,253,000 related to an increase in the fair value of the Retained Shares as well as an increase in the fair value of shares of Crown common stock to be issued under the warrants. There were no similar charges in the prior year quarter.

       We recorded income tax expense of $1,985,000 in the three months ended September 30, 2004 compared to an income tax benefit of $418,000 during the same period of 2003. Although the spin-off of our interest in Solitario to our stockholders is expected to be a taxable transaction, this will not result in current tax due to the utilization of net operating losses. However, because the spin-off of our holdings of Solitario is taxable at the fair market value of the shares distributed, rather than the recorded cost of our holdings, we recorded an increase in our deferred tax liability of $1,066,000 with an offsetting charge to income tax expense for the estimated tax related to the anticipated tax gain. In addition, Crown recorded $2,068,000 as a charge to income tax expense for the reversal of previously recorded deferred tax benefits related to the difference between Crown's book and tax basis in Solitario. The existing deferred tax liability is e xpected to be offset by existing net operating losses. If our pending Merger with Kinross is not completed, we anticipate offsetting any additional operating losses incurred in 2004 against our existing deferred tax liabilities at the statutory rate resulting in a tax benefit.

          Nine months ended September 30, 2004 compared to September 30, 2003

          For the nine months ended September 30, 2004, we had a net loss of $5,767,000, or $0.21 per share, compared to net loss of $1,506,000, or $0.31 per share for the nine months ended September 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 during 2004. The increase in the net loss in 2004 primarily related to (i) the $3,253,000 loss on derivative instruments discussed above, (ii) income tax expense of $1,881,000 primarily related to a reversal of previously recorded temporary differences between the book and tax basis of Crown's investment in Solitario upon the spin-off and recognition of a liability for anticipated tax gain as well as (iii) 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 period in 2004 up to July 26, 2004, the spin-off date, compared to the nine months ended September 30, 2003. These increases in expenses were partially offset by both the gain of $1,030,000 on the increase in the fair value of the Retained Shares discussed above and a reduction in variable option compensation expense, which in turn is directly affected by changes in the underlying price of our common shares. Other than the gain of $1,030,000 and the loss of $3,253,000 discussed above, each of these items is discussed in more detail below.

          Exploration expense, related to property tax, option and claim payments, of $30,000 was recorded during the nine months ended September 30, 2004, and is comparable to the $28,000 of exploration expense recorded in the same period in the prior year.

          General and administrative expenses increased to $647,000 in the nine months ended September 30, 2004 from $453,000 in the same period of 2003, primarily as a result of increased professional fees for legal and accounting services related to our pending merger with Kinross. Legal and accounting costs were $341,000 in the nine months ended September 30, 2004, compared to $130,000 in the nine months ended September 30, 2003. Amounts charged to Solitario for management fees during the nine months ended September 30, 2004 increased to $293,000 from $275,000 in the nine months ended September 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 nine months ended September 30, 2004 and 2003. If our pending Merger with Kinross is not completed we expect our 2004 full-year gene ral and administrative costs to be comparable to 2003 as a result of ongoing professional service costs related to the Merger, which we have incurred during the first nine months of 2004 and the last three months of 2003.

          Variable stock option compensation expense decreased significantly to $518,000 in the nine months ended September 30, 2004 compared to $1,453,000 in the same period of 2003. This decrease was due to vesting of the options, resulting in recognition of deferred compensation of $2,149,000 during the period which was partially offset by a decrease in the net intrinsic value of our options of $1,631,000 due the decrease in the price of our common stock from $2.58 per share at December 31, 2003 to an average of $1.88 per share in July 2004, when the options under variable plan accounting were exercised. 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, ca ncelled or expire. All of our unexercised stock options were exercised during July 2004.

          Our equity in the loss of Solitario was $475,000 in the period of 2004 up to July 26, the spin-off date, compared to $354,000 in the nine months ended September 30, 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 $211,000 in the nine months ended September 30, 2003 to $861,000 in the nine months ended September 30, 2004. In addition in 2004, Solitario also focused some of its exploration efforts in the first nine months ended September 30, 2004 on newly acquired projects, which also contributed to the increase in the nine months ended September 30, 2004 compared to the same period of 2003. Additionally, Solitario had higher general and administrative expenses, which were $555,000 in the nine months ended September 30, 2004 compared to $218,000 in the nine months ended September 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 income tax expense of $1,881,000 in the nine months ended September 30, 2004 compared to an income tax benefit of $774,000 during the same period of 2003. The increase in income tax expense related to the spin-off of our holdings of Solitario being taxable at the fair market value of the shares distributed, rather than the recorded cost of our holdings. In the third quarter of 2004, we recorded an increase in our deferred tax liability of $1,066,000 with an offsetting charge to income tax expense for the estimated tax related to the anticipated tax gain. In addition, Crown recorded $2,068,000 as a charge to income tax expense for the reversal of previously recorded deferred tax benefits related to the difference between Crown's book and tax basis in Solitario. The remaining change in tax expense and benefit from the same period in the prior year was related to the level of pre-tax loss in both periods. If our pen ding 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.

          Nine months ended September 30, 2004 compared to September 30, 2003

          Net cash used in operating activities decreased to $313,000 in the first nine months of 2004 compared to $581,000 in the first nine months of 2003. The decrease of $268,000 in net cash used in operating activities from the nine months ended September 30, 2004 compared to the nine months ended September 30, 2003 was primarily due to an increase in current liabilities from December 2003 to September 2004 of $526,000 compared to a decrease in current liabilities of $163,000 from December 2002 to September 2003. Current liabilities increased significantly at September 30, 2004 as a result of significant additional permitting work at the Buckhorn Mountain Project during the third quarter of 2004, which had not been paid as of September 30, 2004. This increase in current liabilities mitigated increased general and administrative costs for legal and accounting work associated with the Kinross Merger as well as an increase in curre nt assets at September 30, 2004 from the prior year end compared to a decrease in current assets at September 30, 2003 from the prior year end.

          Net cash used in investing activities increased to $1,803,000 in the nine months ended September 30, 2004 compared to $696,000 during the nine months ended September 30, 2003 as a result of our increased efforts at the Buckhorn Mountain Project during the nine months ended September 30, 2004. During the nine months ended September 30, 2004 we expended $1,622,000 on non-interest costs in development of our Buckhorn Mountain Project compared to $684,000 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 fea sibility study, which was prepared by Steffen Robertson and Kirsten, an independent mining and consulting firm ("SRK") during 2003. We capitalized interest paid in cash during the nine months ended September 30, 2004 of $181,000 compared to no capitalized interest paid in cash during the nine months ended September 30, 2003, as all interest costs during the nine months ended September 30, 2003 were related to a combination of accrued interest and amortization of note discounts of $359,000 and shares of our common stock issued as interest of $1,453,000. 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 currently estimate we will spend approximately $2,300,000 for permitting and development at our Buckhorn Mountain Project in 2004.

          All interest costs, including non-cash interest costs, for the nine months ended September 30, 2004 and 2003 have been capitalized as part of our development of the Buckhorn Mountain Project. We capitalized interest costs of $3,881,000 for the nine months ended September 30, 2004 compared to $1,812,000 for the nine months ended September 30, 2003. Interest costs increased significantly during the nine months ended September 30, 2004 compared to 2003 primarily as a result of interest cost of $3,104,000 capitalized upon the conversion of our Senior Notes as well as additional interest of $397,000 from the issuance of common stock for interest upon the conversion of our Senior Notes compared to $628,000 of capitalized interest costs during the nine months ended September 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. We expec t 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 nine months ended September 30, 2004 was $2,066,000, related to proceeds from the exercise of warrants and options compared to cash provided of $2,667,000 in the same period of 2003 primarily resulting from the issuance of $2,705,000 Subordinated B Notes in February 2003.

(f.) Contractual obligations and planned expenditures

          We expect expenditures for non-interest permitting and development expenditures at our Buckhorn Mountain Project to be approximately $2,300,000 in 2004. 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 claim maintenance fees 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 financial re sources 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 September 30, 2004 include the payment of: long-term debt, unpatented mining claim payments, and operating leases, as follows: