Final Results

Pan Andean Resources PLC
24 August 2001

                  PRELIMINARY RESULTS AND CHAIRMAN'S STATEMENT
                       FOR THE YEAR ENDED 31 MARCH 2001

HIGHLIGHTS


*               OPERATING PROFIT OF £1.3MILLION
*               MAJOR GAS AND CONDENSATE OIL DISCOVERY AT EL DORADO IN BOLIVIA
*               PAN ANDEAN US ASSETS CASH POSITIVE



CHAIRMAN'S STATEMENT

It is a pleasure to report on a year in which Pan Andean passed a number of
significant milestones.  We became an oil and gas producer in Bolivia and in
the Gulf of Mexico.  We produced a strong cash flow and an operating profit in
excess of £1 million.  A deep well on our El Dorado joint venture in Bolivia
was successful.  The commercialisation of this large gas field will transform
our company.  As we move on and grow we reluctantly decided to drop the
Chapare concession in Bolivia.  This large block has potential but it is too
costly to maintain and to explore.  Simply put, we have better opportunities
in Bolivia and the US for our time and money.  The decision to leave the
Chapare results in a once off write-off of over £5m.

Our roots are in exploration and we continue to look for high potential
projects.  In Bolivia we are preparing submissions for one and possibly two
large exploration blocks where we expect drilling to discover significant gas
reservoirs.  The discovery of a major gas field on our High Island 52 block in
the Gulf of Mexico opens up exciting possibilities.  We hold a 2.1% gross
royalty interest in this find.  In the block as a whole we hold a 39.7%
interest where in the near future drilling is expected on new targets
identified as a result of this latest find.

The transformation of Pan Andean in the past year is a surprise to some of our
shareholders particularly those of you who have shared the highs and lows of
wildcat drilling during the 1990's.  It is easy to explain the shift in focus.
As your directors gained hydrocarbon experience in Bolivia it became obvious
that a major opportunity existed to supply energy to Brazil.  I cannot over
estimate the size of this opportunity.  Brazil, which makes up 42% of all
South American GNP, has an energy requirement growing at 8 per cent a year.
The country is already seriously short of power.  It is estimated that this
vast country, larger than the USA, needs hundreds of new power stations this
decade.  The main source of this power will be Bolivian gas.  Pan Andean
intends to be part of this growth industry.

The opportunity to purchase Petrolex, a long established private Bolivian
company, offered Pan Andean a quick entry to the Brazilian energy opportunity.
Not only had Petrolex oil and gas production from Monteagudo, an old field
in the South of Bolivia, it also had a stake in an exploration block, El
Dorado, close to the Bolivian-Brazil gas pipeline.  Petrolex had excellent
joint venture partners, in Petrobras, Repsol and Pan American, a BP/Bridas
joint venture.  We acquired Petrolex for a combination of shares, cash and
debt assumption. This acquisition is already paying off.

We also acquired Endeavour Oil and Gas a private US company.  This venture was
brought to us by a group of UK investors, all oil industry people, who were
willing to take Pan Andean shares for a substantial part of a final purchase
price.  Not only did the acquisition give Pan Andean cash flow it also brought
on board shareholders who could supply technical and industry expertise to
your directors.  And that is how it has turned out.  Since the acquisition,
the US assets have contributed millions of dollars to your company while the
new shareholders have contributed advice and skills.

El Dorado

The Review of Operations deals in some detail with this block but its
importance requires comment.  El Dorado may be a company maker for Pan Andean.
A second successful well drilled on the property in late 2000 confirmed a
substantial gas find.  Pan Andean has been actively working to commercialise
this discovery by generating a market in Brazil, by undertaking limited
technical feasibility studies and by negotiating the various permits required
to initiate production. Early development of the field is critical to the
economic success of the project so successful finalisation of current talks
would result in development in the coming year. Based on the success of work
to date Pan Andean is in negotiation with our partner, Pan American, to
increase our working interest in the block from 10% to 30%.

Monteagudo

Monteagudo is a long established oil producer with substantial exploration
potential at deeper levels. Pan Andean owns 30% with the balance held by
Petrobras and Repsol. The field produces about 700 barrels of oil a day.  Gas
production was 11 million cubic feet of gas a day from 17 wells though it is
declining.  Oil production is relatively stable but the gas production will
continue to decline without continuous workovers.  Two step out wells were
drilled in the past year, costing in total over $5million of which Pan Andean
paid $1.7m.  One well was dry the other promised a great deal but output has
declined though it remains in production.

The potential in Monteagudo lies at a deeper level, 5,500 metres, where major
gas finds have been made on neighbouring blocks.  Seismic analysis suggests a
gas bearing structure which could contain 1 trillion cubic feet of gas.
Access to market will decide when this well is drilled.

Petrolex formerly held the block, adjacent to Monteagudo.  We have re-worked
the seismic and drilling results on the block and believe that significant gas
potential exists.  We are considering a proposal to the Bolivian authorities
to acquire rights on this block.

US Assets

The principal producing assets in the US are three blocks in shallow waters in
the Gulf of Mexico offshore Texas.  We own 62.9% of High Island 30L which
produces up to 500 barrels of oil a day, 39.6% of High Island A68 which
produces gas at a daily rate of 1.7million cubic feet and 39.7% of High Island
52 producing about 1.1 million cubic feet of gas a day.

We have a small working interest in a field offshore Louisiana and an onshore
royalty close to the Texas/Mexico border and some exploration acreage in
Texas.

High gas prices last winter resulted in a very strong cash flow from the Gulf
of Mexico properties. The fields are generally mature and require workovers to
maintain production rates.  There is exploration potential in our US assets
particularly on High Island 52 and on our Danbury Dome property onshore.
Gryphon Exploration, a private US company, farmed into High Island 52 and
drilled a discovery well in early 2001.  Estimates suggest a find of 20
billion cubic feet of gas.  A field of this size so close to market has
substantial value.  The find is being developed and will come on stream by
yearend.  Pan Andean, rather than take a working interest, opted for a 2.1%
gross royalty.  The good drilling result has led to a re-evaluation of the
entire block.  While current studies are not finished it does look as if
Gryphon type structures exist elsewhere on the block.  Drilling is likely in
the coming year.

Seismic on Danbury Dome has identified 2 deep structures, one at 3500 metres
the other, a much larger structure, at 4,750 metres.  It is likely that both
prospects will be farmed out for a carried interest.

Pan Andean will continue to develop their existing US operations but will
focus on Bolivia.

Other Projects

In my report last year I discussed the possibility of power generation in
Bolivia with our joint venture partner Enel.  Following a series of studies
Enel decided to withdraw. Lack of regulatory certainty in Bolivia was the
principal reason.

We are conducting a feasibility study into a GTL (Gas to Liquids) plant for
Santa Cruz in Bolivia.  Bolivia imports diesel.  Pan Andean has an agreement
with the distributor who controls 60 per cent of the domestic Bolivian market
of 10,000 barrels a day.  A GTL plant capable of supplying this demand
requires a feed of 120 million cubic feet of gas a day.  GTL technology is
evolving rapidly.  Pan Andean is in discussions with partners who know the
technology and can afford the capital cost.

At an earlier stage of discussion is a project to pipe gas to the Peruvian
coast where an LNG plant would compress the gas for shipment to the US West
Coast.

During the year various oil/gas projects in South America have been presented
to Pan Andean.  None of them have matched the potential of turning Bolivian
gas into fuel or power.

Finance

In the period under review Pan Andean raised a total of £10.9m to finance the
Bolivian and US acquisitions.  Shares were placed at prices ranging from 25p
to 50p.  Much of the financing was raised from UK institutions. Their belief
in and support of our South American focus is a source of satisfaction to your
board.

The rapid growth of Pan Andean means that there are more opportunities than
money.  The cash flow generated in the US is being used to payoff debt raised
in acquiring US assets and in supporting our activities in Bolivia.  In the
current year cash flow and profits will not be as strong as the previous year
due to lower gas prices in the US though we expect to internally finance all
of our current plans.

Developing the El Dorado gas field will require multiple wells, surface
facilities and a 25km pipeline. Capital cost estimates range as high as $100m.
It is anticipated that most of the finance required will come from project
finance.

The Future

We look forward with enthusiasm and confidence to the future.  We will
continue to focus on ways and means of exploiting the vast and growing energy
market in Brazil.  We have a solid foundation in our existing Bolivian
operations.  We will build on these foundations.




                     CONSOLIDATED PROFIT AND LOSS ACCOUNT
                       FOR THE YEAR ENDED 31 MARCH 2001


                                                       2001               2000
                                                          £                  £
TURNOVER - acquired operations                    4,893,481                  -
Cost of sales                                   (2,834,312)                  -


GROSS PROFIT - acquired operations                2,059,169                  -

Administrative expenses                           (724,415)          (209,864)
Exceptional item - discontinued                 (5,045,440)                  -
operations


OPERATING PROFIT/(LOSS)
-  Continuing operations                          1,334,754          (209,864)
-  Discontinued operations                      (5,045,440)                  -


                                                (3,710,686)          (209,864)

Interest receivable and similar income              101,808             73,745
Interest payable                                   (78,917)                  -


LOSS BEFORE TAXATION                            (3,687,795)          (136,119)

Tax on loss on ordinary activities                (224,590)                  -


LOSS ON ORDINARY ACTIVITIES
AFTER TAXATION                                  (3,912,385)          (136,119)



Loss per share                                      (4.53p)            (0.25p)
Loss per share - diluted                            (4.53p)            (0.25p)




                          BALANCE SHEETS AS AT 31 MARCH 2001


                                Group       Company         Group       Company
                                 2001          2001          2000          2000
                                    £             £             £             £
FIXED ASSETS
Intangible assets                   -             -     2,529,037     2,514,178
Tangible assets            13,138,280        10,320         3,099         3,099
Investments                     2,203     6,837,367         1,979         1,979


                           13,140,483     6,847,687     2,534,115     2,519,256


CURRENT ASSETS
Debtors                     1,788,364     5,083,528       415,946       430,805
Cash at bank                1,513,328       223,039     3,139,178     3,139,178


                            3,301,692     5,306,567     3,555,124     3,569,983
CREDITORS : (Amounts
falling due within one    (2,541,013)     (356,379)      (58,858)      (58,858)
year)


NET CURRENT ASSETS            760,679     4,950,188     3,496,266     3,511,125


PROVISION FOR
LIABILITIES
AND CHARGES               (1,059,364)             -             -             -


TOTAL ASSETS LESS
LIABILITIES                12,841,798    11,797,875     6,030,381     6,030,381



CAPITAL AND RESERVES
Called-up share capital       973,220       973,220       695,280       695,280
Share premium              17,715,926    17,715,926     7,355,741     7,355,741
Profit and loss account   (5,847,348)   (6,891,271)   (2,020,640)   (2,020,640)
- deficit


EQUITY SHAREHOLDERS'
FUNDS - ALL EQUITY         12,841,798    11,797,875     6,030,381     6,030,381


The financial statements above were approved by the Board of Directors on 24
August 2001 and signed on its behalf by :

John J Teeling, Director


The results do not constitute full accounts within the meaning of the
Companies Act 1985.  The 2000 figures are extracted from the audited accounts
for the year ended 31 March 2000 upon which the auditors expressed an
unqualified opinion and which have been filed at Companies House.  The 2001
figures are extracted from the audited accounts for the year ended 31 March
2001 upon which the auditors expressed an unqualified opinion.  A copy of the
audited Annual Report for 2001 will be mailed to shareholders at the end of
August and will also be available for inspection at the Company's registered
office at 20-22 Bedford Row, London WC1R 4JS.