EXHIBIT 1





















FREEGOLD VENTURES LIMITED



(An Exploration Stage Company)



CONSOLIDATED FINANCIAL STATEMENTS



31 DECEMBER 2005 and 2004

















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|[ex1002.gif] | [ex1004.gif]
|------------ | ------------





Report of Independent Registered Public Accounting Firm





To the Shareholders of Freegold Ventures Limited:



We have audited the accompanying consolidated balance sheets of Freegold Ventures Limited (an Exploration Stage Company) (the Company) as at 31 December 2005 and 2004 and the related consolidated statements of shareholders' equity, loss and cash flows for each of the years ended 31 December 2005, 2004 and 2003.  These financial statements are the responsibility of the Company's management.  Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the Canadian generally accepted auditing standards and with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement.  The Company is not required to have, nor were we engaged to perform an audit of its internal control over financial reporting.  Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Companys internal control over financial reporting.  Accordingly, we express no such opinion.  An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation.  We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as at 31 December 2005 and 2004, and the results of its operations and its cash flows for each of the years ended 31 December 2005, 2004 and 2003 in accordance with Canadian generally accepted accounting principles.



|                      | Staley, Okada & Partners
|--------------------- | --------------------------
|Vancouver, BC, Canada | STALEY, OKADA & PARTNERS  
|6 February 2006       | CHARTERED ACCOUNTANTS     





[ex1006.gif]





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|                                                         |            
|-------------------------------------------------------- | -----------
|Freegold Ventures Limited
(An Exploration Stage Company) | Statement 1
|Consolidated Balance Sheets                              |            
|As at 31 December                                        |            
|Canadian Funds                                           |            





|                                                          |   |              |   |             
|--------------------------------------------------------- | - | ------------ | - | ------------
|ASSETS                                                    |   | 2005         |   | 2004        
|Current                                                   |   |              |   |             
|Cash and cash equivalents                                 | $ | 544,275      | $ | 167,573     
|Term deposits                                             |   | -            |   | 1,405,949   
|Accounts and advances receivable                          |   | 49,624       |   | 176,273     
|Portfolio investments (Note 3)                            |   | 197,153      |   | 216,711     
|Prepaid expenses and deposits                             |   | 22,380       |   | 34,563      
|                                                          |   | 813,432      |   | 2,001,069   
|Restricted Cash  Flow-through                            |   | -            |   | 894,321     
|Mineral Property Costs- Schedule (Note 4)                 |   | 8,584,178    |   | 7,509,371   
|Property and Equipment(Note 5)                            |   | 34,094       |   | 37,896      
|                                                          | $ | 9,431,704    | $ | 10,442,657  
|                                                          |   |              |   |             
|                                                          |   |              |   |             
|                                                          |   |              |   |             
|LIABILITIES                                               |   |              |   |             
|Current                                                   |   |              |   |             
|Accounts payable                                          | $ | 66,943       | $ | 200,841     
|Accrued liabilities                                       |   | 56,695       |   | 42,985      
|Due to related parties (Note 6a)                          |   | -            |   | 20,960      
|Option payment settlement (Note 4a(ii))                   |   | -            |   | 12,982      
|                                                          |   | 123,638      |   | 277,768     
|                                                          |   |              |   |             
|                                                          |   |              |   |             
|Contingent Liabilities(Note 4g)                           |   |              |   |             
|Commitments(Note 4a(i) and 4d)                            |   |              |   |             
|                                                          |   |              |   |             
|                                                          |   |              |   |             
|SHAREHOLDERS' EQUITY                                      |   |              |   |             
|Share Capital- Statement 2(Note 7)                        |   |              |   |             
|Authorized:                                               |   |              |   |             
|Unlimited common shares without par value                 |   |              |   |             
|Issued, allotted and fully paid:                          |   |              |   |             
|31,562,590 (2004  29,992,205) shares                     |   | 30,714,606   |   | 30,411,391  
|Contributed Surplus                                       |   | 1,072,794    |   | 857,995     
|Deficit Accumulated During Exploration Stage- Statement 2 |   | (22,479,334) |   | (21,104,497)
|                                                          |   | 9,308,066    |   | 10,164,889  
|                                                          | $ | 9,431,704    | $ | 10,442,657  



ON BEHALF OF THE BOARD:



Harry Barr, Director     Bernard Barlin, Director



- See Accompanying Notes -

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- 4 -

|                                                           |             | 
|---------------------------------------------------------- | ----------- | 
|Freegold Ventures Limited
(An Exploration Stage Company)   | Statement 2
|Consolidated Statements of Changes in Shareholders Equity |            
|Canadian Funds                                             |            





|                                           |               |   |            |   |                     |   |                     |   |             | 
|------------------------------------------ | ------------- | - | ---------- | - | ------------------- | - | ------------------- | - | ----------- | 
|                                           | Common
Shares |   | Amount     |   | Contributed Surplus |   | Accumulated
Deficit |   | Total      
|Balance - 31 December 2002                 | 14,367,079    | $ | 23,905,521 | $ | 238,495             | $ | (17,946,772)        | $ | 6,197,244  
|Issuance of shares for:                    |               |   |            |   |                     |   |                     |   |            
|- Cash                                     | 10,924,936    |   | 5,092,738  |   | -                   |   | -                   |   | 5,092,738  
|- Property                                 | 800,000       |   | 336,000    |   | -                   |   | -                   |   | 336,000    
|- Finders fees                            | 174,690       |   | -          |   | -                   |   | -                   |   | -          
|Share issuance costs                       | -             |   | -          |   | -                   |   | (272,171)           |   | (272,171)  
|Stock compensation costs                   | -             |   | -          |   | 261,350             |   | -                   |   | 261,350    
|Loss for the year                          | -             |   | -          |   | -                   |   | (1,177,923)         |   | (1,177,923)
|Balance - 31 December 2003                 | 26,266,705    |   | 29,334,259 |   | 499,845             |   | (19,396,866)        |   | 10,437,238 
|Issuance and allotment of shares for:      |               |   |            |   |                     |   |                     |   |            
|- Cash                                     | 2,738,000     |   | 1,140,100  |   | -                   |   | -                   |   | 1,140,100  
|- Property                                 | 900,000       |   | 303,000    |   | -                   |   | -                   |   | 303,000    
|- Finders fees                            | 87,500        |   | -          |   | -                   |   | -                   |   | -          
|Share issuance costs                       | -             |   | -          |   | -                   |   | (54,910)            |   | (54,910)   
|Stock compensation costs                   | -             |   | -          |   | 358,150             |   | -                   |   | 358,150    
|Future income tax on flow-through (Note 8) | -             |   | (365,968)  |   | -                   |   | -                   |   | (365,968)  
|Loss for the year                          | -             |   | -          |   | -                   |   | (1,652,721)         |   | (1,652,721)
|Balance - 31 December 2004                 | 29,992,205    |   | 30,411,391 |   | 857,995             |   | (21,104,497)        |   | 10,164,889 
|Issuance and allotment of shares for:      |               |   |            |   |                     |   |                     |   |            
|- Cash                                     | 1,445,385     |   | 245,715    |   | -                   |   | -                   |   | 245,715    
|- Property                                 | 75,000        |   | 50,000     |   | -                   |   | -                   |   | 50,000     
|- Performance shares                       | 50,000        |   | 7,500      |   | -                   |   | -                   |   | 7,500      
|Share issuance costs                       | -             |   | -          |   | -                   |   | (6,467)             |   | (6,467)    
|Stock compensation costs                   | -             |   | -          |   | 214,799             |   | -                   |   | 214,799    
|Loss for the year                          | -             |   | -          |   | -                   |   | (1,368,370)         |   | (1,368,370)
|Balance  31 December 2005                 | 31,562,590    | $ | 30,714,606 | $ | 1,072,794           | $ | (22,479,334)        | $ | 9,308,066  









- See Accompanying Notes -

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- 5 -



|                                                         |            
|-------------------------------------------------------- | -----------
|Freegold Ventures Limited
(An Exploration Stage Company) | Statement 3
|Consolidated Statements of Loss                          |            
|Canadian Funds                                           |            





|                                              |  |  |   |                        |   |             |   |            
|--------------------------------------------- |  |  | - | ---------------------- | - | ----------- | - | -----------
|                                              |  |  |   |                        |   |             |   |            
|                                              |  |  |   | Year Ended 31 December
|                                              |  |  |   | 2005                   |   | 2004        |   | 2003       
|General and Administrative Expenses           |  |  |   |                        |   |             |   |            
|Stock-based compensation                      |  |  | $ | 214,799                | $ | 358,150     | $ | 261,350    
|Consulting fees                               |  |  |   | 304,998                |   | 173,124     |   | 297,581    
|Travel                                        |  |  |   | 142,099                |   | 156,151     |   | 97,152     
|Promotion                                     |  |  |   | 92,633                 |   | 143,237     |   | 71,675     
|Management fees                               |  |  |   | 106,818                |   | 124,640     |   | 124,280    
|Director fees                                 |  |  |   | 24,000                 |   | -           |   | -          
|Audit and accounting                          |  |  |   | 81,528                 |   | 76,110      |   | 58,405     
|Wages, salaries and benefits                  |  |  |   | 95,733                 |   | 73,823      |   | 39,432     
|Shareholder relations                         |  |  |   | 83,609                 |   | 61,067      |   | 89,199     
|Transfer and filing fees                      |  |  |   | 46,115                 |   | 52,456      |   | 56,327     
|Rent and utilities                            |  |  |   | 40,015                 |   | 40,015      |   | 40,015     
|Office and miscellaneous                      |  |  |   | 20,277                 |   | 30,175      |   | 41,569     
|Insurance                                     |  |  |   | 39,135                 |   | 26,842      |   | 4,397      
|Legal                                         |  |  |   | 17,050                 |   | 26,776      |   | 31,120     
|Telephone                                     |  |  |   | 10,172                 |   | 18,330      |   | 16,414     
|Equipment rental                              |  |  |   | 1,028                  |   | 12,341      |   | 17,098     
|Amortization                                  |  |  |   | 7,999                  |   | 8,480       |   | 7,577      
|Loss Before the Undernoted                    |  |  |   | (1,328,008)            |   | (1,381,717) |   | (1,253,591)
|                                              |  |  |   |                        |   |             |   |            
|Other Income (Expenses)                       |  |  |   |                        |   |             |   |            
|Gain on sale of portfolio investments         |  |  |   | -                      |   | 30,570      |   | 66,591     
|Interest income                               |  |  |   | 39,476                 |   | 65,250      |   | 19,654     
|Foreign exchange gain (loss), net             |  |  |   | (2,492)                |   | 9,688       |   | 11,760     
|Miscellaneous income                          |  |  |   | 958                    |   | 73,003      |   | -          
|Interest and bank charges                     |  |  |   | (29,373)               |   | (27,107)    |   | (3,620)    
|Write-off of mineral property costs           |  |  |   | (40,020)               |   | (788,376)   |   | (18,717)   
|Write-down of investments                     |  |  |   | (19,559)               |   | -           |   | -          
|Gain on sale of property and equipment        |  |  |   | 10,648                 |   | -           |   | -          
|                                              |  |  |   | (40,362)               |   | (636,972)   |   | 75,668     
|                                              |  |  |   |                        |   |             |   |            
|Loss Before Income Taxes                      |  |  |   | (1,368,370)            |   | (2,018,689) |   | (1,177,923)
|Future income tax recovery (Note 8)           |  |  |   | -                      |   | 365,968     |   | -          
|Loss for the Year                             |  |  | $ | (1,368,370)            | $ | (1,652,721) | $ | (1,177,923)
|                                              |  |  |   |                        |   |             |   |            
|                                              |  |  |   |                        |   |             |   |            
|Loss per Share - Basic and diluted            |  |  | $ | (0.04)                 | $ | (0.06)      | $ | (0.06)     
|                                              |  |  |   |                        |   |             |   |            
|                                              |  |  |   |                        |   |             |   |            
|Weighted Average Number of Shares Outstanding |  |  |   | 30,506,308             |   | 26,847,155  |   | 18,664,625 









- See Accompanying Notes -

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-6 -

|                                                         |            
|-------------------------------------------------------- | -----------
|Freegold Ventures Limited
(An Exploration Stage Company) | Statement 4
|Consolidated Statements of Cash Flows                    |            
|Canadian Funds                                           |            





|                                                           |  |  |   |                        |   |             |   |            
|---------------------------------------------------------- |  |  | - | ---------------------- | - | ----------- | - | -----------
|                                                           |  |  |   |                        |   |             |   |            
|                                                           |  |  |   | Year Ended 31 December
|Cash Resources Provided By (Used In)                       |  |  |   | 2005                   |   | 2004        |   | 2003       
|Operating Activities                                       |  |  |   |                        |   |             |   |            
|Loss for the period                                        |  |  | $ | (1,368,370)            | $ | (1,652,721) | $ | (1,177,923)
|Items not affecting cash:                                  |  |  |   |                        |   |             |   |            
|Amortization                                               |  |  |   | 7,999                  |   | 8,480       |   | 7,577      
|Gain on sale of portfolio investments                      |  |  |   | -                      |   | (30,570)    |   | (66,591)   
|Gain on sale of equipment                                  |  |  |   | (10,648)               |   | -           |   | -          
|Write-down of investments                                  |  |  |   | 19,559                 |   | -           |   | -          
|Write-off of mineral property costs                        |  |  |   | 40,020                 |   | 788,376     |   | 18,717     
|Stock compensation expense included in consulting fees     |  |  |   | 214,799                |   | 358,150     |   | 261,350    
|Consulting fees  performance shares issued                |  |  |   | 7,000                  |   | -           |   | -          
|Future income tax recovery on flow-through shares (Note 8) |  |  |   | -                      |   | (365,968)   |   | -          
|Net changes in non-cash working capital components:        |  |  |   |                        |   |             |   |            
|Accounts and advances receivable                           |  |  |   | 126,649                |   | (154,113)   |   | (12,595)   
|Term deposits                                              |  |  |   | 1,405,949              |   | 100,996     |   | (1,506,945)
|Prepaid expenses and deposits                              |  |  |   | 12,183                 |   | (33,463)    |   | (1,100)    
|Accounts payable                                           |  |  |   | (21,966)               |   | (4,851)     |   | 15,194     
|Accrued liabilities                                        |  |  |   | 13,710                 |   | 27,985      |   | -          
|Due to related parties                                     |  |  |   | (20,960)               |   | 20,960      |   | (9,245)    
|                                                           |  |  |   | 425,924                |   | (936,739)   |   | (2,471,561)
|                                                           |  |  |   |                        |   |             |   |            
|Investing Activities                                       |  |  |   |                        |   |             |   |            
|Purchase of portfolio investments                          |  |  |   | -                      |   | (40,823)    |   | (27,191)   
|Proceeds on sale of portfolio investments                  |  |  |   | -                      |   | 48,260      |   | 93,735     
|Mineral property acquisition costs                         |  |  |   | (173,514)              |   | (280,365)   |   | (241,980)  
|Mineral property deferred exploration costs                |  |  |   | (1,186,119)            |   | (1,770,925) |   | (299,968)  
|Mineral tax credit                                         |  |  |   | 152,873                |   | -           |   | -          
|Option payments received                                   |  |  |   | 30,000                 |   | 104,585     |   | 40,000     
|Advances received from Meridian                            |  |  |   | -                      |   | 986,228     |   | -          
|Purchase of property and equipment                         |  |  |   | (4,197)                |   | (12,549)    |   | (7,861)    
|Proceeds on sale of equipment                              |  |  |   | 10,648                 |   | -           |   | -          
|Option payment liability settlement                        |  |  |   | (12,982)               |   | (29,677)    |   | (28,811)   
|                                                           |  |  |   | (1,183,291)            |   | (995,266)   |   | (472,076)  
|                                                           |  |  |   |                        |   |             |   |            
|Financing Activities                                       |  |  |   |                        |   |             |   |            
|Share capital issued                                       |  |  |   | 245,715                |   | 1,140,100   |   | 5,092,738  
|Share issuance costs                                       |  |  |   | (6,467)                |   | (54,910)    |   | (272,171)  
|Performance shares                                         |  |  |   | 500                    |   | -           |   | -          
|                                                           |  |  |   | 239,748                |   | 1,085,190   |   | 4,820,567  
|                                                           |  |  |   |                        |   |             |   |            
|Net Increase (Decrease) in Cash and Cash Equivalents       |  |  |   | (517,619)              |   | (846,815)   |   | 1,876,930  
|Cash and cash equivalents  - Beginning of year             |  |  |   | 1,061,894              |   | 1,908,709   |   | 31,779     
|Cash and Cash Equivalents - End of Year                    |  |  | $ | 544,275                | $ | 1,061,894   | $ | 1,908,709  
|                                                           |  |  |   |                        |   |             |   |            





- See Accompanying Notes -

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- 7 -



|                                                         |            
|-------------------------------------------------------- | -----------
|Freegold Ventures Limited
(An Exploration Stage Company) | Statement 4
|Consolidated Statements of Cash Flows Continued         |            
|Canadian Funds                                           |            







|                                                                       |  |  |   |                        |   |           |   |          
|---------------------------------------------------------------------- |  |  | - | ---------------------- | - | --------- | - | ---------
|                                                                       |  |  |   |                        |   |           |   |          
|                                                                       |  |  |   | Year Ended 31 December
|Cash Resources Provided By (Used In)                                   |  |  |   | 2005                   |   | 2004      |   | 2003     
|                                                                       |  |  |   |                        |   |           |   |          
|Cash Position Consists of:                                             |  |  |   |                        |   |           |   |          
|Cash and cash equivalents                                              |  |  | $ | 544,275                | $ | 167,573   | $ | 1,158,709
|Restricted cash                                                        |  |  |   | -                      |   | 894,321   |   | 750,000  
|                                                                       |  |  | $ | 544,275                | $ | 1,061,894 | $ | 1,908,709
|                                                                       |  |  |   |                        |   |           |   |          
|                                                                       |  |  |   |                        |   |           |   |          
|                                                                       |  |  |   |                        |   |           |   |          
|Supplemental Disclosure of Non-Cash Investing and Financing Activities |  |  |   |                        |   |           |   |          
|Exploration expenditures included in accounts payable                  |  |  | $ | 66,943                 | $ | 178,875   | $ | 37,522   
|Shares issued or allotted for mineral property                         |  |  | $ | (50,000)               | $ | (303,000) | $ | (436,500)
|Option payments received in shares                                     |  |  | $ | -                      | $ | 17,100    | $ | 32,600   
|Stock-based compensation expense                                       |  |  | $ | (214,799)              | $ | (358,150) | $ | (261,350)
|Performance shares issued for consulting fees                          |  |  | $ | (7,000)                | $ | -         | $ | -        
|Future income tax recovery on flow-through shares (Note 8)             |  |  | $ | -                      | $ | 365,968   | $ | -        







- See Accompanying Notes -

---

- 8 -



|                                                         |         
|-------------------------------------------------------- | --------
|Freegold Ventures Limited
(An Exploration Stage Company) | Schedule
|Consolidated Schedules of Mineral Property Costs        
|For the Years Ended 31 December                          |         
|Canadian Funds                                           |         







|                                      |   |          |   |          
|------------------------------------- | - | -------- | - | ---------
|                                      |   | 2005     |   | 2004     
|Direct                                |   |          |   |          
|Golden Summit Property, Alaska, USA   |   |          |   |          
|Acquisition costs                     |   |          |   |          
|Treasury shares - option payments     | $ | -        | $ | 148,000  
|Cash - option payments                |   | 82,583   |   | 70,266   
|Option payment received from Meridian |   | -        |   | (84,585) 
|                                      |   | 82,583   |   | 133,681  
|Deferred exploration expenditures     |   |          |   |          
|Geological and field expenses         |   | 8,164    |   | 62,591   
|Mineral property fees                 |   | 28,378   |   | 60,535   
|Drilling                              |   | -        |   | 368,840  
|Assaying                              |   | 9,635    |   | -        
|Engineering and consulting            |   | 25,967   |   | -        
|Administration                        |   | -        |   | 22,766   
|Equipment and supplies                |   | -        |   | 32,245   
|Services                              |   | -        |   | 30,912   
|Personnel                             |   | -        |   | 263,763  
|Management fees                       |   | 18,819   |   | 73,003   
|Amounts received from Meridian        |   | -        |   | (986,228)
|Amounts recovered                     |   | -        |   | (9,946)  
|                                      |   | 90,963   |   | (81,519) 
|Total                                 |   | 173,546  |   | 52,162   
|                                      |   |          |   |          
|Union Bay Property, Alaska, USA       |   |          |   |          
|Shares - option payments received     |   | -        |   | (17,100) 
|Cash - option payments received       |   | (30,000) |   | (20,000) 
|Total                                 |   | (30,000) |   | (37,100) 
|Rob Property, Alaska, USA             |   |          |   |          
|Acquisition costs                     |   |          |   |          
|Cash - option payments                |   | 21,175   |   | 16,750   
|                                      |   | 21,175   |   | 16,750   
|Deferred exploration expenditures     |   |          |   |          
|Mineral property fees                 |   | 16,674   |   | 18,261   
|Engineering and consulting            |   | 5,496    |   | 10,338   
|Geological and field expenses         |   | 2,304    |   | 2,709    
|Wages                                 |   | 159      |   | 3,571    
|                                      |   | 24,633   |   | 34,879   
|Total                                 |   | 45,808   |   | 51,629   
|                                      |   |          |   |          
|Balance Forward                       | $ | 189,354  | $ | 66,691   









- See Accompanying Notes -

---

- 9 -



|                                                            |         
|----------------------------------------------------------- | --------
|Freegold Ventures Limited
(An Exploration Stage Company)    | Schedule
|Consolidated Schedules of Mineral Property Costs- Continued
|For the Years Ended 31 December                             |         
|Canadian Funds                                              |         
|                                                            |         









|                                   |   |         |   |        
|---------------------------------- | - | ------- | - | -------
|                                   |   | 2005    |   | 2004   
|Balance Carried Forward            | $ | 189,354 | $ | 66,691 
|Yeager Property, Alaska, USA       |   |         |   |        
|Acquisition costs                  |   |         |   |        
|Treasury shares - option payments  |   | -       |   | 126,000
|Cash - option payments             |   | -       |   | 13,400 
|Total                              |   | -       |   | 139,400
|                                   |   |         |   |        
|Rainbow Hill, Alaska, USA          |   |         |   |        
|Acquisition costs                  |   |         |   |        
|Treasury shares  option payments  |   | -       |   | 14,000 
|Cash  option payments             |   | -       |   | 40,482 
|                                   |   | -       |   | 54,482 
|Deferred exploration expenditures  |   |         |   |        
|Geological and field expenses      |   | -       |   | 376    
|Mineral property fees              |   | -       |   | 11,877 
|Wages                              |   | -       |   | 1,968  
|Engineering and consulting         |   | -       |   | 4,810  
|                                   |   | -       |   | 19,031 
|Total                              |   | -       |   | 73,513 
|                                   |   |         |   |        
|Liberty Bell Property, Alaska, USA |   |         |   |        
|Deferred exploration expenditures  |   |         |   |        
|Mineral property fees              |   | -       |   | 3,904  
|Engineering and consulting         |   | 1,258   |   | 553    
|                                   |   | 1,258   |   | 4,457  
|Total                              |   | 1,258   |   | 4,457  
|Almaden Property, Idaho, USA       |   |         |   |        
|Acquisition costs                  |   |         |   |        
|Cash - option payments             |   | 24,755  |   | 21,094 
|                                   |   | 24,755  |   | 21,094 
|Deferred exploration expenditures  |   |         |   |        
|Mineral property fees              |   | 20,379  |   | 22,909 
|Geological and field expenses      |   | 3,010   |   | 3,230  
|Engineering and consulting         |   | 49,948  |   | -      
|                                   |   | 73,337  |   | 26,139 
|Total                              |   | 98,092  |   | 47,233 
|                                   |   |         |   |        
|Balance Forward                    | $ | 288,704 | $ | 331,294





- See Accompanying Notes -

---

- 10 -



|                                                            |         
|----------------------------------------------------------- | --------
|Freegold Ventures Limited
(An Exploration Stage Company)    | Schedule
|Consolidated Schedules of Mineral Property Costs- Continued
|For the Years Ended 31 December                             |         
|Canadian Funds                                              |         



|                                              |   |           |   |          
|--------------------------------------------- | - | --------- | - | ---------
|                                              |   | 2005      |   | 2004     
|Balance Carried Forward                       | $ | 288,704   | $ | 331,294  
|                                              |   |           |   |          
|Eskay Rift Property, British Columbia, Canada |   |           |   |          
|Acquisition costs                             |   |           |   |          
|Staking costs                                 |   | -         |   | 47,903   
|                                              |   | -         |   | 47,903   
|Deferred exploration expenditures             |   |           |   |          
|Geological and field expenses                 |   | 3,150     |   | 74,583   
|Mineral Property fees                         |   | 1,140     |   | -        
|Assaying                                      |   | -         |   | 24,556   
|Engineering and consulting                    |   | -         |   | 75,928   
|                                              |   | 4,290     |   | 175,067  
|Total                                         |   | 4,290     |   | 222,970  
|                                              |   |           |   |          
|Duke Property, British Columbia, Canada       |   |           |   |          
|Acquisition costs                             |   |           |   |          
|Cash - option payments                        |   | -         |   | 10,000   
|Shares - option payments                      |   | 35,000    |   | -        
|                                              |   | 35,000    |   | 10,000   
|Deferred exploration expenditures             |   |           |   |          
|Geological and field expenses                 |   | 911       |   | 11,574   
|Geophysics                                    |   | 45,027    |   | -        
|Assaying                                      |   | 1,117     |   | -        
|Engineering and consulting                    |   | 31,799    |   | -        
|Drilling                                      |   | 131,628   |   | 64,858   
|                                              |   | 210,482   |   | 76,432   
|Total                                         |   | 245,482   |   | 86,432   
|                                              |   |           |   |          
|Grew Creek Property, Yukon, Canada            |   |           |   |          
|Acquisition costs                             |   |           |   |          
|Cash - option payments                        |   | 45,000    |   | 40,000   
|Shares  option payments                      |   | 15,000    |   | 15,000   
|Staking costs                                 |   | -         |   | 20,470   
|                                              |   | 60,000    |   | 75,470   
|Deferred exploration expenditures             |   |           |   |          
|Geological and field expenses                 |   | 55,467    |   | 136,519  
|Geophysics                                    |   | 196,384   |   | -        
|Drilling                                      |   | 280,647   |   | 389,780  
|Assaying                                      |   | 40,495    |   | 19,887   
|Engineering and consulting                    |   | 96,231    |   | 64,385   
|Mineral tax credit                            |   | (152,873) |   | -        
|                                              |   | 516,351   |   | 610,571  
|Total                                         |   | 576,351   |   | 686,041  
|                                              |   |           |   |          
|Balance Forward                               | $ | 1,114,827 | $ | 1,326,737





- See Accompanying Notes -

---

- 11 -



|                                                            |         
|----------------------------------------------------------- | --------
|Freegold Ventures Limited
(An Exploration Stage Company)    | Schedule
|Consolidated Schedules of Mineral Property Costs- Continued
|For the Years Ended 31 December                             |         
|Canadian Funds                                              |         
|                                                            |         









|                                              |   |           |   |          
|--------------------------------------------- | - | --------- | - | ---------
|                                              |   | 2005      |   | 2004     
|Balance Carried Forward                       | $ | 1,114,827 | $ | 1,326,737
|                                              |   |           |   |          
|General Exploration and Property Examinations |   |           |   |          
|Engineering and consulting                    |   | -         |   | 51,251   
|Geological and field expenses                 |   | -         |   | 9,742    
|Assaying                                      |   | -         |   | -        
|Total                                         |   | -         |   | 60,993   
|                                              |   |           |   |          
|Costs for the Year                            |   | 1,114,827 |   | 1,387,730
|Balance - Beginning of year                   |   | 7,509,371 |   | 6,910,017
|Write-off of mineral property costs           |   | (40,020)  |   | (788,376)
|Balance - End of Year                         | $ | 8,584,178 | $ | 7,509,371







- See Accompanying Notes -

---

- 12 -



|                                                         | 
|-------------------------------------------------------- | 
|Freegold Ventures Limited
(An Exploration Stage Company) | 
|Notes to Consolidated Financial Statements               | 
|31 December 2005 and 2004                                | 
|Canadian Funds                                           | 
|                                                         | 



---



1.

Significant Accounting
Policies



a)

Consolidation



These consolidated financial statements include the accounts of the Companys wholly owned subsidiaries, Freegold Recovery, Inc. USA, Ican Minerals, Inc. ("Ican") and Canu Resources, Inc. ("Canu").  All subsidiaries are U.S. corporations which are involved in mineral property exploration.  They have been accounted for under the purchase method.



b)

Cash and Cash Equivalents



For purposes of reporting cash flows, the Company considers cash and cash equivalents to include amounts held in banks and highly liquid investments with remaining maturities at point of purchase of 90 days or less.  The Company places its cash and cash equivalents with institutions of high-credit worthiness.



c)

Portfolio Investments



Portfolio investments are recorded at the lower of cost or market value.  Portfolio investments are written down to market value when the decline in market value is deemed to be other than temporary.



d)

Mineral Properties and Deferred Exploration Expenditures



The Company is in the process of exploring its mineral properties and has not yet determined whether these properties contain ore reserves that are economically recoverable.



Mineral exploration and development costs are capitalized on an individual prospect basis until such time as an economic ore body is defined or the prospect is abandoned.  Costs for a producing prospect are amortized on a unit-of-production method based on the estimated life of the ore reserves, while those costs for the prospects abandoned are written off.



The recoverability of the amounts capitalized for the undeveloped mineral properties is dependent upon the determination of economically recoverable ore reserves, confirmation of the Company's interest in the underlying mineral claims, the ability to obtain the necessary financing to complete their development, and future profitable production or proceeds from the disposition thereof.



All mineral properties are assessed on a regular basis to determine whether permanent impairment of value has occurred.  A property will be written off at the time that exploration results indicate no further work is warranted.  A property will be written down to net realizable value of proven and probable reserves, as reserve values are determined.



Title to mineral properties involves inherent risks due to the difficulties of determining the validity of certain claims as well as the potential for problems arising from the frequently unreliable conveyancing history characteristic of many mineral properties.  The Company has investigated title to all of its mineral properties and, to the best of its knowledge, all of its properties are in good standing.



---

- 13 -



|                                                         | 
|-------------------------------------------------------- | 
|Freegold Ventures Limited
(An Exploration Stage Company) | 
|Notes to Consolidated Financial Statements               | 
|31 December 2005 and 2004                                | 
|Canadian Funds                                           | 
|                                                         | 



---

1.

Significant Accounting Policies - Continued



e)

Asset Retirement Obligation



Effective 1 January 2004, the Company adopted the recommendations of CICA Handbook Section 3110, Asset Retirement Obligations.  This new section requires recognition of a legal liability for obligations relating to retirement of property, plant, and equipment, and arising from the acquisition, construction, development, or normal operation of those assets.  Such asset retirement cost must be recognized at fair value when a reasonable estimate of fair value can be estimated, in the period in which it is incurred, added to the carrying value of the asset, and amortized into income on a systematic basis over its useful life.



There is no material impact on the financial statements resulting from the adoption of Section 3110 either in the current or prior years presented.



f)

Amortization



The Company provides for amortization on its property, plant and equipment at 20% - 45% on a declining balance method.  One half of the rate is applied in the year of acquisition.



g)

Share Capital



i)

The proceeds from the exercise of stock options and warrants are recorded as share capital in the amount for which the option or warrant enabled the holder to purchase a share in the Company.



ii)

Share capital issued for non-monetary consideration is recorded at an amount based on fair market value.



h)

Stock-Based Compensation



All stock-based awards made to employees and non-employees are measured and recognized using a fair value based method.  For employees, the fair value of the options at the date of the grant is accrued and charged to operations, with the offsetting credit to contributed surplus, on a straight-line basis over the vesting period.  If and when the stock options are ultimately exercised, the applicable amounts of contributed surplus are transferred to share capital. For non-employees, the fair value of the options is measured on the earlier of the date at which the counterparty performance is complete or the date the performance commitment is reached or the date at which the equity instruments are granted if they are fully vested and non-forfeitable.



i)

Loss per Share



Basic earnings per share is computed by dividing income available to common shareholders by the weighted average number of common shares outstanding during the year.  The computation of diluted earnings per share assumes the conversion, exercise or contingent issuance of securities only when such conversion, exercise or issuance would have a dilutive effect on earnings per share.  The dilutive effect of convertible securities is reflected in diluted earnings per share by application of the "if converted" method.  The dilutive effect of outstanding options and warrants and their equivalents is reflected in diluted earnings per share by application of the treasury stock method.





---

- 14 -



|                                                         | 
|-------------------------------------------------------- | 
|Freegold Ventures Limited
(An Exploration Stage Company) | 
|Notes to Consolidated Financial Statements               | 
|31 December 2005 and 2004                                | 
|Canadian Funds                                           | 
|                                                         | 



---

1.

Significant Accounting Policies - Continued



j)

Income Taxes



The asset and liability method is used for determining future income taxes.  Under the asset and liability method, the change in the net future income tax asset or liability is included in income.  The income tax effects of differences in the periods when revenue and expenses are recognized, in accordance with Company accounting practices, and the periods they are recognized for income tax purposes are reflected as future income tax assets or liabilities.  Future income tax assets and liabilities are measured using the statutory income tax rates which are expected to apply to taxable income in the years in which temporary differences are expected to be recovered or settled.



k)

Foreign Currency Translation



The accounts of the Company's foreign operations have been translated into Canadian dollars as follows:



·

Monetary assets and liabilities at year-end rates;

·

All other assets and liabilities at historical rates; and

·

Revenue, expense, exploration and development items at the average rate of exchange prevailing during the year.



Exchange gains and losses arising from these transactions are reflected in income or expense in the year that they occur.



l)

Management's Estimates



The preparation of financial statements in conformity with Canadian generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the dates of the financial statements and the reported amounts of revenues and expenses during the reported periods.  Actual results could differ from those estimates.



m)

Flow-Through Shares



During the prior year, the Company adopted the new recommendations of the Emerging Issues Committee relating to flow-through shares effective for all flow-through agreements dated after 
19 March 2004.  Canadian Income Tax Legislation permits an enterprise to issue securities referred to as flow-through shares, whereby the investor can claim the tax deductions arising from the renunciation of the related resource expenditures.  When resource expenditures are renounced to the investors and the Company has reasonable assurance that the expenditures will be completed, future income tax liabilities are recognized (renounced expenditures multiplied by the effective tax rate) thereby reducing share capital.



If a company has sufficient unused tax losses and deductions (losses) to offset all or part of the future income tax liabilities and no future income tax assets have been previously recognized on such losses, a portion of such unrecognized losses (losses multiplied by the effective corporate tax rate) is recorded as income up to the amount of the future income tax liability that was previously recognized on the renounced expenditures.







---

- 12 -

|                                                         | 
|-------------------------------------------------------- | 
|Freegold Ventures Limited
(An Exploration Stage Company) | 
|Notes to Consolidated Financial Statements               | 
|31 December 2005 and 2004                                | 
|Canadian Funds                                           | 
|                                                         | 



---



n)

Variable Interest Entities  Change in Accounting Policy



The Accounting Standards Board (AcSB) issued Accounting Guideline AcG 15 Consolidation of Variable Interest Entities, to harmonize the Guideline with the equivalent FASB Interpretation No. 46R, Consolidation of Variable Interest Entities (VIE).  The Guideline provides criteria for identifying VIEs and further criteria for determining what entity, if any, should consolidate them.  The Guideline is effective for annual and interim periods beginning on or after November 1, 2005, and upon adoption, will not materially impact the Companys results of operations and financial position.



o)

Mineral Exploration Tax Credits (METC)



The Company recognizes METC amounts and applies those amounts against deferred exploration costs when the Companys application for tax credits is approved by Canada Revenue Agency.  Assessments, if any for taxes, penalties and interest under Part XII.6 under section 2.11.91 of the Income Tax Act are deducted from the tax credits when assessed.





2.

Fair Value of Financial Instruments



The Companys financial instruments consist of cash and cash equivalents, term deposits, accounts and advances receivable, portfolio investments, restricted cash flow-through, accounts payable, accrued liabilities and amounts due to related parties.  Unless otherwise noted, it is managements opinion that the Company is not exposed to significant interest, currency or credit risks arising from the financial instruments.  The fair value of these financial instruments approximates their carrying value due to their short-term maturity or capacity of prompt liquidation.



The Company is exposed to currency risk on its acquisition and exploration expenditures on its US properties since it has to convert Canadian dollars raised through equity financing in Canada to US dollars.  The Companys expenditures will be negatively impacted if the US dollar increase versus the Canadian dollar.



---

- 16 -



|                                                         | 
|-------------------------------------------------------- | 
|Freegold Ventures Limited
(An Exploration Stage Company) | 
|Notes to Consolidated Financial Statements               | 
|31 December 2005 and 2004                                | 
|Canadian Funds                                           | 
|                                                         | 



---

3.

Portfolio Investments



Details are as follows:

|                                         |  |                  |         |      |            |   |              |   |            | 
|---------------------------------------- |  | ---------------- | ------- | ---- | ---------- | - | ------------ | - | ---------- | 
|                                         |  | 2005             |         | 2004
|                                         |  | Number of
Shares | % Owned |      | Book Value |   | Market Value |   | Book Value
|Pacific North West Capital Corp. (PFN) |  | 400,400          | 1.14%   | $    | 120,120    | $ | 120,120      | $ | 139,679   
|CanAlaska Ventures Ltd. (CVV)          |  | 332,400          | 0.54%   |      | 77,033     |   | 142,932      |   | 77,032    
|                                         |  |                  |         | $    | 197,153    | $ | 263,052      | $ | 216,711   



The above investments have been accounted for using the cost method.  PFN, CVV and the Company are companies with certain directors in common.  During the year, the Company had a net gain on sale of investments of $Nil (2004 - $30,570) of which a gain of $Nil (2004 - $15,420) was due to the sale of CVV shares and a gain of $Nil (2004 - $15,150) was due to the sale of other shares.  During the year, the Company had a write down in investments of $19,559 related to PFN shares. The maximum percentage owned of PFN or CVV by the Company at any time during the year was less than 2% (2004  less than 2%).





4.

Mineral Property Costs



Details are as follows:



|                       |   |             |                      |                                     |   |            |   |            |   |          
|---------------------- | - | ----------- | -------------------- | ----------------------------------- | - | ---------- | - | ---------- | - | ---------
|                       |   | Acquisition | Deferred Exploration | Write-off of Mineral Property Costs |   | Total
2005 |   | Total
2004
|Golden Summit Property | $ | 384,867     | $                    | 4,724,811                           | $ | -          | $ | 5,109,678  | $ | 4,936,132
|Union Bay Property     |   | 110,658     |                      | 57,305                              |   | -          |   | 167,963    |   | 197,963  
|Rob Property           |   | 496,250     |                      | 152,909                             |   | -          |   | 649,159    |   | 603,351  
|Liberty Bell Property  |   | 30,015      |                      | 5,715                               |   | (35,730)   |   | -          |   | 34,472   
|Almaden Property       |   | 670,905     |                      | 144,968                             |   | -          |   | 815,873    |   | 717,781  
|PGM Properties         |   | 98,650      |                      | 148,549                             |   | -          |   | 247,199    |   | 247,199  
|Eskay Rift Property    |   | -           |                      | 4,290                               |   | (4,290)    |   | -          |   | -        
|Grew Creek Property    |   | 135,470     |                      | 1,126,922                           |   | -          |   | 1,262,392  |   | 686,041  
|Duke Property          |   | 45,000      |                      | 286,914                             |   | -          |   | 331,914    |   | 86,432   
|                       |   |             |                      |                                     |   |            |   |            |   |          
|                       | $ | 1,971,815   | $                    | 6,652,383                           | $ | (40,020)   | $ | 8,584,178  | $ | 7,509,371







---

- 17 -



|                                                         | 
|-------------------------------------------------------- | 
|Freegold Ventures Limited
(An Exploration Stage Company) | 
|Notes to Consolidated Financial Statements               | 
|31 December 2005 and 2004                                | 
|Canadian Funds                                           | 
|                                                         | 



---

4.

Mineral Property Costs - Continued



a)

Golden Summit Property, Alaska, USA



By various agreements dated from 1 December 1992 to 9 May 1997, the Company acquired from Fairbanks Exploration Inc. (FEI) certain mineral claims in the Fairbanks Mining District of Alaska known as the Golden Summit Property subject to a 7% working interest held in trust for FEI by the Company.  The property is controlled by the Company through long-term lease agreements or outright claim ownership.  As consideration for the property, the Company agreed to:



·

Issue 25,000 shares of the Company (issued in 1997);

·

Issue 25,000 shares of the Company for each US$1,000,000 in expenditures spent on the property including all underlying lease obligations since 9 May 1997 to an aggregate of 125,000 shares.  As at 31 December 2005, the Company had spent approximately US$4,324,000 on the property since 9 May 1997.  Since the Company has expended the next US$1,000,000, the Company issued 25,000 shares of the Company's common stock on 30 March  2005 (25,000 shares issued in 1998, 25,000 shares issued in 1999, 25,000 shares issued in 2001);

·

Expend a minimum of US$1,767,000 of exploration expenditures on the property before 2000 (completed); and

·

Make all required lease payments to underlying lessors(Note 4a(i-iii)).



The Company will fund 100% of the project until commercial production is achieved at which point FEI will be required to contribute 7% of any approved budget.  The property is subject to a 2% Net Smelter Royalty (NSR).  The Company has a 30 day right of first refusal in the event that the 7% working interest of FEI or the NSR is to be sold.  The Company can also purchase the NSR at any time following commercial production, based on its net present value as determined by mineable reserves.



Underlying Leases



(i)

Keystone Claims



By agreement dated 17 May 1992 and amended 15 May 2000 and 30 November 2001, the Company agreed to make advance royalty payments as follows:



|                                  |   |           |  |                                                                      
|--------------------------------- | - | --------- |  | ---------------------------------------------------------------------
|                                  |   | US Funds  |  |                                                                      
|1992  1998 (US$15,000 per year)  | $ | 105,000   |  | (paid)                                                               
|2000                              | $ | 50,000    |  | ($25,000 paid in cash and $25,000 with 58,898 treasury shares issued)
|2001                              | $ | *50,000   |  | (treasury shares issued)                                             
|2002                              | $ | 50,000    |  | (paid)                                                               
|2003                              | $ | 50,000    |  | (paid)                                                               
|2004                              | $ | 50,000    |  | (paid)                                                               
|2005                              | $ | 50,000    |  | (paid)                                                               
|2006                              | $ | 50,000    |  |                                                                      
|2007  2019 (US$150,000 per year) | $ | 1,950,000 |  |                                                                      



*  This advance royalty payment was settled by issuing 250,000 shares.  These shares were issued during the year ended 31 December 2002.





---

- 18 -



|                                                         | 
|-------------------------------------------------------- | 
|Freegold Ventures Limited
(An Exploration Stage Company) | 
|Notes to Consolidated Financial Statements               | 
|31 December 2005 and 2004                                | 
|Canadian Funds                                           | 
|                                                         | 



---

4.

Mineral Property Costs - Continued



a)

Golden Summit Property, Alaska, USA - Continued



Underlying Leases - Continued



(i)

Keystone Claims- Continued



An amendment signing bonus of US$50,000 was paid 1 October 2000.  Until 2006, if the Company terminates the agreement prior to 1 April of any year, the Company's obligation will be the completion of any reclamation work.  If the Company terminates the agreement after 1 April of any year, all obligations must be fulfilled for the calendar year in which the option is terminated.  Advance royalty payments may be made in cash, shares or a combination thereof.



During the exploration stage and before commencement of production, the Company is required to incur minimum exploration expenditures of US$50,000 per year from 2000 to 2006 if the average price of gold exceeds US$300 per ounce in the last quarter of each proceeding year, therefore a minimum expenditure of US$50,000 was required for 2005, as the average price of gold during the last three months of 2004 was above US$300 an ounce.  The work commitment for 2005 was completed. If the work commitment is not met, in whole or part, in any calendar year, the Company must pay the lessor the difference between the value of the work incurred and US$50,000.



The leased property is subject to a 3% NSR.



(ii)

Vetter / McKibben Claims



By lease agreement dated 1 July 1986 and amended 23 July 1991 and 22 September 1997, the Company agreed to make annual advance royalty payments from 1986 to 2003.



During the 1999 fiscal year, the Company terminated the lease agreement and accordingly all direct acquisition costs were written off.  The lessors made a claim against the Company for US$250,000 plus costs and punitive damages, being the payment due under the lease for 1999.  During the 2001 fiscal year, the dispute was settled.  The Company agreed to pay US$160,000 of which US$100,000 was paid during 2001.  The remaining US$60,000 was paid over the next four years commencing in fiscal 2002.  As at 31 December 2005, this amount had been paid in full.



(iii)

Newsboy Claims



By lease agreement dated 28 February 1986 and amended 26 March 1996, the Company assumed the obligation to make advance royalty payments of US$2,500 per year until 1996 (paid) and US$5,000 per year until 2006 (paid to date).  The claims are subject to a 4% NSR which the Company has an option to purchase for the greater of the current value or US$1,000,000 less all advance royalty payments made.





---

- 19 -



|                                                         | 
|-------------------------------------------------------- | 
|Freegold Ventures Limited
(An Exploration Stage Company) | 
|Notes to Consolidated Financial Statements               | 
|31 December 2005 and 2004                                | 
|Canadian Funds                                           | 
|                                                         | 



---

4.

Mineral Property Costs - Continued



a)

Golden Summit Property, Alaska, USA - Continued



Underlying Leases - Continued



(iv)

Tolovana Claims



In May 2004, the Company entered into an agreement with a third party (the Seller) whereby the seller transferred 100% of the rights via Quit Claim Deed to a 20-year lease on the Tolovana Gold Property in Alaska.



Under the terms of the agreement, the Company assumed all of the Sellers obligations under the lease, which include making annual payments of $1,000 per month for the first 23 months increasing to $1,250 per month for the 24th to the 48th months and increasing to $1,500 after the 49th month and for the duration of the lease.



The property is subject to a sliding scale NSR as follows: 1.5% NSR if gold is below US$300, in the event the price of gold is between US$300 to US$400, a 2.0% NSR is in effect.  In the event that the price of gold is above US$400, the property is subject to a 3.0% NSR.  In addition, the Company has made a cash payment of US$7,500 on signing and issued 400,000 shares on regulatory approval. An additional 200,000 shares are to be issued within 30 days of a minimum 200,000 ounce mineral resource being calculated on the property if the resource is established in five years or less from the date of the agreement.



(v)

Meridian Gold Option and Joint Venture



During the prior year, the Company entered into an option and joint venture agreement with Meridian Gold Company (Meridian) with regard to the Gold Summit Project.



During the year, Meridian terminated the agreement.  The 200,000 shares and $75,000 to be subscribed/received on or before 31 December 2004 was never subscribed/received.



b)

Yeager Property, Alaska, USA



Pursuant to an agreement dated 9 July 2002 and amended 31 March 2004 and 15 December 2004, the Company had the option to earn a 100% interest in certain mineral claims, in the Fairbanks Mining District, Alaska, known as the Yeager Property.



During the prior year, management decided not to pursue further exploration on the property.  Accordingly, the associated acquisition and deferred exploration expenditures were written-off during the prior year.



---

- 20 -



|                                                         | 
|-------------------------------------------------------- | 
|Freegold Ventures Limited
(An Exploration Stage Company) | 
|Notes to Consolidated Financial Statements               | 
|31 December 2005 and 2004                                | 
|Canadian Funds                                           | 
|                                                         | 



---

4.

Mineral Property Costs- Continued



c)

Union Bay Property, Alaska, USA



The Company acquired certain mineral claims known as the Union Bay Property, in Alaska, USA, by way of staking.



(i)

By agreement dated 1 October 2002 and amended 2 April 2003, the Company granted to Pacific North West Capital Corp. (PFN), a company with certain directors and officers in common, an option to earn a 70% interest in the property.



To earn a 50% interest, PFN, at its option, must subscribe to purchase a private placement of $165,000 (completed in the 2002 fiscal year) and must at its option make cash payments, issue shares and incur exploration expenditures as follows:



|                                                  |   |          |        |   |                         
|------------------------------------------------- | - | -------- | ------ | - | ------------------------
|                                                  |   | Payments | Shares |   | Exploration Expenditures
|- Within 5 days from approval date (received)     | $ | -        | 30,000 | $ | -                       
|- On or before 1 July 2003 (received / completed) |   | 20,000   | -      |   | 30,000                  
|- On or before 30 January 2004 (received)         |   | -        | 30,000 |   | -                       
|- On or before 1 July 2004 (received / completed) |   | 20,000   | -      |   | 30,000                  
|- On or before 1 July 2005 (received / completed) |   | 30,000   | -      |   | 340,000                 
|- On or before 1 July 2006                        |   | 30,000   | -      |   | 600,000                 
|                                                  | $ | 100,000  | 60,000 | $ | 1,000,000               



Upon vesting with a 50% interest, PFN may elect within 45 days to increase its interest to 60% by completing a feasibility study within 12 months of having vested.  Upon vesting with a 60% interest, PFN may elect within 90 days to earn a 70% interest in the property by placing the property into commercial production within two years of the date of election.  In the event the bankable feasibility study indicates an internal rate of return in excess of 15%, PFN agrees to make cash payments in the amount of $50,000 per year for each year the project is delayed from being placed into commercial production.



PFN is responsible for the annual rents due on the property.  These rental payments shall be made on or before 1 August of each year the agreement is in effect.







---

- 21 -



|                                                         | 
|-------------------------------------------------------- | 
|Freegold Ventures Limited
(An Exploration Stage Company) | 
|Notes to Consolidated Financial Statements               | 
|31 December 2005 and 2004                                | 
|Canadian Funds                                           | 
|                                                         | 



---

4.

Mineral Property Costs- Continued



c)

Union Bay Property, Alaska, USA- Continued



(i)

- Continued



Under an amendment dated 2 April 2003, in the event a major mining company elects to participate in the project before PFN vests with a 50% interest, and subsequently vests with an interest in the property, the Company and PFN shall each, at the time of vesting, be deemed to hold a 50% interest in the property and PFN shall relinquish its right to earn a 60% or 70% interest.  PFN will then issue shares to the value of $100,000 to the Company within 15 days of PFN becoming vested. The shares will be issued at a price equivalent to the volume weighted five-day average price preceding the vesting date.  In addition, PFN will receive 100% of the first US$60,000 received in cash payments from any third party agreement with subsequent payments divided equally between the Company and PFN.



(ii)

Joint Venture Agreement



By agreement dated 21 May 2003 with Lonmin PLC (Lonmin) (a major mining company), the Company and PFN granted Lonmin an option to earn up to a 70% interest in the Union Bay platinum project.  Under the agreement, Lonmin was required to incur, at its option, exploration expenditures of US$815,000 (completed) in 2003 and a minimum of US$1,000,000 per year in 2004 (completed), 2005(completed), and 2006.  US$750,000 for each year thereafter. PFN is the operator of the project during the exploration phase.



On 26 August 2005, Lonmin advised that it will not fund further exploration on the project. PFN has notified the Company that it intends to retain the project by reducing the property size to encompass the remaining prospective target areas identified to date.



d)

Rob Property, Alaska, USA



By agreement dated 9 July 2002 the Company has the option to earn a 100% interest in a 20-year lease on certain mineral claims located in the Good Paster Mining district, Alaska, known as the Rob Property.



As consideration, the Company shall, at its option, make the following payments and issue shares as follows:



|                                                              |   |          |          
|------------------------------------------------------------- | - | -------- | ---------
|                                                              |   | US Funds | Shares   
|- Upon execution of the agreement (paid)                      | $ | 7,000    | -        
|- Earlier of 1 September 2002 and approval date (paid/issued) |   | 7,000    | 500,000  
|- On or before 1 July 2003 (paid/issued)                      |   | 2,500    | 500,000  
|- On or before 1 July 2004 (paid)                             |   | 2,500    | -        
|- On or before 1 July 2005 (paid)                             |   | 2,500    | -        
|- On or before 1 July 2006                                    |   | 2,500    | -        
|- On or before 1 July 2007                                    |   | 2,500    | -        
|- On or before 1 July 2008                                    |   | 2,500    | -        
|                                                              | $ | 29,000   | 1,000,000



---

- 22 -



|                                                         | 
|-------------------------------------------------------- | 
|Freegold Ventures Limited
(An Exploration Stage Company) | 
|Notes to Consolidated Financial Statements               | 
|31 December 2005 and 2004                                | 
|Canadian Funds                                           | 
|                                                         | 



---

4.

Mineral Property Costs- Continued



d)

Rob Property, Alaska, USA- Continued



The Company is also responsible to make payments for an underlying agreement with the vendor as follows:



|                                      |   |         
|------------------------------------- | - | --------
|                                      |   | US Funds
|- On or before 1 July 2003 (paid)     | $ | 10,000  
|- On or before 1 July 2004 (paid)     |   | 10,000  
|- On or before 1 December 2005 (paid) |   | 15,000  
|- On or before 1 December 2006        |   | 20,000  
|- On or before 1 December 2007        |   | 25,000  
|                                      | $ | 80,000  



In addition, the Company is also required to expend a total of US$1,000,000 in exploration expenditures on the property prior to 31 December 2008 ($96,737 spent to date).  Minimum work in any given year shall not be less than US$10,600 per year.  If the Company fulfills this US$1,000,000 exploration expenditure requirement, an additional 500,000 shares of the Company must be issued.



Commencing 1 December 2008 annual advance royalty payments must be made depending on the average gold price for the proceeding year as follows:



|                     |                       
|-------------------- | ----------------------
|Gold Price Per Ounce | Annual Royalty Payment
|Less than US$350     | US$30,000             
|US$350 to US$400     | US$40,000             
|More than US$400     | US$50,000             



The vendor shall retain a NSR, which shall vary according to the London gold price for the preceding six-month period as follows:  1% for gold prices less than US$300, 1.5% for gold prices between US$301 and US$350, and 2% for gold prices greater than US$350.  The NSR may be purchased for US$500,000 for each percentage point.  An undivided 100% interest in the property may be purchased for US$1,500,000.



In addition, an intermediary vendor retains a 1% NSR which the Company may purchase for US$1,000,000.



---

- 23 -



|                                                         | 
|-------------------------------------------------------- | 
|Freegold Ventures Limited
(An Exploration Stage Company) | 
|Notes to Consolidated Financial Statements               | 
|31 December 2005 and 2004                                | 
|Canadian Funds                                           | 
|                                                         | 



---

4.

Mineral Property Costs- Continued



e)

Rainbow Hill Property, Alaska, USA



By agreement dated 28 August 2003 the Company could acquire, from CVV, a company with certain directors and officers in common, up to a 65% interest in certain mineral claims known as the Rainbow Hill Property located in Valdez Mining District central Alaska.



During the prior year, the Company terminated this agreement.  The $30,000 cash payment due on 31 December 2004 was not paid.  Accordingly, all costs associated with the property have been written off.



f)

Liberty Bell Property, Alaska, USA



The Company acquired by staking 48 one hundred sixty-acre state mining claims plus 46 forty-acre state mining claims in the Bonnifield Mining District, Nenana Recording District, Alaska.



During the year, management has decided not to pursue further exploration on the property.  Accordingly, the associated acquisition and deferred exploration expenditures have been written-off.



g)

Almaden Property, Washington County, Idaho, USA



By agreement dated 13 December 1995 and various amendments, the Company purchased a 60% interest in certain mineral claims located in Washington County, Idaho, known as the Almaden Property.  As consideration, the Company paid US$250,000 to underlying optionors, issued 4,621,714 common shares and completed a feasibility study.



Pursuant to the Company submitting a feasibility report, the Company entered into a joint venture agreement whereby 60% of all further costs spent on the property are the responsibility of the Company.  The joint venture assumed the requirements to pay US$250,000 to underlying optionors (paid), US$4 per month for each acre acquired (approximately US$10,000 per year [paid to date]) and US$24,000 per year (US$6,000 annually [paid to date] and the remaining US$18,000 is deferred for payment upon commencement of commercial production).  The US$18,000 annual contingent liability has not been recorded in these financial statements due to the uncertainty of going into commercial production.  This accumulated contingent liability for lease payments due on commencement of commercial production is US$432,000.



By agreement dated 17 April 2001, the Company acquired the remaining 40% portion of the joint venture interest and 100% of the shares of Ican Minerals, Inc. ("Ican") and Canu Resources, Inc. ("Canu") for 500,000 shares of the Company (issued). The Company now owns a 100% interest in the Almaden Property, subject to underlying lease agreements.  Using the recent purchase price as the imputed value, management, for conservative purposes, wrote down the Almaden Property to $576,648 in 2001.



The property is subject to a production royalty of 4% of net returns and a 1% NSR if the average price of gold is less than US$425 per ounce and 2% if the average price of gold is equal to or greater than US$425 per ounce.



---

- 24 -



|                                                         | 
|-------------------------------------------------------- | 
|Freegold Ventures Limited
(An Exploration Stage Company) | 
|Notes to Consolidated Financial Statements               | 
|31 December 2005 and 2004                                | 
|Canadian Funds                                           | 
|                                                         | 



---

4.

Mineral Property Costs- Continued



h)

PGM A Property, Sudbury Region, Ontario, Canada



By various agreements dated between 6 March and 19 December 2000, the Company acquired a property in the Sudbury region, Ontario known as the PGM A Property.  During a prior year, the Company earned a 100% interest in the property by making cash payments of $100,000, issuing 300,000 shares and incurring exploration expenditures of $50,000.  The Company is also required to issue a further 100,000 shares to the optionor upon the completion of a bankable feasibility study.



The property is subject to a 3% NSR.   The Company has the right to purchase up to 2% of the NSR for $3,000,000.  (The first 1% for $1,000,000 and the second 1% for $2,000,000.)



By Letter Agreement dated 16 November 2001, the Company granted to PFN, a company with certain directors in common, an option to earn a 70% interest in PGM A for cash payments of $55,000, issuance of 20,000 PFN shares and exploration expenditures on the property of $55,000 (completed).



PFN has the right to purchase an additional 30% interest in the property by paying to the Company $750,000.  The Company and PFN will share the NSR buyout privileges in proportion to their respective interests.



i)

Grew Creek Property, Yukon Territory, Canada



By Letter Agreement dated 27 May 2004 the Company can acquire, from a third party (Optionor), up to a 100% interest in certain mineral claims known as the Grew Creek Property located in Whitehorse Mining District, Yukon Territory.  To acquire a 100% interest in the property, the Company must, at its option, complete the following:



|                                                   |              |               |                                |   |          
|-------------------------------------------------- | ------------ | ------------- | ------------------------------ | - | ---------
|                                                   | Issue Shares | Cash Payments | Incur Exploration Expenditures
|Upon signing the letter agreement (paid)           | -            | $             | 5,000                          | $ | -        
|Within 5 days of regulatory approval (issued/paid) | 50,000       |               | 35,000                         |   | -        
|On or before 27 May 2005 (issued/paid/incurred)    | 50,000       |               | 45,000                         |   | 75,000   
|On or before 27 May 2006                           | 50,000       |               | 65,000                         |   | 150,000  
|On or before 27 May 2007                           | 50,000       |               | 75,000                         |   | 325,000  
|On or before 27 May 2008                           | -            |               | 80,000                         |   | 450,000  
|On or before 27 May 2009                           | -            |               | -                              |   | 500,000  
|                                                   | 200,000      | $             | 305,000                        | $ | 1,500,000



The project is subject to a 3% NSR.  In the event that commercial production has not commenced on the property by the 6th anniversary of the Letter Agreement, the Company shall make an advance royalty payment in the amount of $50,000.  On the 7th Anniversary, the advance royalty payments shall increase to $100,000 and remain at that level until such time that commercial production commences, or until the Company notifies the Optionor that it does not intend to proceed to commercial production.  These advance royalty payments made shall be deducted from the NSR payments due.  Once commercial production has commenced the minimum annual royalty payable shall be $50,000.



---

- 25 -



|                                                         | 
|-------------------------------------------------------- | 
|Freegold Ventures Limited
(An Exploration Stage Company) | 
|Notes to Consolidated Financial Statements               | 
|31 December 2005 and 2004                                | 
|Canadian Funds                                           | 
|                                                         | 



---

4.

Mineral Property Costs- Continued



j)

Eskay Rift Property, British Columbia, Canada



During a prior year, the Company acquired, by staking, a 100% interest in 440 claim units in the Kiniskan area of northern British Columbia.



During the prior year, management decided not to pursue further exploration on the property.  Accordingly, the associated acquisition and deferred exploration expenditures were written-off during the prior year.



k)

Duke Property, British Columbia, Canada



By agreement dated 21 October 2004 and amended 24 December 2004 the Company can acquire, from a third party (the "Optionor), up to a 70% interest in certain mineral claims known as the Duke Property located in Merritt, British Columbia.  To acquire a 51% interest in the property, the Company must, at its option, complete the following:



|                                             |              |               |                                     |   |        
|-------------------------------------------- | ------------ | ------------- | ----------------------------------- | - | -------
|                                             | Issue Shares | Cash Payments | Cumulative Exploration Expenditures
|Upon receipt of drill permits (paid)         | -            | $             | 10,000                              | $ | -      
|Upon receipt of regulatory approval (issued) | 25,000       |               | -                                   | $ | -      
|On or before 31 May 2005 (issued)            | 25,000       |               | -                                   | $ | -      
|On or before 1 October 2005 (incurred)       | -            |               | -                                   | $ | 100,000
|On or before 21 October 2005 (issued)        | 50,000       |               | -                                   | $ | -      
|On or before 1 October 2006                  | -            |               | -                                   | $ | 350,000
|On or before 1 October 2007                  | -            |               | -                                   | $ | 750,000
|                                             | 100,000      | $             | 10,000                              |   |        



Upon written notification of completion of the exploration expenditures, cash payments and share issuances set out above, the Company shall vest with a 51% interest in the project.  The Company may further elect, within 120 days of the notification date of vesting with a 51% interest, to increase its interest to 70% by paying an additional $150,000 and the Company at its sole election may pay up to 50% of the $150,000 in shares and incurring an additional $1,000,000 in exploration expenditures within three years of the election date.



The Company will act as operator of the property; the Company may terminate this agreement at any time within 30 days written notice upon completing the $100,000 exploration expenditure and the $10,000 payment.



---

- 26 -



|                                                         | 
|-------------------------------------------------------- | 
|Freegold Ventures Limited
(An Exploration Stage Company) | 
|Notes to Consolidated Financial Statements               | 
|31 December 2005 and 2004                                | 
|Canadian Funds                                           | 
|                                                         | 



---



5.

Property and Equipment



Details are as follows:



|                     |      |                          |                     |           |   |       
|-------------------- | ---- | ------------------------ | ------------------- | --------- | - | ------
|                     | Cost | Accumulated Amortization | 2005
Net Book Value
|Automotive equipment | $    | 32,744                   | $                   | (32,744)  | $ | -     
|Office equipment     |      | 185,933                  |                     | (151,839) |   | 34,094
|                     | $    | 218,677                  | $                   | (184,583) | $ | 34,094



|                     |      |                          |                     |           |   |       
|-------------------- | ---- | ------------------------ | ------------------- | --------- | - | ------
|                     | Cost | Accumulated Amortization | 2004
Net Book Value
|Automotive equipment | $    | 32,744                   | $                   | (32,744)  | $ | -     
|Office equipment     |      | 181,736                  |                     | (143,840) |   | 37,896
|                     | $    | 214,480                  | $                   | (176,584) | $ | 37,896





6.

Related Party Balances and Transactions



Except as noted elsewhere in these consolidated financial statements, related party transactions are as follows:



a)

As at 31 December 2005, amounts due to related parties consists of $Nil (2004 - $20,960) owing to a company controlled by the Chairman.  These amounts were incurred in the ordinary course of business, are non-interest bearing, unsecured and due on demand.



b)

During the year, management fees of $106,818 (2004 - $124,640; 2003 - $124,800) were paid to a company controlled by the Chairman.



c)

During the year, consulting fees of $33,428 (2004 - $40,900; 2003 - $26,876) were paid to a company controlled by the Corporate Secretary.



d)

During the year, accounting fees of $28,556 (2004 - $41,713; 2003 - $35,315) were paid to a company controlled by the Chief Financial Officer.



e)

During the year, rent of $40,015 (2004 - $40,015; 2003 - $40,015) was paid to a company controlled by the Chairman.



f)

During the year, consulting fees of $61,658 were paid, 50,000 performance shares (vested as described in Note 7g) were issued  and 350,000 performance shares were allotted to the Vice-President of Business Development.



g)

During the year, consulting fees of $30,000 (2004 - $Nil; 2003 - $34,900) were paid to a director and former President of the Company.



---

- 27 -



|                                                         | 
|-------------------------------------------------------- | 
|Freegold Ventures Limited
(An Exploration Stage Company) | 
|Notes to Consolidated Financial Statements               | 
|31 December 2005 and 2004                                | 
|Canadian Funds                                           | 
|                                                         | 



---

6.

Related Party Balances and Transactions - Continued



h)

During the year, wages of $25,000 were paid and 1,000,000 performance shares (vested as described in Note 7g) were allotted to the President and CEO.



i)

Effective 1 January 2005, each outside director is entitled to receive $500 per month, $500 per directors meeting and $500 per committee meeting.  During the year, $24,000 was paid to directors.



The above transactions, occurring in the normal course of operations, are measured at the exchange amount, which is the amount of consideration established and agreed to by the related parties.





7.

Share Capital



a)

Private Placements



During the year, the Company issued 1,445,385, shares at $0.17 per share (325,294 shares issued to related parties) through private placements for gross proceeds of $245,715.



Subsequent to year end, the Company issued 1,500,000 shares through private placements for gross proceeds of $300,000.



During the prior year, the Company issued 2,713,000, units through private placements for gross proceeds of $1,128,100 as follows:



i)

143,000 units at $0.70 per unit consisting of one common share and one non-transferable share purchase warrant for gross proceeds of $100,100.  Each whole warrant entitled the holder to purchase one additional common share of the Company at a purchase price of $1.00 expiring 15 April 2005.



ii)

2,570,000 flow-through units at $0.40 per unit for gross proceeds of $1,028,000.  Each unit consisted of one flow-through common share and one-half of one non-transferable, non-flow-through share purchase warrant, each whole warrant entitled the holder to purchase one additional common share of the Company for a period of 12 months from the closing date at a price of $0.50 per warrant share. A finders fee of 7% was paid of which $35,000 was cash and 87,500 were shares.  Agents whose participation exceeded $125,000 received additional agents warrant entitling the agent to purchase one additional common share of the Company at a purchase price of $0.50 for a period of 12 months.  Therefore, 250,000 agents warrants were issued expiring December 23, 2005.



---

- 28 -



|                                                         | 
|-------------------------------------------------------- | 
|Freegold Ventures Limited
(An Exploration Stage Company) | 
|Notes to Consolidated Financial Statements               | 
|31 December 2005 and 2004                                | 
|Canadian Funds                                           | 
|                                                         | 



---

Share Capital- Continued



b)

Flow-Through Shares



Flow-through shares are shares issued by a Company that incurs certain resource expenditures and then renounces them for Canadian tax purposes.  This allows the expenditures to flow through to the subscriber for tax purposes.  The subscribers may in turn claim the expenditure as a deduction on their personal or corporate tax returns.



The total amount of funds raised through the issuance of flow-through shares must be spent on qualifying mineral exploration.  The use of proceeds from flow-through shares is restricted to certain Canadian Exploration Expenditures under Canadian Income Tax Legislation.  Restricted Cash  Flow-Through represents funds that have not been spent as at the balance sheet date.



c)

Exercise of Warrant and Options



i)

During the year, no warrants were exercised.



ii)

During the year, Nil (2004 - 25,000) options were exercised for gross proceeds of $Nil (2004 -$12,000).



d)

Share Purchase Warrants



As at 31 December 2005, no share purchase warrants were outstanding.  All share purchase warrants outstanding as of 31 December 2004 expired during the year.



e)

Share Purchase Options



The Company has established a share purchase option plan whereby the Board of Directors (Board), may from time to time, grant options to directors, officers, employees or consultants to a maximum of 8,250,061 options.  Options granted must be exercised no later than five years from date of grant or such lesser period as determined by the Board.  The exercise price of an option is not less than the closing price on the Toronto Stock Exchange on the last trading day preceding the grant date.  Options vest upon the discretion of the Board.



---

- 29 -



|                                                         | 
|-------------------------------------------------------- | 
|Freegold Ventures Limited
(An Exploration Stage Company) | 
|Notes to Consolidated Financial Statements               | 
|31 December 2005 and 2004                                | 
|Canadian Funds                                           | 
|                                                         | 



---

7.

Share Capital- Continued



f)

Share Purchase Options- Continued



A summary of the Companys options at 31 December 2005 and the changes for the year are as follows:



|                                    |         |           |           |           |                                     |                          |                  
|----------------------------------- | ------- | --------- | --------- | --------- | ----------------------------------- | ------------------------ | -----------------
|Number
Outstanding
31 December
2004 | Granted | Exercised | Cancelled | Expired   | Number
Outstanding
31 December
2005 | Exercise
Price
Per Share | Expiry Date      
|140,000                             | -       | -         | -         | (140,000) | -                                   | $0.50                    | 11 February 2005 
|314,500                             | -       | -         | -         | (314,500) | -                                   | $0.50                    | 28 February 2005 
|7,500                               | -       | -         | (5,000)   | (2,500)   | -                                   | $0.50                    | 5 May 2005       
|975,000                             | -       | -         | (115,000) | -         | 860,000                             | $0.50                    | 31 December 2007 
|1,160,000                           | -       | -         | (10,000)  | -         | 1,150,000                           | $0.48                    | 10 September 2008
|100,000                             | -       | -         | -         | -         | 100,000                             | $0.25                    | 1 July 2007      
|90,000                              | -       | -         | (10,000)  | -         | 80,000                              | $0.55                    | 10 February 2007 
|50,000                              | -       | -         | -         | -         | 50,000                              | $0.31                    | 1 July 2007      
|100,000                             | -       | -         | (100,000) | -         | -                                   | $0.25                    | 1 July 2007      
|2,000,000                           | -       | -         | (620,000) | -         | 1,380,000                           | $0.40/
    $0.50         | 5 November 2009  
|-                                   | 100,000 | -         | -         | -         | 100,000                             | $0.30                    | 13 July 2010     
|-                                   | 500,000 | -         | -         | -         | 500,000                             | $0.20                    | 30 September 2010
|4,937,000                           | 600,000 | -         | (860,000) | (457,000) | 4,220,000                           |                          |                  



Effective 1 January 2003, the Company adopted the recommendations of CICA Handbook Section 3870, Stock-based compensation (Note 1h).  The new standard requires that stock-based awards made to employees and non-employees are to be measured and recognized using a fair value based method.





During the year, the Company granted options to purchase up to 100,000 shares of the Companys stock at an exercise price of $0.30 per share for five years.  The total estimated fair value of the 100,000 options is $9,930.  Since the options were granted under a graded vesting schedule, $4,667 of the total fair value has been recorded in the Company accounts as stock-based compensation expenses during the year.  The offsetting entry is to contributed surplus.



During the year, the Company granted options to purchase up to 500,000 shares of the Companys stock to the President of the Company at an exercise price of $0.20 per share for five years.  The total estimated fair value of the 500,000 options is $46,167.  Since the options were granted under a graded vesting schedule, $8,656 of the total fair value has been recorded in the Company accounts as stock-based compensation expenses during the year.  The offsetting entry is to contributed surplus.





---

- 30 -



|                                                         | 
|-------------------------------------------------------- | 
|Freegold Ventures Limited
(An Exploration Stage Company) | 
|Notes to Consolidated Financial Statements               | 
|31 December 2005 and 2004                                | 
|Canadian Funds                                           | 
|                                                         | 



---

7.

Share Capital- Continued



f)

Share Purchase Options- Continued



During the prior year, the Company extended the expiry dates for the 100,000 stock options exercisable at $0.25 previously granted to a consultant of the Company for an additional three years to 1 July 2007.  For the options that had alteration in their conditions, compensation expense is based on the fair value of the options on the alteration date less the fair value of the original options based on the shorter of the remaining expanded life of the old option or the expected life of the modified option. The total additional fair value of the options extended was calculated to be $6,000.  This amount was recorded in the Company accounts during the prior year as stock-based compensation expense.  The offsetting entry is to contributed surplus.



During the prior year, the Company granted options to purchase up to 120,000 shares of the Companys stock at an exercise price of $0.55 per share.  Of these options, 30,000 were cancelled approximately two months after the grant date. The estimated total fair value of the 90,000 options is $21,700 on the grant date.  This amount was recorded in the Company accounts during the prior year as stock-based compensation expense.  The offsetting entry is to contributed surplus.



During the prior year, the Company granted options to purchase up to 50,000 shares of the Companys stock at an exercise price of $0.31 per share.  The estimated total fair value of the 50,000 options is $6,600 on the grant date.  This amount was recorded in the Company accounts during the prior year as stock-based compensation expense.  The offsetting entry is to contributed surplus.



During the prior year, the Company granted options to purchase up to 2,000,000 shares of the Companys stock at an exercise price of $0.40 in years 1, 2 and 3 and  $0.50 in years 4 and 5 per share. The total estimated fair value of the 2,000,000 options is $427,000.  Since the options were granted under a graded vesting schedule, $127,000 of the total fair value has been recorded in the Company accounts as stock-based compensation expenses during the prior year. During the current year, 620,000 of these options were cancelled thereby reducing the estimated fair value by $72,709 of which $16,824 was recorded during the current year. The offsetting entry is to contributed surplus.



The fair value of each option grant is estimated on the date of grant using the Black-Scholes option-pricing model with the following weighted average assumptions:



|                                |           |           |          
|------------------------------- | --------- | --------- | ---------
|                                | 2005      | 2004      | 2003     
|Expected dividend yield         | 0.00%     | 0.00%     | 0.00%    
|Expected stock price volatility | 62.76%    | 73.52%    | 89.59%   
|Risk-free interest rate         | 3.52%     | 3.75%     | 3.70%    
|Expected life of options        | 5.0 years | 4.8 years | 4.5 years



Option pricing models require the input of highly subjective assumptions including the expected price volatility.  Changes in the subjective input assumptions can materially affect the fair value estimate, and therefore the existing models do not necessarily provide a reliable single measure of the fair value of the Companys stock options.



---

- 31 -



|                                                         | 
|-------------------------------------------------------- | 
|Freegold Ventures Limited
(An Exploration Stage Company) | 
|Notes to Consolidated Financial Statements               | 
|31 December 2005 and 2004                                | 
|Canadian Funds                                           | 
|                                                         | 



---

7.

Share Capital- Continued



g)

Performance Shares



A total of 2,187,482 performance shares are reserved for issue.  At the discretion of the Board, these shares may be issued to such arms length parties as the Board considers desirable to attract consultants and/or employees to the Company.



During the year, the Board authorized the issuance of up to 400,000 performance shares at an exercise price of $0.01 per share to attract a Vice-President of Business Development to the Company.  These shares are to be granted as follows:



|        |                  |          
|------- | ---------------- | ---------
|Shares  | Date             |          
|50,000  | 5 September 2005 | (issued*)
|50,000  | 5 March 2006     |          
|50,000  | 5 September 2006 |          
|50,000  | 5 March 2007     |          
|50,000  | 5 September 2007 |          
|50,000  | 5 March 2008     |          
|50,000  | 5 September 2008 |          
|50,000  | 5 March 2009     |          
|400,000 |                  |          



* 50,000 performance shares were issued at $0.01 per share for total proceeds of $500.  The fair market value of the performance shares at the date of the issuance was $7,500.  The difference between the issue price and the fair market value ($7,000) was recorded in the accounts as consulting fees.  The offsetting entry is to share capital.



During the year, the Board authorized the issuance of up to 1,000,000 performance shares at an exercise price of $0.01 per share to attract a new President to the Company.  These shares are to be granted as follows:



|          |                | 
|--------- | -------------- | 
|Shares    | Date           | 
|100,000   | 1 January 2006 | 
|81,818    | 1 April 2006   | 
|81,818    | 1 July 2006    | 
|81,818    | 1 October 2006 | 
|81,818    | 1 January 2007 | 
|81,818    | 1 April 2007   | 
|81,818    | 1 July 2007    | 
|81,818    | 1 October 2007 | 
|81,818    | 1 January 2008 | 
|81,818    | 1 April 2008   | 
|81,818    | 1 July 2008    | 
|81,820    | 1 August 2008  | 
|1,000,000 |                | 





---

- 32 -



|                                                         | 
|-------------------------------------------------------- | 
|Freegold Ventures Limited
(An Exploration Stage Company) | 
|Notes to Consolidated Financial Statements               | 
|31 December 2005 and 2004                                | 
|Canadian Funds                                           | 
|                                                         | 



---

8.

Income Taxes



The Company has incurred certain mineral property related expenditures of approximately $2,625,123 in Canada, which may be carried forward indefinitely and are available to offset future taxable income.



The Company has non-capital losses for Canadian tax purposes of approximately $4,027,000 which are available to offset future taxable income.  These losses may be carried forward and expire as follows:



|     |   |          
|---- | - | ---------
|     |   | Amount   
|2006 | $ | 550,000  
|2009 |   | 480,000  
|2010 |   | 999,000  
|2014 |   | 1,099,000
|2015 |   | 899,000  
|     | $ | 4,027,000



Significant components of the Companys future tax assets and liabilities, after applying enacted corporate income tax rates, are as follows:



|                                                                  |   |             |   |            
|----------------------------------------------------------------- | - | ----------- | - | -----------
|Future Income Tax Assets                                          |   | 2005        |   | 2004       
|Statutory tax rate                                                |   | 34.1%       |   | 35.6%      
|Non-capital losses                                                | $ | 1,373,207   | $ | 1,409,048  
|Undepreciated capital cost in excess of accounting net book value |   | 125,416     |   | 130,079    
|Exploration and development expenditures                          |   | 1,002,718   |   | 649,947    
|                                                                  |   | 2,501,341   |   | 2,189,074  
|Less:  Valuation allowances                                       |   | (2,501,341) |   | (2,189,074)
|                                                                  | $ | -           | $ | -          





---

- 33 -



|                                                         | 
|-------------------------------------------------------- | 
|Freegold Ventures Limited
(An Exploration Stage Company) | 
|Notes to Consolidated Financial Statements               | 
|31 December 2005 and 2004                                | 
|Canadian Funds                                           | 
|                                                         | 



---

8.

Income Taxes - Continued



The Company has net operating loss carryovers for US tax purposes of approximately US$16,149,100 which are available to offset future taxable income.  These losses may be carried forward and expire as follows:



|     |   |                  
|---- | - | -----------------
|     |   | Amount
(US Funds)
|2009 | $ | 89,000           
|2010 |   | 29,000           
|2011 |   | 4,000            
|2013 |   | 1,770,000        
|2014 |   | 8,334,000        
|2020 |   | 3,061,000        
|2021 |   | 2,807,000        
|2022 |   | 1,100            
|2023 |   | 20,400           
|2024 |   | 33,600           
|     | $ | 16,149,100       



The potential future tax benefits of these expenditures and tax losses have not been recognized in these consolidated financial statements.



Future Income Tax Recovery



During the prior year, flow-through shares totalling $1,028,000 were issued, which funds are required to be spent on certain Canadian Exploration Expenditures.  Because the Company no longer has the ability to use the expenditures for tax purposes, the Company is required to record a future tax liability which is equal to the renunciation, times the corporation tax rate when expenditures are renounced.  However, because the Company has unused tax losses and resource pools in excess of the renunciation, the future tax liability becomes a future income tax recovery.



---

- 34 -



|                                                         | 
|-------------------------------------------------------- | 
|Freegold Ventures Limited
(An Exploration Stage Company) | 
|Notes to Consolidated Financial Statements               | 
|31 December 2005 and 2004                                | 
|Canadian Funds                                           | 
|                                                         | 



---

Segmented Information



Details on a geographic basis as at 31 December 2005 are as follows:



|                       |   |           |   |             |   |            
|---------------------- | - | --------- | - | ----------- | - | -----------
|                       |   | USA       |   | Canada      |   | Total      
|Assets                 | $ | 6,753,761 | $ | 2,677,943   | $ | 9,431,704  
|Mineral property costs | $ | 6,742,673 | $ | 1,841,505   | $ | 8,584,178  
|Loss for the year      | $ | (43,019)  | $ | (1,325,351) | $ | (1,368,370)



Details on a geographic basis as at 31 December 2004 are as follows:



|                       |   |           |   |             |   |            
|---------------------- | - | --------- | - | ----------- | - | -----------
|                       |   | USA       |   | Canada      |   | Total      
|Assets                 | $ | 6,601,475 | $ | 3,841,182   | $ | 10,442,657 
|Mineral property costs | $ | 6,489,699 | $ | 1,019,672   | $ | 7,509,371  
|Loss for the year      | $ | (447,510) | $ | (1,205,211) | $ | (1,652,721)



Details on a geographic basis as at 31 December 2003 are as follows:



|                       |   |           |   |             |   |            
|---------------------- | - | --------- | - | ----------- | - | -----------
|                       |   | USA       |   | Canada      |   | Total      
|Assets                 | $ | 5,996,781 | $ | 4,562,455   | $ | 10,559,236 
|Mineral property costs | $ | 6,634,818 | $ | 275,199     | $ | 6,910,017  
|Loss for the year      | $ | (6,200)   | $ | (1,171,723) | $ | (1,177,923)





10.

Differences Between United States and Canadian Generally Accepted Accounting Principles ("GAAP")



These consolidated financial statements have been prepared in accordance with generally accepted accounting principles in Canada.  Except as set out below, these financial statements also comply, in all material aspects, with accounting principles generally accepted in the United States and the rules and regulations of the Securities and Exchange Commission.



a)

Under Canadian GAAP, the mineral properties are carried at cost and written off or written down if the properties are abandoned, sold or if management decides not to pursue the properties.  Under United States GAAP, the Company would periodically review and obtain independent reports in determining adjustments to the mineral properties and record properties at net realizable value.  The Company has not yet obtained an independent report for United States GAAP purposes, therefore, the Companys mineral property costs have been written off.



b)

Under United States GAAP, investments available for sale are recorded at market value.  The difference between the market value and the cost of the investment is recorded as a separate shareholder equity category named comprehensive income.  Once the investment is sold, the comprehensive income for that investment is cleared out to income.  Under Canadian GAAP, investments held for re-sale are recorded at the lower of cost or market.  There is no comprehensive income category in Canada.





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- 35 -



|                                                         | 
|-------------------------------------------------------- | 
|Freegold Ventures Limited
(An Exploration Stage Company) | 
|Notes to Consolidated Financial Statements               | 
|31 December 2005 and 2004                                | 
|Canadian Funds                                           | 
|                                                         | 



---

10.

Differences Between United States and Canadian Generally Accepted Accounting Principles ("GAAP") - Continued



c)

Under United States GAAP, adjustments arising from foreign currency translations are deferred until realization and are included as a separate component of shareholders equity as a component of comprehensive income or loss.  Therefore, translation adjustments are not included in determining net income but reported as other comprehensive income.  Under Canadian GAAP, translation adjustments are included in net income.  There is no comprehensive income category in Canada.



d)

Under Canadian income tax legislation, corporations are permitted to issue shares whereby the corporation agrees to incur qualifying expenditures as defined under the Canadian Income Tax Act, and renounce the related income tax deductions to the investors.



In March, 2004, the Canadian Institute of Chartered Accountants (CICA) released EIC  146 Flow-Through Shares, which requires the future income tax liability resulting from the timing differences on exploration expenditures renounced to investors and the resulting draw down of such future income tax liability be recorded as a credit to income upon renunciation of the exploration expenditures by the Company.  EIC  146 is effective for all flow-through share transactions initiated after 19 March 2004.



United States GAAP requires the premium or discount from the market trading price at the time an irrevocable agreement to issue the flow-through shares exists, to be accounted for separately on the balance sheet.  At the time the expenditures are renounced, the previously recorded premium or discount is reversed and offset against the tax provision on the income statement, and the deferred income tax liability on the balance sheet recorded.  During the years presented, there were no GAAP differences.



e)

The impact of the above differences between Canadian and United States GAAP on loss for the period is as follows:



|                                                                                 |  |                             |                             |                             |   |             |   |            
|-------------------------------------------------------------------------------- |  | --------------------------- | --------------------------- | --------------------------- | - | ----------- | - | -----------
|                                                                                 |  | Year Ended
31 December
2005 | Year Ended
31 December
2004 | Year Ended
31 December
2003
|Loss for the period as reported                                                  |  |                             | $                           | (1,368,370)                 | $ | (1,652,721) | $ | (1,177,923)
|Write-off of mineral property costs                                              |  |                             |                             | (1,074,807)                 |   | (599,354)   |   | (822,840)  
|Foreign exchange adjustment                                                      |  |                             |                             | (2,072)                     |   | (13,520)    |   | (22,377)   
|Loss for the period in accordance with   United States GAAP                      |  |                             | $                           | (2,445,249)                 | $ | (2,265,595) | $ | (2,023,140)
|Pr
      imary loss per share for the year in accordance with United States GAAP |  |                             | $                           | (0.08)                      | $ | (0.08)      | $ | (0.11)     



---

- 36 -



|                                                         | 
|-------------------------------------------------------- | 
|Freegold Ventures Limited
(An Exploration Stage Company) | 
|Notes to Consolidated Financial Statements               | 
|31 December 2005 and 2004                                | 
|Canadian Funds                                           | 
|                                                         | 



---

10.

Differences Between United States and Canadian Generally Accepted Accounting Principles ("GAAP") -Continued



f)

The impact of the above differences between Canadian and United States GAAP on the deficit, as reported, is as follows:



|                                              |  |                             |                             |                             |   |              |   |             
|--------------------------------------------- |  | --------------------------- | --------------------------- | --------------------------- | - | ------------ | - | ------------
|                                              |  | Year Ended
31 December
2005 | Year Ended
31 December
2004 | Year Ended
31 December
2003
|Deficit - As reported                         |  |                             | $                           | (22,479,334)                | $ | (21,104,497) | $ | (19,396,866)
|Stock compensation expense                    |  |                             |                             | (244,404)                   |   | (244,404)    |   | (244,404)   
|Write-off of mineral property costs           |  |                             |                             | (8,584,178)                 |   | (7,509,371)  |   | (6,910,017) 
|Share issuance costs                          |  |                             |                             | 972,026                     |   | 965,559      |   | 910,649     
|Foreign exchange adjustment                   |  |                             |                             | (37,969)                    |   | (35,897)     |   | (22,377)    
|Deficit in accordance with United States GAAP |  |                             | $                           | (30,373,859)                | $ | (27,928,610) | $ | (25,663,015)



g)

The impact of the above differences between Canadian and United States GAAP on the statement of changes in shareholders equity, as reported, is as follows:



| |                                                                                |            |   |            |   |              |   |                     |   |                      |   |             |  |  |  |  |  |  |  |  |  | 
| | ------------------------------------------------------------------------------ | ---------- | - | ---------- | - | ------------ | - | ------------------- | - | -------------------- | - | ----------- |  |  |  |  |  |  |  |  |  | 
| | Common Shares                                                                  |            |   |            |   |              |   |                     |  
| |                                                                                | Number     |   | Amount     |   | Deficit      |   | Contributed Surplus |   | Comprehensive
Income |   | Total      
| | Shareholders equity balance as reported at 31 December 2003                   | 26,266,705 | $ | 29,334,259 | $ | (19,396,866) | $ | 499,845             | $ | -                    | $ | 10,437,238 
| | Stock compensation expense                                                     | -          |   | 244,404    |   | (244,404)    |   | -                   |   | -                    |   | -          
| | Write-off of mineral property costs                                            | -          |   | -          |   | (6,910,017)  |   | -                   |   | -                    |   | (6,910,017)
| | Share issuance costs                                                           | -          |   | (910,649)  |   | 910,649      |   | -                   |   | -                    |   | -          
| | Investments held for re-sale                                                   | -          |   | -          |   | -            |   | -                   |   | 288,129              |   | 288,129    
| | Foreign exchange adjustment                                                    | -          |   | -          |   | (22,377)     |   | -                   |   | 22,377               |   | -          
| | Shareholders equity in accordance with United States GAAP at 31 December 2003 | 26,266,705 | $ | 28,668,014 | $ | (25,663,015) | $ | 499,845             | $ | 310,506              | $ | 3,815,350  
| | Shareholders equity balance as reported at 31 December 2004                   | 29,992,205 | $ | 30,411,391 | $ | (21,104,497) | $ | 857,995             | $ | -                    | $ | 10,164,889 
| | Stock compensation expense                                                     | -          |   | 244,404    |   | (244,404)    |   | -                   |   | -                    |   | -          
| | Write-off of mineral property costs                                            | -          |   | -          |   | (7,509,371)  |   | -                   |   | -                    |   | (7,509,371)
| | Share issuance costs                                                           | -          |   | (965,559)  |   | 965,559      |   | -                   |   | -                    |   | -          
| | Investments held for re-sale                                                   | -          |   | -          |   | -            |   | -                   |   | 127,403              |   | 127,403    
| | Foreign exchange adjustment                                                    | -          |   | -          |   | (35,897)     |   | -                   |   | 35,897               |   | -          
| | Shareholders equity in accordance with United States GAAP at 31 December 2004 | 29,992,205 | $ | 29,690,236 | $ | (27,928,610) | $ | 857,995             | $ | 163,300              | $ | 2,782,921  
| | Shareholders equity balance as reported at 31 December 2005                   | 31,562,590 | $ | 30,714,606 | $ | (22,479,334) | $ | 1,072,794           | $ | -                    | $ | 9,308,066  
| | Stock compensation expense                                                     | -          |   | 244,404    |   | (244,404)    |   | -                   |   | -                    |   | -          
| | Write-off of mineral property costs                                            | -          |   | -          |   | (8,584,178)  |   | -                   |   | -                    |   | (8,584,178)
| | Share issuance costs                                                           | -          |   | (972,026)  |   | 972,026      |   | -                   |   | -                    |   | -          
| | Foreign exchange adjustment                                                    | -          |   | -          |   | (37,969)     |   | -                   |   | 37,969               |   | -          
| | Shareholders equity in accordance with United States GAAP at 31 December 2005 | 31,562,590 | $ | 29,986,984 | $ | (30,373,859) | $ | 1,072,794           | $ | 37,969               | $ | 723,888    





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- 37 -



|                                                         | 
|-------------------------------------------------------- | 
|Freegold Ventures Limited
(An Exploration Stage Company) | 
|Notes to Consolidated Financial Statements               | 
|31 December 2005 and 2004                                | 
|Canadian Funds                                           | 
|                                                         | 



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10.

Differences Between United States and Canadian Generally Accepted Accounting Principles ("GAAP")- Continued



h)

New Accounting Pronouncements



In December 2004, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standard (SFAS) No. 123R, Share Based Payment. SFAS 123R is a revision of SFAS No. 123 Accounting for Stock-Based Compensation, and supersedes APB Opinion No. 25, Accounting for Stock Issued to Employees and its related implementation guidance. SFAS 123R establishes standards for the accounting for transactions in which an entity exchanges its equity instruments for goods or services. It also addresses transactions in which an entity incurs liabilities in exchange for goods or services that are based on the fair value of the entitys equity instruments or that may be settled by the issuance of those equity instruments. SFAS 123R focuses primarily on accounting for transactions in which an entity obtains employee services in share-based payment transactions. SFAS 123R does not change the accounting guidance for share-based payment transactions with parties other than employees provided in SFAS 123 as originally issued and Emerging Issues Task Force Issue No. 96-18, Accounting for Equity Instruments That Are Issued to Other Than Employees for Acquiring, or in Conjunction with Selling, Goods or Services.  SFAS 123R does not address the accounting for employee share ownership plans, which are subject to AICPA Statement of Position 93-6, Employers Accounting for Employee Stock Ownership Plans.  SFAS 123R requires a public entity to measure the cost of employee services received in exchange for an award of equity instruments based on the grant-date fair value of the award (with limited exceptions). That cost will be recognized over the period during which an employee is required to provide service in exchange for the award  the requisite service period (usually the vesting period). SFAS 123R requires that the compensation cost relating to share-based payment transactions be recognized in financial statements. That cost will be measured based on the fair value of the equity or liability instruments issued. The scope of SFAS 123R includes a wide range of share-based compensation arrangements including share options, restricted share plans, performance-based awards, share appreciation rights, and employee share purchase plans. Public entities (other than those filing as small business issuers) will be required to apply SFAS 123R as of the first interim or annual reporting period that begins after 15 June 2005. Public entities that file as small business issuers will be required to apply SFAS 123R in the first interim or annual reporting period that begins after 15 December 2005. For non-public entities, SFAS 123R must be applied as of the beginning of the first annual reporting period beginning after 15 December 2005. The adoption of this standard is not expected to have a material effect on the Companys results of operations or financial position.

In December 2004, FASB issued SFAS No. 153, Exchanges of Nonmonetary Assets - An Amendment of APB Opinion No. 29. The guidance in APB Opinion No. 29, Accounting for Nonmonetary Transactions, is based on the principle that exchanges of nonmonetary assets should be measured based on the fair value of the assets exchanged. The guidance in that Opinion, however, included certain exceptions to that principle.  SFAS No. 153 amends Opinion No. 29 to eliminate the exception for nonmonetary exchanges of similar productive assets and replaces it with a general exception for exchanges of nonmonetary assets that do not have commercial substance. A nonmonetary exchange has commercial substance if the future cash flows of the entity are expected to change significantly as a result of the exchange.  The provisions of SFAS No. 153 are effective for nonmonetary asset exchanges occurring in fiscal periods beginning after 15 June 2005. Early application is permitted and companies must apply the standard prospectively. The adoption of this standard is not expected to have a material effect on the Companys results of operations or financial position.



---

- 38 -



|                                                         | 
|-------------------------------------------------------- | 
|Freegold Ventures Limited
(An Exploration Stage Company) | 
|Notes to Consolidated Financial Statements               | 
|31 December 2005 and 2004                                | 
|Canadian Funds                                           | 
|                                                         | 



---

10.

Differences Between United States and Canadian Generally Accepted Accounting Principles ("GAAP")- Continued



h)

New Accounting Pronouncements- Continued



In May 2005, the FASB issued SFAS No. 154, Accounting Changes and Error Corrections, which replaces APB Opinion No. 20, Accounting Changes, and supersedes FASB Statement No. 3, Reporting Accounting Changes in Interim Financial Statements  an amendment of APB Opinion No. 28. SFAS 154 requires retrospective application to prior periods financial statements of changes in accounting principle, unless it is impracticable to determine either the period-specific effects or the cumulative effect of the change.  When it is impracticable to determine the period-specific effects of an accounting change on one or more individual prior periods presented, SFAS 154 requires that the new accounting principle be applied to the balances of assets and liabilities as of the beginning of the earliest period for which retrospective application is practicable and that a corresponding adjustment be made to the opening balance of retained earnings for that period rather than being reported in an income statement.  When it is impracticable to determine the cumulative effect of applying a change in accounting principle to all prior periods, SFAS 154 requires that the new accounting principle be applied as if it were adopted prospectively from the earliest date practicable.  SFAS 154 shall be effective for accounting changes and corrections of errors made in fiscal years beginning after 15 December 2005.  The company does not expect the provisions of SFAS 154 will have a significant impact on its results of operations.



In February 2006, the FASB issued SFAS No. 155, Accounting for Certain Hybrid Financial Instruments, an amendment of FASB Statements No. 133 and 140.  This statement permits fair value re-measurement for any hybrid financial instrument that contains an embedded derivative that otherwise would require bifurcation.  It establishes a requirement to evaluate interests in securitized financial assets to identify interests that are freestanding derivatives or that are hybrid financial instruments that contain an embedded derivative requiring bifurcation.  In addition, SFAS 155 clarifies which interest-only strips and principal-only strips are not subject to the requirements of Statement 133.  It also clarifies that concentrations of credit risk in the form of subordination are not embedded derivatives.  SFAS 155 amends Statement 140 to eliminate the prohibition on a qualifying special-purpose entity from holding a derivative financial instrument that pertains to a beneficial interest other than another derivative financial instrument.  This Statement is effective for all financial instruments acquired or issued after the beginning of an entitys first fiscal year that begins after 15 September 2006.  The adoption of this standard is not expected to have a material effect on the Companys results of operations or financial position.





11.

Comparative Figures



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