FORM 20-F

_________________________



SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

_________________________

(Mark One)



[   ]

REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934OR



[ X ]

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



[   ]

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



Commission file number:

0-28874



CANADIAN EMPIRE EXPLORATION CORP.

(Exact name of Registrant as specified in its charter)



CANADIAN EMPIRE EXPLORATION CORP.

(Translation of Registrant's name into English)



PROVINCE OF BRITISH COLUMBIA, CANADA

(Jurisdiction of incorporation or organization)



#1205 - 675 West Hastings Street

Vancouver, British Columbia    V6B 1N2

(Address of principal executive offices)



Securities registered or to be registered pursuant to Section 12(b) of the Act:  None



Securities registered or to be registered pursuant to Section 12(g) of the Act:



Common Shares without par value

(Title of Class)



Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act:  None



Indicate the number of outstanding Common Shares of each of the Issuer's classes of capital or common stock as of the close of the period covered by this registration statement:



Common Shares without par value:

The Registrant has authorized 250,000,000 Common Shares.

As at December 31, 2005 and May 19, 2006, the Registrant had outstanding 36,364,366 and 36,389,366 Common Shares respectively.

At December 31, 2005, 3,923,000 (May 19, 2006  3,923,000) Common Shares were reserved for issuance on exercise of options, and 50,000 Common Shares (May 19, 2006  Nil Common Shares) on exercise of warrants.



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Indicate by check mark whether the registrant:  (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

YesXNo.



Indicate by check mark which financial statement item the registrant has elected to follow.

Item 17X Item 18

,

(APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PAST FIVE YEARS)



Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Section 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court.

Yes  No _____

N/A



Copies of communications to:



Jeffrey T.K. Fraser, Esq.

Lexas Law Group

1550 - 1185 West Georgia Street

Vancouver, B.C.  V6E 4E6  CANADA

(604) 689-9356 Telephone

(604) 689-7030 Facsimile



and to



John Iino

Reed Smith Crosby Heafey LLP

1901 Avenue of the Stars, Suite 700

Los Angeles, CA  90067

(310) 734-5200  Telephone

(310) 734-5299 Facsimile







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CANADIAN EMPIRE EXPLORATION CORP.

TABLE OF CONTENTS

PART I

5

ITEM 1

IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISORS

5

A)

DIRECTORS AND SENIOR MANAGEMENT

5

B)

AUDITORS

5

ITEM II

OFFER STATISTICS AND EXPECTED TIMETABLE

5

ITEM III

KEY INFORMATION

5

A)

SELECTED FINANCIAL DATA

5

B)

CAPITALIZATION AND INDEBTEDNESS

7

C)

REASON FOR THE OFFER AND USE OF PROCEEDS

7

D)

RISK FACTORS

7

ITEM IV

INFORMATION ON THE COMPANY

12

A)

HISTORY AND DEVELOPMENT OF THE COMPANY

12

B)

BUSINESS OVERVIEW

13

C)

ORGANIZATIONAL STRUCTURE

14

D)

DESCRIPTION OF PROPERTY

15

ITEM V

OPERATING AND FINANCIAL REVIEW AND PROSPECTS

17

A)

OPERATING RESULTS

17

B)

LIQUIDITY AND CAPITAL RESOURCES

20

C)

RESEARCH AND DEVELOPMENT, PATENTS AND LICENSES, ETC.

22

D)

TREND INFORMATION

22

E)

OFF-BALANCE SHEET ARRANGEMENTS

22

F)

TABULAR DISCLOSURE OF CONTRACTUAL OBLIGATIONS

22

G)

OTHER INFORMATION

22

H)

OUTLOOK

22

I)

FORWARD LOOKING STATEMENTS

23

ITEM VI

DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES

23

A)

DIRECTORS AND SENIOR MANAGEMENT

23

B)

COMPENSATION

24

C)

BOARD PRACTICES

25

D)

EMPLOYEES

26

E)

SHARE OWNERSHIP

26

ITEM VII

MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS

27

A)

MAJOR SHAREHOLDERS

27

B)

RELATED PARTY TRANSACTIONS

28

ITEM VIII

FINANCIAL INFORMATION

28

A)

CONSOLIDATED STATEMENTS AND OTHER FINANCIAL INFORMATION

28

B)

SIGNIFICANT CHANGES

29

ITEM IX

THE OFFER AND LISTING

29

A)

PRICE RANGE AND VOLUME OF SHARES OF COMMON STOCK

29

B)

PLAN OF DISTRIBUTION

30

C)

MARKETS

30

D)

SELLING SHAREHOLDERS

30

E)

DILUTION

30

ITEM X

ADDITIONAL INFORMATION

30

A)

SHARE CAPITAL

30

B)

NOTICE OF ARTICLES (formerly "MEMORANDUM") AND ARTICLES

31



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C)

MATERIAL CONTRACTS

31

D)

EXCHANGE CONTROLS

32

E)

TAXATION

32

F)

DIVIDENDS AND PAYING AGENTS

35

G)

STATEMENTS BY EXPERTS

35

H)

DOCUMENTS ON DISPLAY

35

I)

SUBSIDIARY INFORMATION

35

ITEM XI

QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

36

ITEM XII

DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES

36

PART II

36

ITEM XIII

DEFAULTS, DIVIDENDS, ARREARS AND DELINQUENCIES

36

ITEM XIV

MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS

36

ITEM XV

CONTROLS AND PROCEDURES

36

ITEM XVI

AUDIT COMMITTEE FINANCIAL EXPERT

36

PART III

37

ITEM XVII

FINANCIAL STATEMENTS

37

ITEM XVIII

FINANCIAL STATEMENTS

37

ITEM XIX

EXHIBITS

38

INDEX TO FINANCIAL STATEMENTS

41

SIGNATURE

42

CERTIFICATIONS

43





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PART I



Canadian Empire Exploration Corp. (formerly Northern Crown Mines Ltd.) ("Canadian Empire" or the "Registrant" or the "Company")  has one wholly owned subsidiary, Minera Reina Isabel, S.A. de C.V. ("Minera Reina Isabel"), and one 90% owned subsidiary, Minera Tatemas, S.A. de C.V. (Minera Tatemas), both corporations formed under the laws of Mexico to carry out mineral exploration and development programs in Mexico.  The subsidiaries are currently inactive.



ITEM 1

IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISORS



A)

DIRECTORS AND SENIOR MANAGEMENT

|                            |                                                                   |                                         
|--------------------------- | ----------------------------------------------------------------- | ----------------------------------------
|John S. Brock               | President
Chief Executive Officer
Director
Audit Committee Member | West Vancouver, British Columbia, Canada
|R.E. Gordon Davis, P. Eng.  | Director
Audit Committee Member                                   | Vancouver, British Columbia, Canada     
|Lawrence Page, LL.B.,  Q.C. | Director
Audit Committee Member                                   | West Vancouver, British Columbia, Canada
|Wayne J. Roberts, P. Geo.   | Director
Vice-President, Exploration                              | Coquitlam, British Columbia, Canada     
|Jeannine P. M. Webb, CGA    | Chief Financial Officer
Corporate Secretary                       | Burnaby, British Columbia, Canada       



Advisors



Principal Bankers of the Company:

|                                   |                                                               
|---------------------------------- | --------------------------------------------------------------
|Canadian Imperial Bank of Commerce | 400 Burrard Street
Vancouver, British Columbia
Canada  V6C 3A6



Legal Counsel of the Company:

|       |                              |                                                                            
|------ | ---------------------------- | ---------------------------------------------------------------------------
|Canada | Lexas Law Group              | 1550  1185 West Georgia Street
Vancouver, British Columbia
Canada  V6E 4E6
|US     | Reed Smith Crosby Heafey LLP | 1901 Avenue of the Stars, Suite 700
Los Angeles, CA  90067                 
|Mexico | Garcia Jimenez y Asociados   | San Francisco No. 656-601
Col Del Valle
Mexico, DF, Mexico  03100          





B)

AUDITORS

Since 1991, the independent Auditors of the Company have been PricewaterhouseCoopers LLP "PWC" located at Suite 700, 250 Howe Street, Vancouver, British Columbia, Canada  V6C 3S73



ITEM II

OFFER STATISTICS AND EXPECTED TIMETABLE



This Form 20F is being filed as an annual report under the Exchange Act and, as such, there is no requirement to provide information under this item.



ITEM III

KEY INFORMATION

A)

SELECTED FINANCIAL DATA



Set forth below is certain selected financial data of the Company for the fiscal years ended December 31, 2005, 2004, 2003, 2002, and 2001.  The selected financial data for the fiscal years ended December 31, 2005, 2004, 2003, 2002 and 2001, was derived from the audited financial statements of the Company.





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Unless otherwise indicated, all references to dollars herein are to Canadian dollars.  As at December 31, 2005, one United States dollar was equal to 1.1630 Canadian dollar and that value is used in calculations herein, unless otherwise indicated.

Unless otherwise indicated, all references to share capital herein are on a post-consolidated basis. On December 5, 2001, the Registrant consolidated its capital on a ten (10) old Common Shares for one (1) new share basis.

TABLE OF SELECTED CONSOLIDATED FINANCIAL DATA(1)

(Stated in Canadian Dollars)

Presented in Accordance with

Canadian Generally Accepted Accounting Principles Unless Otherwise Stated



FISCAL YEARS ENDED



|                                                               |               |               |               |               |              
|-------------------------------------------------------------- | ------------- | ------------- | ------------- | ------------- | -------------
|                                                               | Dec. 31, 2005 | Dec. 31, 2004 | Dec. 31, 2003 | Dec. 31, 2002 | Dec. 31, 2001
|(Loss)  for the Year                                           | ($1,465,324)  | ($455,500)    | ($2,096,679)  | ($1,022,609)  | ($388,599)   
|Income (Loss)  for the Year  US GAAP                          | ($470,972)    | ($1,400,432)  | ($1,088,027)  | ($2,031,261)  | ($388,599)   
|Basic and Diluted (Loss) per common share (2)                  | ($0.04)       | ($0.02)       | ($0.12)       | ($0.12)       | ($0.11)      
|Basic and Diluted (Loss) per common share  US GAAP (2)        | ($0.02)       | ($0.05)       | ($0.06)       | ($0.23)       | ($0.11)      
|Weighted Avg. No. Common Shares (net of escrowed)              | 36,333,530    | 28,922,009    | 17,964,336    | 8,657,892     | 3,531,045    
|Working
Capital (deficiency) (3)                               | ($302,814)    | $99,282       | $90,767       | $613,098      | $50,888      
|Assets                                                         | $32,080       | $1,452,157    | $1,085,920    | $1,807,957    | $265,271     
|Assets  US GAAP                                               | $32,080       | $507,225      | $1,085,920    | $799,305      | $265,271     
|Resource Assets                                                | $0            | $944,932      | $0            | $1,008,652    | $0           
|Resource Assets  US GAAP                                      | $0            | $0            | $0            | $0            | $0           
|Write-off of Deferred Exploration Expenses/Resource Properties | ($1,314,405)  | ($102,706)    | ($1,668,119)  | ($394,751)    | ($68,336)    
|Shareholders Equity (Deficiency)                               | ($291,514)    | $1,199,914    | $846,724      | $1,621,750    | $53,124      
|Shareholders Equity (Deficiency)  US GAAP                     | ($291,514)    | $254,982      | $846,724      | $613,098      | $53,124      





(1)

The financial information set forth in this table includes the accounts of Canadian Empire and its subsidiaries, Minera Reina Isabel and Minera Tatemas, on a consolidated basis.

(2)

After taking into effect the consolidation of the capital of the Registrant on December 5, 2001 on a ten (10) old Common Shares for one (1) new share basis.

(3)

At December 31, 2005, the Registrant had cash and cash equivalents of $17,450 (2004: $451,514; 2003: $1,067,042), of which $nil (2004: $342,964; 2003: $927,891) is restricted to flow-through expenditures on Canadian mineral properties, resulting in an unrestricted working capital deficiency of $302,814 (2004: $99,282; 2003: $90,767).











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The following table sets out the exchange rates of CDN$ for 1 US$ for the following periods:



|                                    |         |        |        |       
|----------------------------------- | ------- | ------ | ------ | ------
|Period                              | Average | High   | Low    | Close 
|May, 2006                           | 1.1095  | 1.1132 | 1.1055 | 1.1093
|April, 2006                         | 1.1438  | 1.1476 | 1.1413 | 1.1434
|March 2006                          | 1.1574  | 1.1606 | 1.1546 | 1.1572
|February, 2006                      | 1.1489  | 1.1520 | 1.1461 | 1.1489
|January, 2006                       | 1.1573  | 1.1621 | 1.1536 | 1.1567
|December, 2005                      | 1.1610  | 1.1646 | 1.1583 | 1.1613
|                                    |         |        |        |       
|Fiscal Year Ended December 31, 2005 | 1.2114  | 1.2552 | 1.1612 | 1.1630
|Fiscal Year Ended December 31, 2004 | 1.3013  | 1.3957 | 1.1759 | 1.2020
|Fiscal Year Ended December 31, 2003 | 1.4001  | 1.5672 | 1.2943 | 1.2965
|Fiscal Year Ended December 31, 2002 | 1.5702  | 1.6125 | 1.5122 | 1.5776
|Fiscal Year Ended December 31, 2001 | 1.5485  | 1.6034 | 1.4935 | 1.5928



B)

CAPITALIZATION AND INDEBTEDNESS



This Form 20F is being filed as an annual report under the Exchange Act and, as such, there is no requirement to provide information under this item.



C)

REASON FOR THE OFFER AND USE OF PROCEEDS



This Form 20F is being filed as an annual report under the Exchange Act and, as such, there is no requirement to provide information under this item.



D)

RISK FACTORS



The securities of the Registrant are highly speculative.  In evaluating the Company, it is important to consider that the Company is a resource exploration enterprise and that it is in the exploratory stage of its operations.  To date, the Company has had no revenues and there is no immediate expectation of revenues.  A prospective investor or other person reviewing the Company should not consider an investment in the Registrant unless the investor is capable of sustaining an economic loss of the entire investment.  All costs have been funded through equity and related party advances.  Certain risks are associated with the Company's business including:



Mineral Exploration and Development

The Companys properties are in the exploration stage and are without a known body of commercial ore. Development of any of the Companys properties will only follow upon obtaining satisfactory exploration results. Mineral exploration and development involve a high degree of risk and few properties which are explored are ultimately developed into producing mines. There is no assurance that the Companys mineral exploration and development activities will result in the discovery of a body of commercial ore on any of its properties. Several years may pass between the discovery and the development of commercial mineable mineralized deposits.  Most exploration projects do not result in the discovery of commercially mineralized deposits.



Trends

The Company's financial success is dependent upon the discovery of properties which could be economically viable to develop.  Such development could take years to complete and the resulting income, if any, is difficult to determine.  The sales value of any mineralization discovered by the company is largely dependent upon factors beyond the Company's control, such as market value of the products produced.  Other than as disclosed herein, the company is not aware of any trends, uncertainties, demands, commitments or events which are reasonably likely to have a material effect on the Company's results or financial position.



Operating Hazards and Risks

Mineral exploration involves many risks. The operations in which the Company has a direct or indirect interest will be subject to all the hazards and risks normally incidental to exploration, development and production of resources, any of which could result in work stoppages and damage to persons or property or the environment and possible legal liability for any and all damage. Fires, power outages, labour disruptions, flooding, explosions, cave-ins, land slides and the inability to obtain suitable or adequate machinery, equipment or labour are some of the risks involved in the operation of mines and the conduct of exploration programs.  Although the Company will, when appropriate, secure liability insurance in an amount which it considers adequate, the nature of these risks is such that liabilities might exceed policy limits, the liability and



7



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hazards might not be insurable, or the Company might elect not to insure itself against such liabilities due to high premium costs or other reasons, in which event the Company could incur significant costs that could have a material adverse effect upon its financial condition.



Economics of Developing Mineral Properties

Substantial expenditures are required to establish ore reserves through drilling, to develop metallurgical processes to extract metal from ore and to develop the mining and processing facilities and infrastructure at any site chosen for mining. No assurance can be given that minerals will be discovered in sufficient quantities to justify commercial operation or that the funds required for development can be obtained on a timely basis.



The marketability of any minerals acquired or discovered may be affected by numerous factors which are beyond the Companys control and which cannot be predicted, such as market fluctuations, the proximity and capacity of milling facilities, mineral markets and processing equipment, and such other factors as government regulations, including regulations relating to royalties, allowable production, importing and exporting of minerals, and environmental protection. Depending on the price of minerals produced, the Company may determine that it is impractical to commence or continue commercial production.



Environmental Factors

The Company proposes to conduct exploration activities in various parts of Canada.  Such activities are subject to laws, rules and regulations governing the protection of the environment, including, in some cases, posting of reclamation bonds. In Canada, extensive environmental legislation has been enacted by federal, provincial and territorial governments. All phases of the Companys operations are subject to environmental regulation in the jurisdictions in which it operates. Environmental legislation is evolving in a manner which requires stricter standards and enforcement, increased fines and penalties for non-compliance, more stringent environmental assessments of proposed properties and a heightened degree of responsibility for companies and their officers, directors and employees. There is no assurance that future changes in environmental regulation, if any, will not adversely affect the Companys operations. The cost of compliance with changes in governmental regulations has the potential to reduce the profitability of operations or to preclude entirely the economic development of a property. Environmental hazards may exist on the Companys properties, which hazards are unknown to the Company at present, which may have been caused by previous or existing owners or operators of the properties. The Company is not aware of any environmental hazards on any of the properties held by the Company.



The approval of new mines on federal lands in Canada is subject to detailed review through a clearly established public hearing process, pursuant to the Federal Canadian Environmental Assessment Act.  In addition, lands under federal jurisdiction are subject to the preparation of a costly environmental impact assessment report prior to commencement of any mining operations.  These reports entail a detailed and scientific assessment as well as a prediction of the impact on the environmental and proposed development. Further, under such review process, there is no assurance that regulatory and environmental approvals will be obtained on a timely basis or at all. Failure to comply with the legislation may have serious consequences. Orders may be issued requiring operations to cease or be curtailed or requiring installation of additional facilities or equipment. Violators may be required to compensate those suffering loss or damage by reason of its mining activities and may be fined if convicted of an offense under such legislation.



Canadian provincial mining legislation establishes requirements for the decommissioning, reclamation and rehabilitation of mining properties in a state of temporary or permanent closure. Such closure requirements relate to the protection and restoration of the environment and the protection of the public safety. Some former mining properties must be managed for long periods of time following closure in order to fulfill closure requirements. The costs of closure of mining properties, and, in particular, the cost of long term management of mining properties can be substantial. The Company intends to progressively rehabilitate its mining properties during their period of operation, should any properties become operational, so as to reduce the cost of fulfilling closure requirements after the termination or suspension of production.



The Company has adopted environmental practices designed to ensure that it continues to comply with or exceeds all environmental regulations currently applicable to it.  All of the Companys activities are in compliance in all material respects with applicable environmental legislation.  The Company is currently engaged in exploration with nil to minimal environmental impact.





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Uncertainty of Ownership Rights and Boundaries of Resource Properties

There is no assurance that the rights of ownership and other rights in concessions held by the Company are not subject to loss or dispute particularly because such rights may be subject to prior unregistered agreements or transfers or other land claims and may be affected by defects and adverse laws and regulations which have not been identified by the Company.  Notwithstanding that the exploration and exploitation concessions in respect of which the Company may hold various interests have been surveyed, the precise boundary locations thereof may be in dispute. Although the Company has exercised the usual due diligence with respect to title to properties in which it has a material interest, there is no guarantee that title to the properties will not be challenged or impugned. The Company's mineral property interest may be subject to prior unregistered agreements or transfers or native land claims and title may be affected by undetected defects. In addition, certain of the mining claims in which the Company has an interest are not recorded in the name of the Company and cannot be recorded until certain steps are taken by other parties. Before a number of claims under option can be recorded in the Company's name, the underlying title holder has to assign title to the Company once the Company satisfies its option agreement obligations. There are no assurances that the underlying title holder will assign title.



Potential Conflicts of Interest

The Directors of the Company serve as directors of other public and private companies and devote a portion of their time to manage other business interests.  This may result in certain conflicts of interest.  To the extent that such other companies may participate in ventures in which the Company is also participating, such directors and officers of the Company may have a conflict of interest in negotiating and reaching an agreement with respect to the extent of each company's participation.  The laws of British Columbia require the directors and officers to act honestly, in good faith, and in the best interests of the company and its shareholders.  However, in conflict of interest situations, directors of the Registrant may owe the same duty to another company and will need to balance the competing obligations and liabilities of their actions.  There is no assurance that the needs of the Registrant will receive priority in all cases.  From time to time, several companies may participate together in the acquisition, exploration and development of natural resource properties, thereby allowing these companies to:  (i) participate in larger programs; (ii) acquire an interest in a greater number of programs; and (iii) reduce their financial exposure with respect to any one program.  A particular company may assign, at its cost, all or a portion of its interests in a particular program to another affiliated company due to the financial position of the company making the assignment.  In determining whether or not the Company will participate in a particular program and the interest therein to be acquired by it, it is expected that the directors of the Company will primarily consider the degree of risk to which the Company may be exposed and its financial position at the time.



Indemnity and Protection of Directors, Officers and Employees

Article 19.1 of the Registrant's Articles states:



"Subject to the provisions of the Company Act [the British Columbia Company Act], the directors shall cause the Company to indemnify a director or former director of the Company and the directors may cause the Company to indemnify a director or former director of a corporation of which the Company is or was a shareholder and the heirs and personal representatives of any such person against all costs, charges and expenses including any amount paid to settle an action or satisfy a judgment, actually and reasonably incurred by him or them including an amount paid to settle an action or satisfy a judgment in a civil, criminal or administrative action or proceeding to which he is or they are made a party by reason of his or their being or having been a director of the Company or a director of such corporation, including any action brought by the Company or any such corporation.  Each director of the Company, on being elected or appointed, shall be deemed to have contracted with the Company on the terms of the foregoing indemnity."



The Article also provides similar protection for officers and employees for liabilities incurred arising out of the performance of their duties or by reason of their position with the Registrant.  Thus, the Registrant may be required to pay amounts to settle any such claims that may arise, if any.  The impact of any such possible future indemnity protection cannot be determined at this time.  Insofar as indemnification for liabilities arising under the U.S. Securities Act of 1933 (the "1933 Act") may be permitted to directors, officers or persons controlling the Registrant pursuant to the foregoing provisions, the Registrant has been informed that, in the opinion of the Securities and Exchange Commission, such indemnification is against public policy as expressed in the 1933 Act and is therefore unenforceable.



Potential Dilution

Commitments exist which could require the issuance of additional shares of the Registrant, such as by way of the exercise of stock options and the exercise of outstanding share purchase warrants.  Furthermore future equity financings, property transactions, and issuance of additional stock options among other things may require the subsequent issuance of the Registrant's securities.



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No U.S. Listing of the Company's Securities

The Registrant's Common Shares are listed on the TSX-Venture Exchange ("TSX").  The Registrant's investor base is located principally outside the United States and therefore, it has no current plans to apply for the listing of its shares or to otherwise qualify its securities on any U. S. stock exchange or the NASDAQ automated quotation system.  As a result, the market on the Registrant's securities is limited, particularly in the United States.  If market interest changes, and the Registrant meets the applicable eligibility requirements of NASDAQ or other U.S. exchanges in the future, it may reconsider this policy.  Investors should recognize that U.S. market liquidity will not be readily available.



Canadian Aboriginal Land Claims

Canadian Aboriginal rights may be claimed on Crown properties or other types of tenure with respect to which mining rights have been conferred.  The Company is aware of the mutual benefits afforded by cooperative relationships with indigenous people in conducting exploration activity and is supportive of measures established to achieve such cooperation. While there is, to the Companys knowledge, no existing claim in respect of any of its properties, the advent of any future aboriginal land claims and the outcome of any aboriginal land claims negotiations cannot be predicted.



Competition

The mineral industry is intensely competitive in all its phases.  The Company competes with many companies possessing greater financial resources and technical facilities than itself for the acquisition of mineral concessions, claims, leases and other mineral interests as well as for the recruitment and retention of qualified employees.  Many of the mining companies with which the Company competes have operations and financial strength many times that of the Company.  Nevertheless, the market for the Company's possible future production of minerals tends to be commodity rather than enterprise oriented since mineral products tend to be fungible.  As a result, the competitive factors are principally impacted by overall market issues rather than by corporate presence and strength.  Accordingly, the Company expects to compete by keeping its production costs low (as yet, the Company does not have any property in the development or production stage) through judicious selection of the property to be developed and by keeping overhead and other charges within industry standards.



Governmental Regulation

Operations, development and exploration on the Companys properties are affected to varying degrees by: (i) government regulations relating to such matters as environmental protection, health, safety and labour; (ii) mining law reform; (iii) restrictions on production, price controls, and tax increases; (iv) maintenance of claims; (v) tenure; and (vi) expropriation of property. There is no assurance that future changes in such regulation, if any, will not adversely affect the Companys operations. Changes in such regulation could result in additional expenses and capital expenditures, availability of capital, competition, reserve uncertainty, potential conflicts of interest, title risks, dilution, and restrictions and delays in operations, the extent of which cannot by predicted.



The Company is at the exploration stage on all of its properties. Exploration on the Companys properties requires responsible best exploration practices to comply with Company policy, government regulations, and maintenance of claims and tenure. The Company is required to be registered to do business and have a valid prospecting license (required to prospect or explore for minerals on Crown Mineral land or to stake a claim) in any Canadian province in which it is carrying out work. Mineral exploration primarily falls under provincial jurisdiction. However, the Company is also required to follow the regulations pertaining to the mineral exploration industry that fall under federal jurisdiction, such as the Fish and Wildlife Act.



If any of the Companys projects are advanced to the development stage, those operations will also be subject to various laws and regulations concerning development, production, taxes, labour standards, environmental protection, mine safety and other matters. In addition, new laws or regulations governing operations and activities of mining companies could have a material adverse impact on any project in the mine development stage that the Company may possess.



Uncertainty of Markets for Metals

The global market price for metals is influenced by numerous factors beyond the control of the Company. Such factors include supply and demand, inflation, imposition of export controls, government regulated ad valorem taxes and royalties that may be imposed on metal production, refining costs and penalties, labor problems experienced by large producers and market price fluctuations resulting from speculative and production hedging activity.  The exact effect of these factors cannot be accurately predicted and the combination of these factors may result in the Company not receiving an adequate return on invested capital.





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Uncertainty of Establishing Mineral Reserves

Locating mineral deposits depends on a number of factors, including the technical skill of the exploration personnel involved.  Whether a mineral deposit, once discovered, will be commercially viable also depends on a number of factors, including the particular attributes of the deposit (i.e., the size and grade of the deposit and the proximity of the deposit to the mine development infrastructure) as well as the market prices of precious metals and ores, which can be highly volatile.  Factors contributing to the uncertainty of establishing reserves of minerals may be resolved by further exploration for additional mineralization, establishment of infrastructure by non-related entities, development of improved mining technologies and increased market prices for the metals.  In the event that the Company's exploration efforts succeed and established reserves of minerals are identified, but various factors make mining not commercially viable, the Company would postpone mine development until there was an improvement in the factors contributing to commercial viability.  In the event that such commercial viability is never attained, the Company could seek to sell or otherwise realize value or could be required to abandon its business and fail as a "going concern."



Need for Additional Capital

Currently, exploration programs and feasibility studies are pursued by the Company with an objective of establishing mineralization of commercial quantities.  The Company may fund the proposed programs and feasibility studies through equity financing and the possible exercise of outstanding options.  Such funding would be dilutive to current shareholders.  Should sources of equity financing not be available to the Company, the Company would seek a joint venture relationship in which the funding source could become entitled to a shared, negotiated interest in the property or the projects.  If exploration programs carried out by the Company are successful in es­tablishing ore of commercial quantities and/or grade, additional funds will be required to develop the properties and reach commercial production.  In that event, the Company may seek capital through further equity funding, debt instruments, by offering an interest in the property being explored and allowing the party or parties carrying out further exploration or development thereof to earn an interest, or through a combination of funding arrangements.  There can be no assurance of such funding sources.  Furthermore, if the Company is not able to obtain the capital resources necessary to meet property payments or exploration or development obligations which now apply or which would apply in joint ventures with others, its potential as a "going concern" could be seriously affected.



Management and Directors

The Company is dependent on a relatively small number of key directors and officers:  John S. Brock, Wayne J. Roberts and Jeannine P.M. Webb.  Loss of any one of those persons could have an adverse affect on the Company.  The Company does not maintain key-man insurance in respect of any of its management.



Price Fluctuations:  Share Price Volatility

In recent years, the international securities markets have experienced high level of price and volume volatility, and the market price of securities of many mineral exploration companies have experienced wide fluctuations in price which have not necessarily been related to the operating performance, underlying asset values or prospects of such companies. There can be no assurance that the continual fluctuations in price will not occur.



Business Risks of Mineral Exploration

The Company is engaged in the exploration of mineral resource properties.  To date, any exploration program carried out by the Company has been an exploratory search for ore.  Mineral exploration involves significant operating and investment risks and few properties which are explored are ultimately successfully developed into producing mines.  The Company does not have any interests, direct or indirect, in producing mines or mineral properties which, as of the date hereof, have a known body of commercial ore.  Exploration for mineral resources requires compliance with the laws of the jurisdiction in which the exploration is taking place and potential changes to laws relating to exploration activities, environmental considerations and ownership of the properties being explored can have a significant impact on the Company.



Uninsurable Risks

In the course of exploration and development of, and production from, mineral resource properties, certain risks, and in particular, unexpected or unusual geological formations and engineering operating conditions may occur and may expose the Company to liabilities.  Should such liabilities arise the payment of such liabilities may have a material, adverse effect on the Company's financial position.  It is not always possible to fully insure against such risks or the Company may elect not to cover such risks because of the high cost of such insurance.  The Company may become subject to liability for pollution or hazards.  Payment of liabilities for claims for such occurrences could reduce or eliminate any future profitability and could result in increasing costs and a decline in the value of the securities of the Company.  Currently, the Company is a named insured with respect to Commercial General Liability and Excess Liability in a gross amount limited to $10 million (Cdn.) for each occurrence.



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Market Risk

The Company is in the business of mineral exploration.  Metal prices and foreign exchange rates may fluctuate widely from time to time.  The Company has not entered into market instruments for trading or other purposes.



Variations in Operating Results

The Registrant was incorporated on February 24, 1987 and since incorporation has not realized net income nor paid dividends.  During the years ended December 31, 2005, 2004 and 2003, the Company had net losses of
$1,465,324, $455,500 and $2,096,679 respectively, deficits of $22,661,277, $21,076,533 and $20,621,033 respectively, and per share losses of $0.04, $0.02 and $0.12 respectively. There is no assurance that these trends in operating results will change.



Plan of Operations and Financial Sources and Liquidity

During 2005, the Company issued 7,000,000 Common Shares for gross proceeds of $525,000, which proceeds had been received prior to December 31, 2004. At December 31, 2005, the Registrant had cash and cash equivalents of $17,450,  and a working capital deficit of $302,814.



At April 15, 2006, the Registrant had 36,364,366 Common Shares outstanding, outstanding options expiring on various dates until September 17, 2009, entitling the holders to purchase up to 3,923,000 Common Shares at prices ranging from $0.10 to $0.15 per share, and warrants entitling the holder to purchase up to 50,000 shares at $0.055 per share until May 17, 2006.



To date, the Companys mineral exploration activities have been funded through sales of common shares.  The Companys ability to continue operations is dependent on managements ability to secure additional financing.  Management is actively pursuing such additional sources of financing, and while it has been successful in doing so in the past, there can be no assurance it will be able to do so in the future.  Because of this uncertainty, there is substantial doubt about the ability of the Company to continue as a going concern.  The Consolidated Financial Statements do not include the adjustments that would be necessary should the Company be unable to continue as a going concern.



Additional Financing

In order to continue exploring its mineral properties and acquiring additional properties, management may be required to pursue additional sources of financing. The Company has limited financial resources and there is no assurance that additional funding will be available to allow the Company to fulfill its obligations on existing exploration properties. Failure to obtain additional financing could result in delay or indefinite postponement of further exploration and the possible, partial or total loss of the Companys interest in certain properties. The Company may, in the future, be unable to meet its share of costs incurred under agreements to which it is a party and the Company may consequently have its interest in the properties subject to such agreements reduced. Furthermore, if other parties to such agreements do not meet their share of such costs, the Company may be unable to finance the cost required to complete recommended programs.





ITEM IV

INFORMATION ON THE COMPANY



A)

HISTORY AND DEVELOPMENT OF THE COMPANY



Canadian Empire is a British Columbia corporation incorporated as Progressive Minerals Ltd. on February 24, 1987 by registration of its British Columbia Company Act Memorandum and Articles.  On February 10, 1989, the name was changed to Northern Crown Mines Ltd. On August 14, 2002, the name was changed to Canadian Empire Exploration Corp.



Canadian Empire's head office and principal place of business is located at #1205 - 675 West Hastings Street, Vancouver, British Columbia, Canada, V6B 1N2 (telephone:  (604) 687-4951; facsimile:  (604) 687-4991).  The principal contact person is John S. Brock, President, Chief Executive Officer and a Director.  Minera Reina Isabels and Minera Tatemas registered offices are at San Francisco No. 656-601, Col. Del Valle, C.P. 03100, Mexico, D.F.



Canadian Empire maintains a calendar fiscal year.  The Company's financial statements are stated in Canadian Dollars and are prepared in accordance with Canadian Generally Accepted Accounting Principles (GAAP), the application of which, in the case of the Company, conforms in all material respects for periods presented with U.S. GAAP except as noted in the notes to the Company's financial statements.  See "Item XVII Financial Statements".





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The Registrant's Common Shares are listed on the TSX Venture Exchange  (formerly the Canadian Venture Exchange) and trade on the facilities of the TSX Venture Exchange under the symbol "CXP."  On December 5, 2001, the Registrant consolidated its capital on a ten (10) old Common Shares for one (1) new share basis, changed its trading symbol from NCW to CXP, and received a new CUSIP number (664903 50 7). The Registrant is a reporting issuer and an exchange issuer under the Securities Act, R.S.B.C. 1993, c.418 (the "BC Act"), is a reporting issuer under the Securities Act, R.S.A. 2000, c S-4 (the "Alberta Act"), is a reporting issuer under the Securities Act of Manitoba, ccsm c.S50 (the "Manitoba Act") is a reporting issuer under the Securities Act R.S.O. 1990, c. S5 (the "Ontario Act") and is not in default of any requirements of the BC Act, the Alberta Act, the Manitoba Act or the Ontario Act or the rules and regulations pertaining to those acts.



During 2003 and 2004, the Company entered into various agreements to acquire the right to various mineral properties located in Canada.   At December 31, 2003, the Company determined that, results not having met expectations, it would no longer maintain its interests in these mineral properties and wrote off all costs associated with the properties.  During 2005, the Company determined that results not having met expectations, it would no longer maintain its interests in mineral properties, and wrote off costs associated with the properties. See Item V  Operating and Financial Review and Prospects and Description of Property.





B)

BUSINESS OVERVIEW



TO DATE, THE COMPANY HAS FOCUSED ON ACQUIRING EXPLORATION RIGHTS AND DETERMINING WHETHER THE PROPERTIES HAVE SUFFICIENT MINERALIZATION TO SUPPORT FULL DEVELOPMENT.  TO DATE, THE COMPANY HAS NOT GENERATED REVENUES FROM ITS EXPLORATION OPERATIONS AND THERE IS NO IMMEDIATE EXPECTATION OF ANY SUCH REVENUES.

During 2005, the Company relinquished the Atikokan West, Barrington, Silver Hope and McBride Grubstake properties, and wrote off all expenditures related to those properties.



Atikokan West

Additional compilation of results was conducted and assessment credit was applied to maintain all claims in good standing through 2005.  No field work was conducted during the year.  Prior to December 31, 2005, the property was returned to the vendor.



Barrington

Following the 2004 program, results of the field program suggested the attractive higher copper-gold grades were limited to narrower zones than originally anticipated and did not warrant drill testing, and on March 31, 2005 the property was returned to the vendor.



Silver Hope

A report summarizing the 2004 program was completed and appropriate assessment work was filed.  No field work was conducted during the period.  On December 19, 2005, the property was returned to the vendor.



McBride Grubstake

The Company acquired through map staking a large claim block of 132 contiguous claims that covered an area of interest measuring approximately 70 kilometres in length and 7 kilometres in width.  The Company initiated follow-up prospecting and geochemical programs that defined target areas of mineralization.  Anomalous nickel, copper and zinc values were defined but results not having met expectations, the property was returned to the vendor.

During 2004, the Company acquired the right to earn an 80% interest in the Atikokan West Property in Ontario, entered into an option agreement to acquire a 100% interest in the Barrington copper-gold porphyry property located in northwestern British Columbia, entered into an agreement to earn a 65% interest in the Silver Hope property in British Columbia and entered into the McBride grubstake agreement.



Atikokan West

The Atikokan West property in northwestern Ontario hosts several zones of structurally controlled gold mineralization where prior drilling intersected intervals to 6.2 g/t Au over 10.4 metres.  During 2004, the Company drilled 5 holes.  Continued drilling was contemplated for 2005.





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Barrington

The Barrington property, located in northwestern British Columbia, covers several zones of porphyry copper-gold mineralization.  During 2004, the Company conducted an initial surface sampling program and determined the attractive copper-gold values to be hosted in narrower zones than anticipated.



Silver Hope

The Silver Hope property, located in central British Columbia, covers 3 zones of copper-silver mineralization.  During 2004, the Company conducted an eight-hole drilling program to test for high-grade feeder zones at depth below the known zones.  The program was successful in intersecting  high-grade copper-silver mineralization at the Hope Zone.



McBride Grubstake

During 2004, the Company entered into a grubstake agreement with prospectors to fund grassroots exploration for shale hosted stratabound nickel-copper-precious metals mineralization in the McBride area of British Columbia.  A large block of claims was subsequently acquired in 2005.



During 2003, the Company continued to work under a strategic alliance with Teck Cominco in the acquisition of Canadian exploration projects with drill targets indicating large metal systems.



Yukon Olympic

The Yukon Olympic Property, located in the Yukon, has an iron oxide copper gold system with a 2.0 milligal gravity anomaly and magnetic anomaly over a length of 8 kilometres and a width of 1 kilometre.  Copper-bearing hematitic breccia was discovered near the eastern end of the geophysical anomalies.  A drilling program conducted in 2002 failed to intersect significant mineralization and the property was relinquished in 2003 to an underlying vendor.



Big Bulk and VMS

During 2003, the Company completed 1664 metres of diamond drilling in 11 holes on the Big Bulk copper-gold property located in northwestern B.C.    Surface exploration work was conducted on the adjacent VMS property.  With exploration results failing to meet expectations, the Big Bulk and VMS properties were relinquished to underlying vendors.



Hemlo West

During 2002, seven drill holes were completed at the Hemlo West property, located in the western portion of Ontarios Hemlo Gold Camp, to test continuity of gold mineralization in a 1200 metre by 300 metre section of the Hemlo-Heron Bay Shear.  Although most of the holes intersected alteration, sulphides, quartz veining and anomalous gold values characteristic of the Hemlo Camp host rocks, exploration results did not meet expectations and the property was relinquished  to its vendor in 2003.



Amos

Six gold-enriched massive sulphide VMS targets were drill tested during 2002 at the Amos Project, located near Amos, Quebec.  Drill results did not meet expectations and during 2003 the property was relinquished  to its vendor.



Meridian

In 2002, five drill holes were completed on the Meridian massive sulphide project in Northern Manitoba with inconclusive drilling results.  The option was relinquished to the propertys underlying vendor in 2003.





TO THE COMPANY'S KNOWLEDGE, THE MINERAL PROPERTIES CANNOT BE PROVEN TO CONTAIN A BODY OF COMMERCIAL ORE UNTIL A POSITIVE FEASIBILITY STUDY DEMONSTRATING COMMERCIAL PRODUCTION HAS BEEN PREPARED BY INDEPENDENT CONSULTING ENGINEERS.



C)

ORGANIZATIONAL STRUCTURE



Canadian Empire has one wholly owned subsidiary, Minera Reina Isabel and 90% ownership in another subsidiary, Minera Tatemas, both corporations formed under the laws of Mexico on March 27, 1991, and February 13, 1997 respectively.  The remaining 10% of Minera Tatemas is owned by Enrique Gaitan Enriquez.  As the Company no longer holds any mineral property interest in Mexico, Minera Tatemas and Minera Reina Isabel are currently inactive.  During 1999, the Company sold its shareholdings in one of its Mexican subsidiaries, Minera Sierra Pacifico, S.A. de C.V. ("Minera Sierra") to an arms length purchaser. Minera Sierra was incorporated under the laws of Mexico on March 27, 1991.



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D)

DESCRIPTION OF PROPERTY



Exploration and Mineral Property Expenditures for Fiscal 2005:



|                                |                 |            |             |                 |              |         |        
|------------------------------- | --------------- | ---------- | ----------- | --------------- | ------------ | ------- | -------
|                                | ATIKOKAN 
 WEST | BARRINGTON | SILVER HOPE | YUKON 
 OLYMPIC | MC
    BRIDE | GENERAL | TOTAL  
|Accomodation                    | -               | -          | -           | -               | 12,891       | 100     | 12,991 
|Assays and geochemical analysis | -               | -          | 18,284      | -               | 23,525       | 166     | 41,975 
|Consulting                      | -               | 5,388      | 12,100      | -               | 36,151       | 1,911   | 55,550 
|Environmental                   | -               | -          | -           | 11,436          | -            | -       | 11,436 
|Expediting                      | 3               | -          | 2           | -               | 121          | 37      | 163    
|Field supplies                  | -               | -          | 318         | -               | 5,152        | -       | 5,470  
|Maps, printing and drafting     | -               | -          | 7,121       | -               | 3,916        | 133     | 11,170 
|Property acquisition costs      | -               | 210        | 2,421       | -               | 6,158        | -       | 8,789  
|Project management fees         | 6               | 434        | 3,717       | 915             | 21,667       | 325     | 27,064 
|Salaries and wages              | -               | -          | 6,733       | -               | 65,915       | 1,596   | 74,244 
|Transportation                  | 76              | 38         | 1,698       | -               | 123,077      | 117     | 125,006
|                                | 85              | 6,070      | 52,394      | 12,351          | 298,573      | 4,385   | 373,858





During the year ended December 31, 2005, the company expended $373,858 (2004: $1,047,638) in exploration costs on mineral properties, primarily at the McBride and Silver Hope properties, including $4,385 (2004: $100,026) on costs incurred while conducting general exploration.  The Company terminated its agreement in respect of the Atikokan West, Barrington, Silver Hope, and McBride properties and wrote off property acquisition costs of $117,089 (2004: $nil) and deferred exploration costs of $1,197,316 (2004: $2,680).

ATIKOKAN WEST PROPERTY

In an agreement entered into in 2004 with Teck Cominco Limited (Teck Cominco), the Company had the option to earn an 80% interest in the Atikokan West Property by making staged exploration expenditures in the aggregate amount of $1,000,000 by December 31, 2008 and then maintaining that interest by funding ongoing exploration through pre-feasibility.  After the completion of a pre-feasibility study, Teck Cominco had the option to back-in for a 60.8% interest in the project by funding a minimum of 200% of the Companys prior expenditures and completing a feasibility study.  During the currency of the agreement, Teck Cominco was responsible for making all cash and advance royalty payments to an underlying vendor.  Under the terms of the underlying agreement, Teck Cominco had the right to earn a 100% property interest subject to a 2% NSR royalty.



The Atikokan West Property, located near Atikokan, Ontario, consisted of 162 claim units located along a length of 8 kilometres that cover 7 structurally controlled gold occurrences in favourable volcanic rocks geologically analogous to high-grade gold systems in the Red Lake camp.  Six of these gold occurrences have not seen prior drilling.  Work to date has outlined targets ready for drill testing, including the depth extensions of mineralization identified by prior drill holes with grades of 6.2 g/t gold over 10.4 metres, as reported by the Ontario Ministry of Northern Development and Mines.



During 2004, the Company conducted a detailed prospecting program and the completion of 5 diamond drill holes for a total footage of 1561 metres testing the Zephyr gold zone.  Prospecting of additional zones on the property did not yield encouraging results.  Assay results of the altered and mineralized drill hole intercepts yielded low gold values.



During 2005 additional compilation of results was conducted and assessment credit was applied to maintain all claims in good standing
through 2005.  No field work was conducted during the year.  Prior to December 31, 2005, the property was returned to Teck Cominco, and the Company wrote off deferred exploration expenditures of $403,323.

BARRINGTON PROPERTY

During 2004, the Company conducted a preliminary mapping and sampling program to define drill targets of the Barrington Property.  The results of the field program suggested the attractive higher copper-gold grades were limited to narrower zones than originally anticipated and did not warrant drill testing.  On March 31, 2005 the property was returned to the vendor, and the Company wrote off property acquisition costs of $14,510 and deferred exploration costs of $64,130.



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SILVER HOPE PROPERTY

In an agreement entered into in 2004 with Sci-Tek Resources Ltd. (Sci-Tek), a private B.C. company, the Company may earn a 65% interest in the Silver Hope Property by making cash payments of $315,000 ($45,000 paid in 2004 and $30,000 paid in 2005) and share payments of 1,000,000 shares (200,000 shares issued) by December 31, 2008 to Sci-Tek and completing $5.0 million in exploration expenditures by December 31, 2009.  The Company and Sci-Tek may then form a joint venture, with each party providing pro-rata funding of ongoing exploration.  Non-contribution by either party to the joint venture will result in pro-rata dilution of interest, convertible to a 2% NSR subject to a buy-down provision from the relinquishing party for $2.0 million.



The Silver Hope Property is contiguous with the southern boundary of the past producing Equity Silver Mines Property located in central British Columbia and covers prospective stratigraphy for discovery of stratabound copper-silver-gold mineralization.  Prior workers conducted several drilling programs along a two-kilometre strike length of favourable geology that partially outlined 3 near-surface bulk tonnage copper-silver zones.  The zones, named Hope, Superstition and Gaul by prior workers, occur along a favourable horizon in pyroclastic volcanics that have been tested by approximately 40 holes.  No resources were calculated although drill holes intersected reported grades to 0.71% copper and 12.9 g/t silver over 65.4 metres that included high-grade zones that assayed 7.9% copper and 105 g/t silver over 4.0 meters.



A re-interpretation of this style of mineralization along a four-kilometre length that includes two deposits that saw production by Equity Silver Mines and 3 zones on the Silver Hope Property suggests opportunity for re-classification of the deposits as stratabound with a hydrothermal overprint.



During 2004, the Company completed 2141 metres of diamond drilling in 8 holes on the Hope and Gaul Zones that tested for higher-grade copper-silver mineralization at depth.  The program was successful in confirming the presence of higher-grade mineralization at depth below the Hope Zone where a breccia feeder zone was outlined.  No such feeder zone was found at the Gaul Zone.



During 2005, the report summarizing the 2004 program was completed and appropriate assessment work was filed.  No field work was conducted during the period.  On December 19, 2005, the property was returned to the vendor, and the Company wrote off property acquisition costs of $96,421 and deferred exploration costs of $335,379.

MCBRIDE PROJECT

On July 1, 2004, the Company entered into the McBride Grubstake Agreement with two prospectors whereby the Company may earn 90% interest in any mineral claims acquired by the prospectors by making exploration expenditures of $1.0 million, cash payments of $140,000 and 250,000 unit payments on or before December 31, 2008.  Each unit shall consist of one common share of the Company and one 12-month share purchase warrant.  The Company has the right to purchase the remaining 10% interest in the project mineral claims for $100,000 and 1.5 million shares of the Company to be paid to the prospectors.  The prospectors retain a 1% NSR which the Company can buy down 0.5% for $1.0 million.  Prior to June 30, 2005, the Company issued a total of 50,000 common shares to the prospectors, as well as warrants allowing for the purchase of up to 50,000 common shares at $0.055 per common share until May17, 2006.



The McBride project was initiated with a program of initial geochemical silt sampling and prospecting of a Proterozoic shale basin hosting a 50-kilometre long metal-rich horizon.  The exploration objective is discovery of Sedex-style nickel-copper-precious metal mineralization.



During 2004, the Company funded a regional silt sampling and prospecting program to outline areas of potential nickel, copper and zinc mineralization.  The 2004 regional scale stream sediment sampling identified a 50 kilometre-long trend of anomalous nickel, copper and zinc values.  Detailed silt sampling of individual creeks has yielded consistent high metal values along stream lengths of 0.5 to over 2.0 kilometres with values peaking at 1566 ppm Ni, 445 ppm Cu, 1361 ppm Zn and attendant values to 681 ppm Co and 3.0 ppm Au.  Initial prospecting, until terminated by snow conditions, identified over 25 gossans (rusty zones) aligned along the favourable horizon resulting from weathering of sulphide mineralization.



During 2005, the Company acquired through map staking a large claim block of 132 contiguous claims with 2539 cells that cover an area of interest measuring approximately 70 kilometres in length and 7 kilometres in width.  During the second and third quarters of 2005, the Company completed follow-up prospecting and geochemical programs that defined target areas of mineralization.  Five target areas saw grid-controlled soil sampling, rock sampling and geological mapping surveys.  Anomalous nickel, copper and zinc values were defined but results not having met expectations, the property was returned to the vendor, and the Company wrote off property acquisition costs of $6,158 and deferred exploration costs of $382,133.



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YUKON OLYMPIC

During 2005, the Company incurred additional costs relating to final environmental mitigation in connection with exploration of the Yukon Olympic property in 2003, which was returned to the vendor during 2004, and wrote off $12,351 of deferred exploration costs.



Wayne J. Roberts, P.Geo, Vice-President, Exploration of the Company, a Qualified Person, has reviewed and compiled the mineral projects technical information presented in this document.



TO THE COMPANY'S KNOWLEDGE, THE MINERAL PROPERTIES CANNOT BE PROVEN TO CONTAIN A BODY OF COMMERCIAL ORE UNTIL A POSITIVE FEASIBILITY STUDY DEMONSTRATING COMMERCIAL PRODUCTION HAS BEEN PREPARED BY INDEPENDENT CONSULTING ENGINEERS.







ITEM V

OPERATING AND FINANCIAL REVIEW AND PROSPECTS



The following discussion of the financial condition, changes in financial condition and results of operations of the Company for the years ended December 31, 2005, 2004, and 2003 should be read in conjunction with the Consolidated Financial Statements of the Company for the years ended December 31, 2005, 2004, and 2003. Except as otherwise indicated, all dollar amounts contained in this discussion and analysis and the Consolidated Financial Statements are in Canadian dollars.  The financial information presented in the Consolidated Financial Statements was prepared in accordance with generally accepted accounting principles (GAAP) in Canada.  Note 9 of these Consolidated Financial Statements of the Company sets forth the material differences between Canadian and U.S. GAAP.  The Company capitalizes property acquisition and exploration expenditures relating to mineral properties in which the Company has an active interest.  In the event that such properties become inactive or prove uneconomic, they are written off.  Any reference in this document to "properties" means any mineral resources properties in which the Company has or in the future may earn an interest.



A)

OPERATING RESULTS



OVERALL PERFORMANCE



RESULTS OF OPERATION OF FISCAL 2005 VS FISCAL 2004

As at December 31, 2005, the Company had total assets of $32,080 as compared with $1,452,157 as at December 31, 2004.  Resource assets at December 31, 2005 were $nil as compared with $944,932 at December 31, 2004.  The decrease in resource assets at December 31, 2005 results from the return of all mineral properties to their vendor and write off of all property acquisition and deferred exploration costs pertaining to these properties.  At December 31, 2005, the Registrant had cash and cash equivalents of $17,450 (2004: $451,514; 2003: $1,067,042), of which $nil (2004: $342,964; 2003: $927,891) is restricted to flow-through expenditures on Canadian mineral properties, resulting in an unrestricted working capital deficiency of $302,814 (2004: $99,282; 2003: $90,767).  Current liabilities increased slightly to $323,594 in 2005 as a result of insufficient funds (2004: $252,243). Included in the current liabilities is $120,534 owed toBadger & Co. Management Corp. ("Badger & Co.") (see "Related Party Transactions").  During 2003, the Company was advanced $30,000 by a related party owned by Directors of the Company and charged interest in the amount of $412.  The interest was paid during 2003 and the principal was repaid in 2004.



During 2005, the Company incurred administrative expenses of $176,193 (2004: $261,109).  The overall decrease relates to the proration of costs between companies managed within the facilites housing the Company and the reduced activities of the Company.  Management and administrative services and Office operation and facilities are provided by Badger & Co., and are established on the basis of time expended on management of the Company.  Stock-based compensation is a non-cash item, resulting from the application of the Black-Scholes Option Pricing Model using assumptions in respect of expected dividend yield, average risk-free interest rates, expected life of the options and expected volatility.  The $89,788 (2004: $137,732) represents the fair value of the vested portion of options for the year.   The tax penalty of $8,044 (2004: $30,106) results from an amount due to Canada Revenue Agency ("CRA") on the renunciation of flow-through funds to the participants in the year 2004 for funds expended in 2005.  During 2005, the Company earned interest income of $27 as compared with $14,212 for the year 2004, due to decreased cash balances available during the year.  During 2005, the Company recorded, for Canadian GAAP, a future income tax recovery of $119,420 and a corresponding reduction of share capital in respect of the 2004 flow-through share financing for which the costs were renounced in 2005.



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Exploration and mineral property expenditures in fiscal 2005 decreased to $373,858 as compared with $1,047,638 for 2004 relating primarily to the Silver Hope and McBride properties.  During 2005, the Company terminated its agreement in respect of the Atikokan West, Barrington, Silver Hope, and McBride properties and wrote off property acquisition costs of $117,089 and deferred exploration costs of $1,197,316.  During 2004, the Company wrote off exploration expenditures of $2,680 and $nil of mineral property acquisition costs relating to disposition costs of the Yukon Olympic, Hemlo West, Meridian, VMS and Big Bulk properties.



RESULTS OF OPERATION OF FISCAL 2004 VS FISCAL 2003

For the fiscal year ended December 31, 2004, the Company had total assets of $1,452,157 as compared with $1,085,920 for the fiscal year ended December 31, 2003.  Resource assets at December 31, 2004 were $944,932 as compared with $nil at December 31, 2003.  The increase in resource assets at December 31, 2004 resulted from agreements entered into to earn interests in the various mineral properties.  At December 31, 2004 the Company had cash and cash equivalent of $451,514 (2003: $1,067,042) of which $342,964 (2003: $927,891) was restricted to flow-through expenditures on Canadian mineral properties, resulting in an unrestricted working capital deficiency of $99,282 (2003: $90,767).  Current liabilities remained relatively unchanged at December 31, 2004 and 2003, as to $252,243 at December 31, 2004, and $239,196 at December 31, 2003.  During 2003, the Company was advanced $30,000 by a related party owned by Directors of the Company and charged interest in the amount of $412.  The interest was paid during 2003 and the principal was repaid in 2004.



During 2004, the Company incurred administrative expenses of $398,841 (2003: $439,041).  The overall decrease related to the proration of costs between companies managed within the facilites housing the Company.  Management and administrative services and Office operation and facilities are provided by Badger & Co. (see "Related Party Transactions"), and are established on the basis of the time expended on management of the Company.  Stock-based compensation is a non-cash item, resulting from the application of the Black-Scholes Option Pricing Model using assumptions in respect of expected dividend yield, average risk-free interest rates, expected life of the options and expected volatility.  The $137,732 (2003: $145,509) represents the fair value of the vested portion of options for the year.   The tax penalty of $30,106 (2003: $14,309) results from an amount due to Canada Revenue Agency ("CRA") on the renunciation of flow-through funds to the participants in the year 2003 for funds expended in 2004.  During 2004, the Company earned interest income of $14,212 as compared with $9,144 for the year 2003, due to increased cash balances available during the year.



During 2004, under the Company's Stock Option Plan, incentive stock options allowing for the purchase in the aggregate of up to 2,458,000 shares in the capital of the Company at $0.10 per share until September 17, 2009 were granted to directors, officers and employees.



Exploration and mineral property expenditures in fiscal 2004 increased to $1,047,638 as compared with $659,467 for 2003 relating primarily to the Atikokan West and Silver Hope properties.  The Company wrote off exploration expenditures of $2,680 relating to disposition costs of the Yukon Olympic, Hemlo West, Meridian, VMS and Big Bulk properties, as compared with $1,475,505 for 2003.  The Company did not write off any mineral property acquisition costs in 2004, as compared with $113,814 in 2003.



RESULTS OF OPERATIONS OF FISCAL 2003 VS FISCAL 2002

For the fiscal year ended December 31, 2003, the Company had total assets of $1,085,920 as compared with $1,807,957 for the fiscal year ended December 31, 2002.  Resource assets at December 31, 2003 were $nil as compared with $1,008,652 at December 31, 2002.  The decrease in resource assets at December 31, 2003 resulted from the return of all properties to the vendors during the year.  As a result of the financings completed during 2003, at December 31, 2003, the Registrant had cash and cash equivalents of $1,067,042 (2002: $729,735), of which $927,891 was restricted to flow-through expenditures on Canadian mineral properties, resulting in an unrestricted working capital of $90,767.  Current liabilities remained relatively unchanged at December 31, 2003 and 2002, as to $239,196 at December 31, 2003, and $186,207 at December 31, 2002.  During 2003, the Company was advanced $30,000 by a related party owned by Directors of the Company and charged interest in the amount of $412.  The interest was paid during 2003 and the principal was repaid in 2004.



Exploration and mineral property expenditures in fiscal 2003 were $659,467, as compared with $1,403,403 for fiscal 2002, when funds were expended primarily on the Hemlo West, Amos, Yukon Olympic, Big Bulk and VMS Properties. The decrease from $1,403,403 in fiscal 2002 to $659,467 in fiscal 2003 resulted from the abandonment of properties during 2003 and reduced activity at the Hemlo West, Amos, Yukon Olympic, Big Bulk and VMS Properties prior to their return to the vendors.



18



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Due to the reduced activity in fiscal 2003, the administrative expenses remained relatively unchanged in fiscal 2003 ($439,041) as compared with fiscal 2002 ($432,836). Audit and related services increased to $35,458 as compared with $14,887 for 2002 as a result of increased regulatory requirements.  The tax penalty of $14,309 for 2003 (2002- $nil) results from an amount due to CRA on the renunciation of flow-through funds to the participants in the year 2002 for funds not expended until 2003.  Legal fees reduced in 2003 to $16,046 as compared with $78,474 in 2002 due to the Short-Form Offering Document completed in 2002 to raise gross proceeds of $1,620,000, agreements entered into with Teck Cominco Limited, amendment to existing warrants to make them transferable, the change of name of the Registrant from Northern Crown Mines Ltd. to Canadian Empire Exploration Corp.  Stock-based compensation is a non-cash item, resulting from the application of the Black-Scholes Option Pricing Model using assumptions in respect of expected dividend yield average risk-free interest rates, expected life of the options and expected volatility.  The $145,509 (2003: $nil) represents the fair value of the vested portion of options for the year.   During 2003, the Company earned interest income of $9,144 as compared with $4,650 for the year 2002, due to the higher cash balances available during the year.



Shareholder communications in fiscal 2003 decreased to $44,201 as compares with $136,145 for fiscal 2002, as a result of the realignment of projects and the return of properties to the vendors. Interest expenses for fiscal 2003 were $412 as compared with $nil in fiscal 2002.  Fiscal 2003 saw an advance of $30,000 made to the Company by a related party owned by Directors of the Company.  Interest of $412 was paid in connection with the advance and the principal was repaid in the 2004.



During fiscal 2003, the Company wrote off exploration expenditures of $1,475,505 and property acquisition expenditures of $113,814  previously capitalized as resource assets relating to the relinquished properties, as compared with $349,104 and $nil respectively for fiscal 2002 relating primarily to the disposition of the Meridian Property.



SUMMARY OF QUARTERLY RESULTS



The following table sets forth a comparison of revenues and earnings for the previous eight quarters ending with December 31, 2005.

|                                 |                        |                        |                   |                    |                        |                        |                   |                   
|-------------------------------- | ---------------------- | ---------------------- | ----------------- | ------------------ | ---------------------- | ---------------------- | ----------------- | ------------------
|Quarter Ended:                   | December 31,  2005
($) | September 30, 2003
($) | June 30, 2005
($) | March 31, 2005
($) | December 31,  2004
($) | September 30, 2004
($) | June 30, 2004
($) | March 31, 2004
($)
|Current Assets                   | 20,780                 | 131,644                | 290,761           | 390,979            | 495,925                | 727,480                | 859,960           | 1,083,883         
|Resource Assets                  | 0                      | 1,120,199              | 960,811           | 919,576            | 944,932                | 164,635                | 92,608            | 6,159             
|Current Liabilities              | 323,594                | 251,296                | 225,456           | 215,204            | 252,243                | 157,386                | 137,100           | 174,122           
|Shareholders' Equity             |                        |                        |                   |                    |                        |                        |                   |                   
|Capital Stock                    | 21,931,172             | 21,931,951             | 21,931,173        | 21,928,423         | 21,403,422             | 21,384,423             | 21,381,165        | 21,381,165        
|Allotted but not Issued          | 0                      | 0                      | 0                 | 0                  | 525,000                | 0                      | 0                 | 0                 
|Contributed Surplus              | 438,591                | 415,550                | 394,065           | 371,911            | 348,025                | 341,586                | 240,046           | 240,046           
|Deficit                          | (22,541,857)           | (21,335,653)           | (21,287,822)      | (21,193,682)       | (21,076,533)           | (20,970,514)           | (20,784,978)      | (20,695,690)      
|Loss for the period              | (1,232,742)            | (47,831)               | (67,602)          | (117,149)          | (106,020)              | (185,535)              | (89,288)          | (74,657)          
|Working Capital (Deficit)  (1)   | (302,814)              | (119,652)              | 65,305            | 175,775            | 243,682                | (135,668)              | (65,188)          | 5,614             
|Basic and diluted loss per share | (0.04)                 | (0.01)                 | 0.00              | (0.003)            | (0.005)                | (0.012)                | (0.003)           | (0.003)           



(1)

At December 31, 2005, the Registrant had cash and cash equivalents of $17,450 (2004: $451,514; 2003: $1,067,042), of which $nil (2004:$342,964; 2003: $927,891) is restricted to flow-through expenditures on Canadian mineral properties, resulting in an unrestricted working capital deficiency of $302,814 (2004: $99,282; 2003: $90,767).



Variations in annual and quarterly loss and loss per shares are affected by the administration costs and by the write down or write offs of mineral property carrying costs.  In accordance with its policies, management reviews the carrying value of the deferred mineral property acquisiton and exploration expenditures to assess whether there has been any impairment in value.  In the event that mineral deposits are determined to be insufficient to recover the carrying value of any property, the carrying value is written down or written off, as appropriate.

No cash dividends have been declared or paid since the date of incorporation and the Company has no present intention of paying dividends on its common shares.  The Company anticipates that all available funds will be used to finance the growth of its business.  Losses for the year are affected mainly by administration costs and write off of deferred exploration and mineral property costs for that year.  These losses vary from year to year depending on the Company's level of activity, and the amount of write offs relating to the project(s) abandoned during the year.  Resource assets balances are dependent on the costs spent to date to earn an interest in projects held at period end.







19



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B)

LIQUIDITY AND CAPITAL RESOURCES



LIQUIDITY

FISCAL 2005 VS FISCAL 2004

As a result of the financings initiated during 2004, at December 31, 2005, the Company had cash and cash equivalents of $17,450 (2004: $451,514), of which $nil (2004: $342,964) is restricted to flow-through expenditures on Canadian mineral properties, resulting in an unrestricted working capital deficiency of $302,814 (2004: $99,282).Accounts receivable at December 31, 2005 of $3,330 (December 31, 2004: $44,411) were comprised of Goods and Services Tax credits of $2,830 (December 31, 2004: $44,411), and an advance relating to exploration at the Silver Hope Property of $500 (December 31, 2004: $nil).  Accounts payable at December 31, 2005 of $323,594 (December 31, 2004: $252,243) were comprised of amounts due primarily for audit services for the years 2004 and 2005 of $58,641 (December 31, 2004: $29,700), a penalty in respect of the renunciation of flow-through funds of $8,044 (December 31, 2004: $30,106), an amount owing for legal services of $27,122 (December 31, 2004: $14,667), an amount owing for taxes on the disposition of the Guadaupe property of approximately $96,644 (December 31, 2004: $96,644), payment due for the acquisition of the Silver Hope Property of $nil (December 31, 2004: $30,000), an amount owing in respect of the Yukon Olympic property (relinquished in prior years) of $11,436 (December 31, 2004: $nil), amounts owing to Badger & Co. Management Corp. ("Badger & Co.") for cost of administrative and exploration services provided (see "Related Party Transactions") in the amount of $120,534 (December 31, 2004: $50,612), and amounts to various other parties of $1,173 (December 31, 2004: $514).

During 2005, in connection with a private placement for which funds of $525,000 were received during 2004, the Company issued 3,500,000 common shares and 3,500,000 flow-through common shares, and 170,030 common shares in payment of finders' fees.  On May 18, 2005, in connection with the McBride Grubstake agreement, the Company issued a total of 50,000 common shares to the prospectors at fair value of $2,750, as well as warrants allowing for the purchase of up to 50,000 common shares at $0.055 per common share until May 17, 2006.  The warrants were valued at $778.

During 2004, the Company issued 415,250 common shares in connection with the exercise of 420,500 warrants for total proceeds of $123,700, of which 3,500 common shares were issued in relation to flow-through warrants for proceeds of $525.

During 2005, 820,000 warrants allowing for the purchase of up to 820,000 shares at $0.15 per share until December 22, 2005 expired. During 2005 the Company granted and, at December 31, 2005 had outstanding, 50,000 warrants allowing for the purchase of up to 50,000 shares at $0.055 per share until May 27, 2006.  At December 31, 2004, the Company had outstanding 820,000 warrants allowing for the purchase of up to 820,000 common shares at $0.15 per share until December 22, 2005, and stock options allowing for the purchase of up to 1,365,000 common shares at $0.15 per share until January 3, 2008, 100,000 common shares at $0.15 per share until August 21, 2008, and 2,458,000 common shares at $0.10 per share until September 17, 2009.



The company had no contractual obligations at December 31, 2005.  All property option payments are made at the election of the Company.



FISCAL 2004 VS FISCAL 2003

As a result of the financings completed during 2004, at December 31, 2004, the Company had cash and cash equivalents of $451,514 (2003: $1,067,042), of which $342,964 (2003: $927,891) is restricted to flow-through expenditures on Canadian mineral properties, resulting in an unrestricted working capital of $99,282 (2003: $90,767). Accounts receivable at December 31, 2004 of $44,411 (2003: $9,278) were comprised of Goods and Services Tax credits.  Accounts payable at December 31, 2004 of $252,243 (2003: $239,196) were comprised of an accrual for audit services for the year 2004 of approximately $30,000 (2003: $24,000), a penalty in respect of the renunciation of flow-through funds of approximately $30,000 (2003: $14,000), an amount owing for legal services of approximately $15,000 (2003: $18,000) and an amount owing for taxes on the disposition of the Guadaupe property of approximately $96,000 (2003: $96,000), payment due for the acquisition of the Silver Hope Property ($30,000) and amounts owing to Badger & Co. Management Corp. ("Badger & Co.") for cost of administrative and exploration services provided (see "Related Party Transactions") in the amount of $50,612 (2003: $46,394).  In addition, at December 31, 2003, the Company owed $30,000 to John S. Brock Limited, a company owned by the CEO and President of the Company, and the Vice-President, Exploration of the Company, for an advance made to the Company during the year.  The advance was repaid in 2004.

During 2004, the Company issued 415,250 common shares in connection with the exercise of 420,500 warrants for total proceeds of $123,700, of which 3,500 common shares were issued in relation to flow-through warrants for proceeds of $525.  The Company received, in connection with a private placement, gross proceeds of $525,000, of which $350,000 were flow-through funds. The shares were issued in 2005.  During 2003, the Company issued 11,750,000 common shares in connection with private placements for total gross proceeds of $1,266,000 (8,744,000 common shares issued for flow-



20



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through funds of $924,400), issued 820,000 common shares on the exercise of special warrants  for gross proceeds of $246,000, issued 63,000 shares for share issue costs valued at $6,300 and paid $96,156 for share issue costs.

At December 31, 2004, the Company had outstanding 820,000 warrants allowing for the purchase of up to 820,000 common shares at $0.15 per share until December 22, 2005, and stock options allowing for the purchase of up to 1,365,000 common shares at $0.15 per share until January 3, 2008, 100,000 common shares at $0.15 per share until August 21, 2008, and 2,458,000 common shares at $0.10 per share until September 17, 2009.  At December 31, 2003, the Company had stock options outstanding allowing for the purchase of up to 1,580,000 common shares at $0.15 per share until January 3, 2008 and 100,000 common shares at $0.15 per share until August 21, 2008.  At December 31, 2003, the Company had warrants outstanding as follows:



|                   |                                                              |                    |            
|------------------ | ------------------------------------------------------------ | ------------------ | -----------
|Number of warrants | Number of common shares issuable on the exercise of warrants | Exercise price ($) | Expiry date
|1,500,000 (1)      | 1,500,000                                                    | 0.15               | May 22/04  
|4,050,000 (2)      | 2,025,000                                                    | 0.15               | June 18/04 
|1,080,000 (1)      | 1,080,000                                                    | 0.35               | June 18/04 
|820,000 (3)        | 820,000                                                      | 0.30               | June 30/04 
|973,000 (4)        | 486,500                                                      | 0.10               | Sept 15/04 
|200,000 (1)        | 200,000                                                      | 0.20               | Sept 20/04 
|1,624,000 (1)      | 1,624,000                                                    | 0.14               | Oct 12/04  
|100,000 (1)        | 100,000                                                      | 0.20               | Oct 22/04  
|820,000            | 820,000                                                      | 0.15               | Dec 22/05  
|11,167,000         | 8,655,500                                                    |                    |            



(1)

Expired unexercised

(2)

3,500 common shares issued on exercise of warrants; the remainder of the warrants expired unexercised

(3)

410,000 common shares issued on exercise of warrants; the remainder of the warrants expired unexercised

(4)

1,750 common shares issued on exercise of warrants; the remainder of the warrants expired unexercised



The company had no contractual obligations at December 31, 2004.  All property option payments are made at the election of the Company.



CAPITAL RESOURCES

The Company's continuing operations are dependent on its ability to secure additional financing.  There can be no assurance that the Company will be successful in this regard.  The exploration and subsequent development of the Company's properties therefore depends on the Company's ability to obtain additional required financing.  The Company has limited financial resources and there is no assurance that additional financing will be available to allow the Company to fulfill its obligations on its existing exploration properties.  Failure to obtain additional financing could result in the delay or indefinite postponement of further exploration and the possible, partial or total loss of the Company's interest in the properties.  The Company may in the future be unable to meet its obligations under agreements to which it is a party and the Company may consequently have its interest in the properties subject to such agreement jeopardized.  Furthermore, the Company may be unable to finance the cost required to complete recommended programs.  The Company is dependent on raising funds by the issuance of shares or disposing of interests in its mineral properties (by option, joint ventures or sales) in order to finance further acquisitions, undertake exploration and development of other mineral properties and meet general and administrative expenses in the immediate and long term.  There can be no assurance that the Company will be successful in raising the required financing.



To date, the Companys mineral exploration activities have been funded through sales of common shares.  The Companys ability to continue operations is dependent on managements ability to secure additional financing.  Management is pursuing such additional sources of financing, and while it has been successful in doing so in the past, there can be no assurance it will be able to do so in the future.  Because of this uncertainty, there is doubt about the ability of the Company to continue as a going concern.  The Consolidated Financial Statements do not include the adjustments that would be necessary should the Company be unable to continue as a going concern.





21



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Outstanding Share Data as at May 19, 2006

Authorized - 250,000,000 no par value common shares

Issued - 36,389,366



Warrants outstanding:

Nil



Stock Options outstanding:

|                             |                              |                    |            
|---------------------------- | ---------------------------- | ------------------ | -----------
|Number of shares outstanding | Number of shares exercisable | Exercise Price ($) | Expiry Date
|100,000                      | 100,000                      | 0.15               | Aug 21/08  
|1,365,000                    | 1,365,000                    | 0.15               | Jan 3/08   
|2,458,000                    | 2,458,000                    | 0.10               | Sept 17/09 
|3,923,000                    | 3,923,000                    |                    |            



Escrowed or pooled shares: nil shares.



Property option payments:



At December 31, 2005 and May 19, 2006 the Company had no resource assets.Option payments on properties are made at the election of the Company.





C)

RESEARCH AND DEVELOPMENT, PATENTS AND LICENSES, ETC.



The Company is not involved in any research, development, patenting or licensing activities.



D)

TREND INFORMATION



The Company is in the business of mineral exploration.  The Company is affected by operating trends and uncertainties which are dependent on the extraction of minerals.



E)

OFF-BALANCE SHEET ARRANGEMENTS



The Company has no off-balance sheet arrangements.



F)

TABULAR DISCLOSURE OF CONTRACTUAL OBLIGATIONS



The Company has no contractual obligations other than those included under Liquidity or Capital Resources.



G)

OTHER INFORMATION



The Company's web address is www.canadianempire.com.  Other information relating to the Company may be found on the SEDAR website (www. SEDAR.com).



H)

OUTLOOK



The Company is actively seeking acquisition of mineral properties with an emphasis on gold and gold related projects that can be easily financed and explored, and in this regard has reviewed over 50 submittals to April 15, 2006.  Two properties, contingent on due diligence, have been selected for further negotiation of acquisition terms.  As at April 15, 2006, no new properties have been acquired.



During the past year, the climate for exploration financing for companies such as Canadian Empire has greatly improved as the result of increased availability of capital, and the financing of mineral exploration..  Forecasts of gold prices for 2006 are strong and it is anticipated that availability of risk capital for mineral exploration will continue through 2006.







22



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I)

FORWARD LOOKING STATEMENTS



This discussion includes certain statements that may be deemed "forward-looking statements".  Other than statements of historical facts, statements in this discussion include, but are not limited to, the Companys expectations as to, future production, reserve potential, exploration drilling, exploration activities and events or developments, commodities market prices, timetables, costs, capital expenditures, work programs, and budgets..  Although the Company believes the expectations expressed in such forward-looking statements are based on reasonable assumptions, the risks, hazards, uncertainties and factors that could cause actual results to differ materially from those in forward-looking statements include, but are not limited to, exploitation and exploration successes, continued availability of capital and financing, and general economic, environmentl, industry, market or business conditions.  such statements are not guarantees of future performance and actual results or developments may differ materially from those in the forward-looking statements.  Investors are cautioned that any such statements are not guarantees of future performance and that actual results or developments may differ materially form those projected in the forward-looking statements.





ITEM VI

DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES



A)

DIRECTORS AND SENIOR MANAGEMENT



John S. Brock (age 64) has been President and a Director of the Registrant since March 8, 1990.  Mr. Brock is a Geologist and the President and controlling shareholder of John S. Brock Ltd. (JSB) from 1966 to present.  Mr. Brock was employed by JSB from 1990 to March 31, 2001, and by Badger & Co. Management Corp. (Badger & Co.) from April 1, 2001 to present.  Badger & Co. is a private company owned by Mr. Brock, Mr. Roberts and Ms. Webb, as to 40%, 30% and 30% respectively.  Mr. Brock was a governor of the Vancouver Stock Exchange from June 1990 to June 1995 and a director of the CDNX Venture Exchange from November 1999 to July 2001. Mr. Brock currently serves on the Boards of Directors of the Registrant, Pacific Ridge Exploration Ltd., Western Prospector Group Ltd., and Canadian Resources House Limited.



R.E. Gordon Davis, P. Eng. (age 68), has been a Director of the Registrant since June 8, 1994.  Mr. Davis is a Professional Geological Engineer and Businessman.  Mr. Davis serves on the Boards of Directors of the Registrant, Pacific Ridge Exploration Ltd., Western Prospector Group Ltd., Canadian Resources House Limited, and Silver Standard Resources Inc.
and is President and Director of Canplats Resources Corporation.



Lawrence Page, LL. B., Q.C. (age 67) has been a Director of the Registrant since October 31, 1989.  Mr. Page is a Barrister and Solicitor who practised with the Vancouver, British Columbia law firm of Worrall Scott and Page from 1981 to April 30, 1995.  Since 1995, Mr. Page has practised with Lawrence Page, Q.C. Law Corporation.  Mr. Page is the President and serves on the Boards of Directors of Bravo Venture Group Inc.., Newcoast Silver Mines Ltd., is a Director and the Secretary of Western Silver Corporation., is the Chairman and a Director of Rio Fortuna Exploration Corp.,  Quaterra Resources Inc. and Avalon Venture Corporation.



Wayne J. Roberts, P. Geo. (age 60),  has been a Director of the Registrant since March 8, 1990 and its Vice-President, Exploration since June 14, 1995.  Mr. Roberts is a minority shareholder (30%) of JSB, was employed by JSB from 1990 to March 31, 2001, and by Badger & Co. from April 1, 2001 to present.  Badger & Co. is a private company owned by Mr. Brock, Mr. Roberts and Ms. Webb, as to 40%, 30% and 30% respectively.  Mr. Roberts is a Registered Professional Geoscientist in the Province of British Columbia.  Mr. Roberts serves on the Board of Directors of the Registrant, Western Prospector Group Ltd. and Canadian Resources House Limited, and is Vice-President, Exploration of the Registrant, Pacific Ridge Exploration Ltd., Western Prospector Group Ltd. and Canadian Resources House Limited.



Jeannine P.M. Webb, CGA (age 46), has been the Chief Financial Officer of the Registrant since October 31, 1995, the Corporate Secretary of the Registrant since October 16, 1997, and an employee of JSB from 1991 to March 31, 2001.  Ms. Webb has been employed by Badger & Co. from April 1, 2001 to present.  Badger & Co. is a private company owned by Mr. Brock, Mr. Roberts and Ms. Webb, as to 40%, 30% and 30% respectively.  Ms. Webb is the Chief Financial Officer and Corporate Secretary of the Registrant, Pacific Ridge Exploration Ltd., Canadian Resources House Limited, and Western Prospector Group Ltd.



There are no family relationships between any of the directors, senior management and employees of the Company.





23



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B)

COMPENSATION



The Registrant does not compensate its directors or senior management (or executive officers) for their services as directors or senior management.  Directors and senior management are entitled to reimbursement for reasonable travel and other out-of-pocket expenses incurred in connection with corporate matters pertaining to the Company.  The Board of Directors may award special remuneration to any director or senior management undertaking any special services on behalf of the Company other than services ordinarily required of a director or senior management.  Other than indicated below no director or senior management received any compensation for his services as a director or senior management, including committee participation and/or special assignments.



The Registrant grants stock options to directors, senior management and employees - see "Options to Purchase Securities from Registrant".



The following table sets forth details of the compensation paid during the Registrant's fiscal year ended December 31, 2005 to directors and senior management:



|                                   |              |                                           |                    |                   
|---------------------------------- | ------------ | ----------------------------------------- | ------------------ | ------------------
|Directors/Executive Officers       | Salary/Bonus | Stock Option Exercise Net Market Value(a) | Other Compensation | Total Compensation
|John Brock                         | $0           | $0                                        | $11,393 (b)        | $11,393           
|Wayne J. Roberts                   | $0           | $0                                        | $20,488 (c)        | $20,488           
|Jeannine P. M. Webb                | $0           | $0                                        | $6,055 (d)         | $6,055            
|Other Directors/ Senior Management | $0           | $0                                        | $0                 | $0                



(a)

Stock Option Exercise Net Market Value represents the aggregate difference between the exercise price of stock options exercised during fiscal 2003 and the market value of the common stock on the date of exercise.

(b)

The $11,393 in other compensation represents payments to John S. Brock made by Badger & Co. for services provided by John S. Brock to the Company under an Administrative Agreement and an Exploration Services Agreement between the Company and Badger & Co..  In addition, Badger & Co., which is owned 40% by John S. Brock and 30% each by Wayne J. Roberts and Jeannine P.M. Webb, received compensation from the Company for services under the Administrative Agreement and the Exploration Services Agreement.  The $11,393 includes a 10% mark-up retained by Badger & Co..

(c)

The $20,488 in other compensation represents payments to Wayne J. Roberts made by Badger & Co. for services provided by Wayne J. Roberts to the Company under an Administrative Agreement and an Exploration Services Agreement between the Company and Badger & Co..  In addition, Badger & Co., which is owned 40% by John S. Brock and 30% each by Wayne J. Roberts and Jeannine P.M. Webb, received compensation from the Company for services under the Administrative Agreement and the Exploration Services Agreement.  The $20,488 includes a 10% mark-up retained by Badger & Co..

(d)

The $6,055 in other compensation represents payments to Jeannine P. M. Webb made by Badger & Co. for services provided by Jeannine P. M. Webb to the Company under an Administrative Agreement and an Exploration Services Agreement between the Company and Badger & Co..  In addition, Badger & Co., which is owned 40% by John S. Brock and 30% each by Wayne J. Roberts and Jeannine P.M. Webb, received compensation from the Company for services under the Administrative Agreement and the Exploration Services Agreement.  The $6,055 includes a 10% mark-up retained by Badger & Co..



Under the Administrative Agreement, the Company is charged for the cost of corporate and administrative wages of Badger & Co. employees incurred by Badger & Co. on behalf of the Company at Badger & Co.s cost plus a 10% mark-up, as well as office facilities and operations expenses incurred by Badger & Co. on behalf of the Company at Badger & Co.s cost plus a 10% mark-up.  For the year ended December 31, 2005, the Company was charged as follows:



|                                                 |          |             | 
|------------------------------------------------ | -------- | ----------- | 
|                                                 | Cost ($) | Mark-up ($) | 
|Corporate and administrative wages(1)            | 33,300   | 3,330       | 
|Office facilities and operations                 | 29,893   | 4,312       | 
|Total in respect of the Administrative Agreement | 63,193   | 7,642       | 



(1)

Includes $11,393 for services provided by John S. Brock as President and Chief Executive Officer (CEO) of the Company and $6,055 for services provided by Jeannine P.M. Webb, Chief Financial Officer and Corporate Secretary, of the Company, respectively.





24



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Under the Exploration Agreement, the Company is charged for the cost of exploration and field wages of Badger & Co. employees incurred by Badger & Co. on behalf of the Company at Badger & Co.s cost plus a 10% mark-up, and exploration project management fees charged by Badger & Co. calculated at 8% of all exploration costs incurred by the Company.  For the year ended December 31, 2005, the Company was charged as follows:



|                                              |          |             | 
|--------------------------------------------- | -------- | ----------- | 
|                                              | Cost ($) | Mark-up ($) | 
|Exploration and field wages(1)                | 21,638   | 2,164       | 
|Exploration Project Management Fees           | None     | 27,064      | 
|Total in respect of the Exploration Agreement | 21,638   | 29,228      | 



(1)

Includes $20,488 for services provided by Wayne J. Roberts as Vice-President, Exploration of the Company.



No amounts have been set aside or accrued by the Registrant during fiscal 2005 to provide for pension, retirement or similar benefits for directors or senior management of the Company pursuant to any plan provided for or contributed to by the Registrant.  Except as discussed in "Options to Purchase Securities From Registrant", the Registrant has no material bonus or profit sharing plans pursuant to which cash or non-cash compensation is or may be paid to the Company's directors, senior management or employees.



The Registrant has no plans or arrangements in respect of remuneration received or that may be received by executive officers of the Registrant in fiscal 2006 to compensate such officers in the event of termination of employment (as a result of resignation, retirement, change of control) or a change of responsibilities following a change of control, where the value of such compensation exceeds $60,000 U.S. per executive officer.



No director or executive officer of the Registrant received other compensation in excess of the lesser of $25,000 U.S. or 10% of such officer's cash compensation as reported in the above table and all directors and executive officers as a group did not receive other compensation which exceeded $25,000 U.S. times the number of persons in the group or 10% of the compensation reported in the table set forth above.



C)

BOARD PRACTICES



The Board of Directors of the Registrant is divided into three classes, designated as Class I, Class II, and Class III, to provide for a rotation of the terms of office for the directors on the Board of Directors.  Directors are, except for those directors initially classified as Class I or II directors, appointed for three-year terms and placed in Class I, II or III as determined by the Board of Directors.  The expiry of the term of a director is determined by the Class in which he is placed at the time of his election or appointment, with the term of all directors in one Class expiring at the end of the appropriate annual general meeting.  Accordingly, at each annual general meeting, directors to replace those directors whose terms have expired are to be elected to hold office until the third succeeding annual general meeting, unless they resign sooner or cease to be directors in accordance with the Registrants Articles.  Any director whose term expires will be eligible for re-election. The Company's last annual general meeting was held on May 29, 2006 and the next meeting will be held within 13 months of that date as specified in the Registrant's Articles.  The Registrant's executive officers are appointed by and serve at the pleasure of the Board of Directors.  Currently, the directors are classified as follows, and have their terms of office expire accordingly.



The following sets out the name of each Director and the expiry of their term:



|                   |       |                                  |                                        
|------------------ | ----- | -------------------------------- | ---------------------------------------
|Director           | Class | Date Began Serving as a Director | Expiry Date                            
|John S. Brock      | III   | 1990                             | Annual General Meeting in the year 2007
|Wayne J. Roberts   | III   | 1990                             | Annual General Meeting in the year 2007
|R. E. Gordon Davis | II    | 1994                             | Annual General Meeting in the year 2009
|Lawrence Page      | I     | 1989                             | Annual General Meeting in the year 2008





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The following sets out the name of the senior management (executive officers) and the term of their position:



|                    |                                             |           |                                            
|------------------- | ------------------------------------------- | --------- | -------------------------------------------
|Officers            | Officership                                 | Since     | Expiry Date                                
|John S. Brock       | President
Chief Executive Officer           | 1990
1990 | At the discretion of the Board of Directors
|Wayne J. Roberts    | Vice-President, Exploration                 | 1990      | At the discretion of the Board of Directors
|Jeannine P. M. Webb | Chief Financial Officer
Corporate Secretary | 1995
1997 | At the discretion of the Board of Directors



Service Contracts

The Companys administrative and exploration requirements are being provided by Badger & Co. Management Corp (Badger & Co.), a private company owned 40% by John S. Brock and 30% each by Wayne J. Roberts and Jeannine P. M. Webb.  Under the Badger & Co. administrative services arrangement, the Company is charged for the cost of corporate and administrative wages of Badger & Co. employees incurred by Badger & Co. on behalf of the Company at Badger & Co.s cost plus a 10% mark-up, as well as office facilities and operations expenses incurred by Badger & Co.s on behalf of the Company at Badger & Co.s cost plus a 10% mark-up. Under the Badger & Co. exploration services arrangement, the Company is charged for the cost of exploration and field wages of Badger & Co. employees incurred by Badger & Co. on behalf of the Company at Badger & Co.s cost plus a 10% mark-up, and exploration project management fees charged by Badger & Co. calculated at 8% of all exploration costs incurred by the Company.



Audit Committee

The majority of the Companys Audit Committee is composed of unrelated Directors.  The Audit Committee members of the Company at May 19, 2006  are Lawrence Page, R. E. Gordon Davis and John S. Brock.  The committee is responsible for reviewing the Companys financial reporting procedures, internal controls, and the performance of the Companys external auditors.  The committee is also responsible for reviewing the annual financial statements prior to their approval by the Board of Directors.



Compensation Committee

The Company does not have a Compensation Committee.





D)

EMPLOYEES



The Company has no employees.  Services for the year 2005 were provided by 3 management personnel located in Vancouver, British Columbia, Canada.



E)

SHARE OWNERSHIP



At May 19, 2006, directors and senior management of the Company beneficially owned directly or indirectly or exercised control or discretion over Common Shares of the Registrant as follows:



|                   |                                                 |              |                        
|------------------ | ----------------------------------------------- | ------------ | -----------------------
|Name               | Position                                        | Shares       | % of Shares Outstanding
|John S. Brock      | President, Chief Executive Officer and Director | 1,116,416(1) | 3.07%                  
|Wayne J. Roberts   | Vice-President, Exploration and Director        | 272,860      | 0.75%                  
|Lawrence Page      | Director                                        | 199,000      | 0.55%                  
|R.E. Gordon Davis  | Director                                        | 450,000      | 1.24%                  
|Jeannine P.M. Webb | Chief Financial Officer and Corporate Secretary | 1,000        | 0.00%                  



(1)

The 1,116,416 Common Shares include 810,806 Common Shares held by John S. Brock Limited, a British Columbia company owned by John S. Brock as to 70% and Wayne J. Roberts as to 30%.







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Options to Purchase Securities from the Registrant



Stock Options

At December 31, 2005, stock options to purchase up to 3,923,000 Common Shares from the Registrant had been granted to directors, officers, members of senior management of the Company or of Badger & Co. on the terms and conditions acceptable to the regulatory authorities in Canada.



The Registrant also has a stock option plan, as amended  (the Plan) that was approved by the Registrants shareholders, and is administered by the Registrants board of directors.  Under the terms of the Plan, at December 31, 2005, the aggregate number of Common Shares issuable under the Plan is 7,262,873 Common shares, provided that stock options in favor of any one individual may not exceed 5% of the issued and outstanding Common shares.  No stock option granted under the Plan is transferable by the optionee other than by will or the laws of descent and distribution, and each stock option is exercisable during the lifetime of the optionee and only by such optionee.  The exercise price of the stock options shall be the closing price of the Common Shares on the TSX on the trading day immediately preceding the date on which the option is granted.  The term of each stock option shall not exceed 5 years from the date of grant.  Under the policies of the TSX, upon the Registrants adoption of the Plan, stock options may thereafter only be granted under the Plan.



The names and titles of the directors, officers and senior management of the Registrant to whom outstanding stock options have been granted and the number of Common Shares subject to such stock options are set forth below as at December 31, 2005 and May 19, 2006  The exercise price of the stock options is stated in Canadian dollars.



|                    |           |                    |               |            
|------------------- | --------- | ------------------ | ------------- | -----------
|Optionee            | Number    | Exercise Price ($) | Date of Grant | Expiry Date
|John S. Brock       | 560,000   | 0.15               | Jan. 3/03     | Jan. 3/08  
|                    | 1,000,000 | 0.10               | Sept 17/04    | Sept 17/09 
|Lawrence Page       | 75,000    | 0.15               | Jan. 3/03     | Jan. 3/08  
|                    | 124,000   | 0.10               | Sept 17/04    | Sept 17/09 
|R. E. Gordon Davis  | 75,000    | 0.15               | Jan. 3/03     | Jan. 3/08  
|                    | 124,000   | 0.10               | Sept 17/04    | Sept 17/09 
|Wayne J. Roberts    | 430,000   | 0.15               | Jan. 3/03     | Jan. 3/08  
|                    | 600,000   | 0.10               | Sept 17/04    | Sept 17/09 
|Jeannine P. M. Webb | 200,000   | 0.15               | Jan. 3/03     | Jan. 3/08  
|                    | 300,000   | 0.10               | Sept 17/04    | Sept 17/09 
|                    | 3,488,000 |                    |               |            



Share Purchase Warrants

At December 31, 2005 warrants allowing for the purchase of up 50,000 Common shares were outstanding as follows:



|                 |                    |                    |                  |            
|---------------- | ------------------ | ------------------ | ---------------- | -----------
|                 | Exercise Price ($) | Number of Warrants | Number of Shares | Expiry Date
|McBride property | 0.055              | 50,000             | 50,000           | May 17/06  



At May 19, 2006 there were no warrants outstanding.





ITEM VII

MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS



A)

MAJOR SHAREHOLDERS



The Company is not owned or controlled, directly or indirectly, by another corporation or by any foreign government.

At May 19, 2006, there were no persons or company who beneficially owned directly or indirectly or exercised control or discretion over Common Shares carrying more than 5% of the voting rights attached to all outstanding Common Shares of the Company.



The information as to shares beneficially owned, not being within the knowledge of the Company, has been furnished by the respective individuals.  The Companys major shareholders do not have different voting rights.  There are no arrangements known to the Company which may at a subsequent date result in a change in control of the Company.





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B)

RELATED PARTY TRANSACTIONS



Except as described below and as noted earlier herein, no executive officer or senior management of the Registrant, nor any spouse, relative, associate or affiliate of the foregoing persons, has any interest in any material transactions which occurred during the Company's last three fiscal years and involved the Registrant or any of its subsidiaries; or any presently proposed transaction involving the Registrant or any of its subsidiaries.  Except as noted below, during the last three years and through the date of this Annual Report, no senior management or director, nor any associate thereof, was or is indebted to the Registrant or any of its subsidiaries.



Services Provided by Badger & Co. Management Corp.

Effective April 1, 2001, the Registrant entered into an administrative services agreement (the "Badger Administrative Agreement") with Badger & Co., a British Columbia company owned by John S. Brock (40%), Wayne J. Roberts (30%), and Jeannine P. M. Webb (30%) directors and/or officers of the Registrant.  Badger & Co. received from the Registrant its pro rata share of corporate and administrative wages of Badger & Co. employees incurred by Badger & Co. on behalf of the Company at Badger & Co.s cost plus a 10% mark-up, as well as office facilities and operations expenses incurred by Badger & Co. on behalf of the Company at Badger & Co.s cost plus a 10% mark-up.



Effective April 1, 2001, the Registrant entered into an exploration management agreement (the "Badger Exploration Agreement") with Badger & Co. pursuant to which Badger & Co. would implement exploration programs on certain properties of the Company.  Under the Badger Exploration Agreement, the Company was charged for the cost of exploration and field wages of Badger & Co. employees incurred by Badger & Co. on behalf of the Company at Badger & Co.s cost plus a 10% mark-up, and exploration project management fees charged by Badger & Co. calculated at 8% of all exploration costs.



During 2005, the Company was charged, by Badger & Co., $53,388 (2004: $64,686; 2003: $91,675) for cost of operations and administration, $37,935 (2004: $110,647; 2003: $154,082) for professional services and $30,379 (2004: $90,414; 2003: $140,729) for exploration salaries and wages and project management fees.  These transactions are in the normal course of operations and are consistent with industry standards.



ITEM VIII

FINANCIAL INFORMATION



A)

CONSOLIDATED STATEMENTS AND OTHER FINANCIAL INFORMATION



This Annual Report contains the consolidated financial statements for the Company for the fiscal years ended December 31, 2005, 2004, and  2003 which contain an Auditors Report dated April 12, 2006, Consolidated Balance Sheets as at December 31, 2005, and 2004, Consolidated Statements of Loss and Deficit, Consolidated Statements of Deferred Exploration and Mineral Property Expenditures, and Consolidated Statements of Cash Flows for the years ended December 31, 2005, 2004, and 2003, and Notes to Consolidated Financial Statements.



INDEBTEDNESS TO COMPANY OF DIRECTORS AND SENIOR MANAGEMENT

No directors or senior management of the Company are indebted to the Company or have been indebted to the Company since the beginning of the last completed financial year of the Company.



LEGAL OR ARBITRATION PROCEEDINGS

As of the date hereof, the Company is not party to any active or pending legal proceedings initiated by it and, to the best of its knowledge, the Company is not subject to any active or pending legal proceedings or claims against it or any of its properties.  However, from time to time, the Company may become subject to claims and litigation generally associated with any business venture.  In addition, the operations of the Company are subject to risks of accident and injury, possible violations of environmental and other regulations, and claims associated with the risks of exploration operations in foreign areas some of which cannot be covered by insurance or other risk reduction strategies.  Since the Registrant is a Canadian corporation and the officers, directors and certain of the persons involved with the Company as professional advisors are resident in Canada, it may be difficult to effect service within the United States upon such persons or to realize on any judgment by a court of the United States which is predicated on civil liabilities under the 1933 Act.  The Registrant's Canadian counsel have advised that there is doubt as to the enforceability in Canada, either in original actions or through enforcement of United States judgments, of liabilities predicated solely upon violations of the 1933 Act or the rules and regulations promulgated thereunder.





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DIVIDEND DISTRIBUTION POLICY

The Registrant has not paid any cash dividends on its Common Stock and has no present intention of paying any dividends.  The current policy of the Registrant is to retain earnings, if any, for use in operations and in the development of its business.  The future dividend policy of the Registrant will be determined from time to time by the Board of Directors.



CHANGES IN ACCOUNTING POLICIES, INCLUDING INITIAL ADOPTION

Variable Interest Entities

Effective January 1, 2005, the Company adopted the new Accounting Guideline 15 (AcG-15) Consolidation of Variable Interest Entities". This new standard establishes when a company should consolidate a variable interest entity in its financial statements.  Adoption of this guideline had no impact on the results or financial position of the Company.



AUDIT COMMITTEE

The Companys Audit Committee is composed of a majority of non-executive Directors.  The Audit Committee members of the Company at April 15, 2006 are Lawrence Page, R. E. Gordon Davis and John S. Brock.  The committee is responsible for reviewing the Companys financial reporting procedures, internal controls, and the performance of the Companys external auditors.  The committee is also responsible for reviewing the Company's annual financial statements prior to their approval by the Board of Directors.



COMPENSATION COMMITTEE

The Company does not have a Compensation Committee.



CRITICAL ACCOUNTING ESTIMATES

The detailed accounting policies are listed in Note 2 to the Financial Statements for the year ended December 31, 2005.  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, stock-based compensation and disclosure of contingent liabilities at the date of the financial statements and the reported amount of income and expenses during the year.  Actual results could differ from those estimates.  Management uses its best estimates for recording mineral property carrying values based on expenditures incurred, the results of any exploration conducted, prevailing market conditions and future plans for the projects.



FINANCIAL INSTRUMENTS

The Company only invests its cash in bank term deposits and/or instruments that are deemed to be very low risk.



B)

SIGNIFICANT CHANGES



There have been no significant changes from January 1 to May 19, 2006.



ITEM IX

THE OFFER AND LISTING



A)

PRICE RANGE AND VOLUME OF SHARES OF COMMON STOCK



The following table sets forth the price ranges of the Registrants shares on the Vancouver Stock Exchange, the Toronto Stock Exchange, the Canadian Venture Exchange and the TSX-Venture Exchange for each of the most current five years, each of the quarters for the most current two years and each of the most current six months, after taking into effect the consolidation of the Registrants capital on a ten (10) old shares for one (1) new share basis on December 5, 2001:

For each of the most current five years:

|     |          |        
|---- | -------- | -------
|Year | High ($) | Low ($)
|2005 | 0.100    | 0.045  
|2004 | 0.150    | 0.055  
|2003 | 0.170    | 0.080  
|2002 | 0.400    | 0.090  
|2001 | 0.400    | 0.100  
|2000 | 1.100    | 0.400  





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For each of the quarters for the most current two years:

|                          |          |        
|------------------------- | -------- | -------
|Quarter                   | High ($) | Low ($)
|October to December, 2005 | 0.080    | 0.050  
|July to September, 2005   | 0.070    | 0.045  
|April to June, 2005       | 0.080    | 0.045  
|January to March, 2005    | 0.100    | 0.065  
|October to December, 2004 | 0.105    | 0.055  
|July to September, 2004   | 0.100    | 0.055  
|April to June, 2004       | 0.090    | 0.055  
|January to March, 2004    | 0.150    | 0.080  



For each of most current six months:

|               |          |        
|-------------- | -------- | -------
|Month          | High ($) | Low ($)
|April, 2006    | 0.140    | 0.110  
|March, 2006    | 0.110    | 0.075  
|February, 2006 | 0.170    | 0.090  
|January, 2006  | 0.145    | 0.065  
|December, 2005 | 0.075    | 0.055  
|November, 2005 | 0.070    | 0.050  



B)

PLAN OF DISTRIBUTION



This Form 20F is being filed as an Annual Report under the Exchange Act and, as such, there is no requirement to provide any information under this section.



C)

MARKETS



The Registrant's Common Shares commenced trading on the Canadian Venture Exchange (CDNX) (now the TSX Venture Exchange) of British Columbia and Alberta, Canada under the symbol "CXP" and CUSIP No. 664903 50 7 on December 5, 2001.  The Registrants transferable non-flow-through share purchase warrants commenced trading on the TSX Venture Exchange of British Columbia and Alberta, Canada under the symbol "CXP-WT" and CUSIP No. 135660 11 6 on June 18, 2002.  The Registrant's Common Shares traded on The Toronto Stock Exchange (TSE) in Ontario, Canada from April 18, 1997 to September 11, 2000, on the Canadian Venture Exchange ("CDNX") in British Columbia and Alberta, Canada under the symbol "NCW" from December 8, 2000 to December 4, 2001, and on the Vancouver Stock Exchange (VSE) in British Columbia, Canada from November 18, 1987 to December 31, 1997.  The Registrants Common Shares were suspended from trading on the TSE effective September 11, 2000 for failure to meet minimum listing requirements through those facilities.  The Registrant applied and was granted trading privileges on the CDNX to commence trading on December 8, 2000.  The Company has no current plans to seek a listing on any U. S. exchange or on NASDAQ.



D)

SELLING SHAREHOLDERS



This Form 20F is being filed as an Annual Report under the Exchange Act and, as such, there is no requirement to provide any information under this section.



E)

DILUTION



This Form 20F is being filed as an Annual Report under the Exchange Act and, as such, there is no requirement to provide any information under this section.





ITEM X

ADDITIONAL INFORMATION



A)

SHARE CAPITAL



This Form 20F is being filed as an Annual Report under the Exchange Act and, as such, there is no requirement to provide any information under this section.





30



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B)

NOTICE OF ARTICLES (formerly "MEMORANDUM") AND ARTICLES



The information called for by this item is contained in Exhibits filed herewith.  In particular:

1.

The Companys Notice of Articles (formerly, "Memorandum") is on file with the Office of the British Columbia Registrar of Companies under Certificate of Incorporation No. 0322353.  Under the provisions of the Business Corporations Act (BC), the Company has the capacity and the rights, powers and privileges of an individual of full capacity.   There are no further restrictions in the Companys Notice of Articles or Articles, on the business that the Company can carry on nor on the powers the Company can exercise.

2.

Part 15 of the Companys Articles sets out the circumstances whereby a director must not vote on a proposal, arrangement or contract in which the director is materially interested, Article 12.2 sets out the directors powers to determine their compensation, Part 8 of the Companys Articles outlines the Companys borrowing powers exercisable by the directors and Article 12.3 sets out that no shares are required to be held for directors qualification.

3.

The Companys common shares rank equally as to dividend rights, voting rights (even though the Companys directors stand for re-election at staggered intervals), rights to share in the Companys profits and liquidation rights.  The Companys common shares are not, under the Companys Notice of Articles and Articles, subject to redemption or sinking fund provisions, liability to further capital calls, nor any provisions discriminating against any existing or prospective holder of such shares as a result of such shareholder owning a substantial number of shares.

4.

In accordance with the Business Corporations Act (BC) and Article 6.2 of the Companys Articles, an ordinary resolution is required to change the rights of holders of the Companys common shares.  An ordinary resolution is a resolution:

a)

passed at a general meeting by a simple majority of the votes cast by shareholders voting shares that carry the right to vote at general meetings, or

b)

passed, after being submitted to all of the shareholders holding shares that carry the right to vote at general meetings, by being consented to in writing by shareholders holding shares that carry the right to vote at general meetings who, in the aggregate, hold shares carrying at least 2/3 of the votes entitled to be cast on the resolution.

5.

Part 9 of the Companys Articles together with applicable corporate and securities laws contain the conditions governing the manner in which annual and extraordinary general meetings of shareholders are called including Notice of Meeting/Proxy Solicitation requirements.  Part 10 of the Companys Articles deals with proceedings at such meetings including quorum requirements.

6.

To the Companys knowledge, there are no limitations on the rights to own securities.

7.

There are no provisions of the Companys Notice of Articles or Articles that would have an effect of delaying, deferring or preventing a change in control of the Company and that would operate only with respect to a merger, acquisition or corporate restructuring involving the Company or any of its subsidiaries.

8.

There are no bylaw provisions governing the ownership threshold above which shareholder ownership must be disclosed.

9.

There are no conditions imposed by the Notice of Articles and Articles of the Company governing changes in the capital of the Company that are more stringent than is required by law.





C)

MATERIAL CONTRACTS



During 2001, the Company and Teck Cominco entered into the Teck Cominco Agreement, whereby Teck Cominco is a strategic partner in the Companys CEEx Program.  The Company's CEEx Program will incur mineral exploration expenses qualifying as CEE as defined in the Income Tax Act (Canada) on mineral properties. The CEEx Program is structured so that CEE funds will be expended on activities on selected mineral properties in consideration for the Company having the right to initially earn majority interests in those properties. The program is being directed towards a number of properties and a range of mineral commodities.  The CEEx Program operates under the direction of the Advisory Committee comprised of two representatives each from Teck Cominco and the Company.   The CEEx Program is dependent on the Companys acquisition of mineral properties on which a program of mineral exploration is warranted. Under the direction of the Advisory Committee mineral properties may be sourced by the Company from Teck Cominco or third parties.  Acquisition criteria places emphasis on the building of a portfolio of properties.  Approximately 70% of the portfolio is intended to contain properties sufficiently advanced to warrant immediate diamond drilling, approximately 20% of the portfolio is intended to contain properties that require additional exploration to develop drill targets and approximately 10% of the portfolio is intended to contain properties that are considered as early stage exploration projects.  Metal commodities of choice include: precious metals (gold, silver), base metals (copper and zinc), diamonds and industrial minerals (including tantalum and rare-earths).  Properties are intended to be acquired by way of option agreements whereby the Company may elect to earn an initial majority interest in a property by making scheduled exploration expenditures that qualify as CEE.





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D)

EXCHANGE CONTROLS



There are no governmental laws, decrees or regulations in Canada that restrict the export or import of capital or that affect the remittance of dividends, interest or other payments to non- resident holders of the Registrants securities.  However, any such remittance to a resident of the United States may be subject to a withholding tax pursuant to the reciprocal tax treaty between Canada and the Unites States.  For further information concerning such withholding tax see Item X Taxation below.



There are no limitations under the laws of Canada, the Province of British Columbia, or in the charter or other constituent documents of the Registrant with respect to the right of non-resident or foreign owners to hold and/or vote shares of the Registrants common stock.  However, the Investment Canada Act(the Act) enacted on June 20, 1985, as amended, requires the prior notification and, in certain cases, advance review and approval by the Government of Canada of the acquisition by a non-Canadian of control of a Canadian business, all as defined in the Act.  For the purposes of the Act, Control can be acquired through the acquisition of all or substantially all of the assets used in the Canadian business or the direct or indirect acquisition of interests in an entity that carries on a Canadian business, or which controls the entity which carries on the Canadian business.  Under the Act, control of a corporation, is deemed to be acquired through the acquisition of a majority of the voting shares of a corporation, and is presumed to be acquired where more than one-third, but less than a majority, of the voting shares of a corporation are acquired, unless it can be established that the corporation is not controlled in fact through the ownership of voting shares.  Other rules apply with respect to the acquisition of non-corporate entities.



Investments requiring review and approval include direct acquisitions of Canadian businesses with assets with a gross book value of Cdn. $5,000,000 or more; indirect acquisitions of Canadian businesses with assets of Cdn. $50,000,000 or more; and indirect acquisitions of Canadian businesses where the value of assets of the entity or entities carrying on business in Canada, control of which is indirectly being acquired, is greater than Cdn. $5,000,000 and represents greater than 50% of the total value of the assets of all the entities, control of which is being acquired.



Pursuant to the World Trade Organization Agreement Implementation Act, the Act was amended to provide that the value of the business acquisition threshold (the Threshold) above described is increased from those levels outlined where the acquisition is by a World Trade Organization Investor or by a non-Canadian other than a World Trade Organization Investor where the Canadian business that is the subject of the investment is immediately before the investment controlled by a World Trade Organization Investor.  The Threshold is to be determined yearly in accordance with a formula set forth in the Act.  For 1997, for example, the Threshold was determined to be Cdn. $172,000,000.



A World Trade Organization Investor includes an individual, other than a Canadian, who is a national of a World Trade Organization Member, or who has the right of permanent residence in relation to that World Trade Organization Member.



Different provisions and considerations apply with respect to investment to acquire control of a Canadian business that, as defined in the Act or regulations:



1.

Engages in production of uranium and owns an interest in producing uranium property in Canada;

2.

Provides financial services;

3.

Provides transportation services;

4.

Is a cultural business.



If an investment is reviewable, an application for review in the form prescribed by regulation is normally required to be filed with the Ministry of Industry, Director of Investment prior to the investment taking place and the investment may not be consummated until the review has been completed and ministerial approval obtained.  Applications for review concerning indirect acquisitions may be filed up to 30 days after the investment is consummated.  Applications concerning reviewable investments in culturally sensitive and other specified activities referred to in the preceding paragraph are required upon receipt of a notice for review.  There is, moreover, provision for the Minister (a person designated as such under the Act) to permit an investment to be consummated prior to completion of review if he is satisfied that delay would cause undue hardship to the acquirer or jeopardize the operation of the Canadian business that is being acquired.



E)

TAXATION



The discussions summarize the material tax considerations relevant to an investment in shares by individuals and corporations who, for income tax purposes, are resident in the U.S. for purposes of the Convention (as hereinafter defined)



32



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and are not resident in Canada, who hold shares as a capital asset, and who do not use or hold the shares in carrying on a business through a permanent establishment in Canada or in connection with a fixed base in Canada (collectively, unconnected U.S. Shareholders or Holders).  The tax consequences of an investment in the shares by investors who are not Unconnected U.S. Shareholders may differ substantially from the tax consequences discussed herein.  The discussion of U.S. tax considerations is addressed only to Unconnected U.S. Shareholders whose functional currency within the meaning of section 985 of the Internal Revenue Code of 1986, as mended (the Code), is the U.S. dollar, and to U.S. citizens who are not residents in the U.S. for purposes of the Convention, but who otherwise meet the definition of Unconnected U.S. Shareholders.  Furthermore, the discussion of U.S. tax considerations does not address the tax treatment of Unconnected U.S. Shareholders that own, or are deemed for U.S. federal income tax purposes to own, 10% or more of the total combined voting power of all classes of voting stock of the Registrant.  The discussion of Canadian tax considerations does not address the tax treatment of a trust, company, organization or other arrangement that is a resident of the U.S. and that is generally exempt from U.S. tax.



This discussion does not address all of the income tax consequences that may be applicable to any particular Holder subject to special treatment under the U.S. federal income tax law or to any particular Holder in light of such Holders particular facts and circumstances.  Some Holders, including tax-exempt entities, banks, insurance companies and persons who hold the shares as part of a synthetic security, conversion transaction or straddle or hedging transactions may be subject to special and/or different rules not discussed below.  Statements of legal conclusion of U.S. tax considerations as to the material U.S. federal income tax consequences of the acquisition, ownership and disposition of the shares by Unconnected U.S. Shareholders do not purport to be a complete analysis or listing of all possible tax considerations.  The discussion of U.S. tax considerations is based upon the provisions of the Code, and of published administrative practices of the Internal Revenue Service and judicial decisions, all of which are subject to change possibly with retroactive effect.  Statements of legal conclusions of Canadian tax considerations as to the material Canadian federal income tax consequences of the acquisition, ownership and disposition of the shares by Unconnected U.S. Shareholders do not purport to be a complete analysis or listing of all possible tax consequences.  The discussion of Canadian tax considerations is based upon the provisions of the Income Tax Act (Canada) (the Tax Act), the Convention between Canada and the U.S. of America with Respect to Taxes on Income and on Capital, as amended from time to time (the Convention), and our understanding of published administrative practices of Canada Customs and Revenue Agency (formerly, Revenue Canada) and judicial decisions, all of which are subject to change.  The discussion does not take into account the tax laws of the various provinces or territories of Canada or the tax laws of the various state and local jurisdictions in the U.S.



This discussion is not intended to be nor should it be construed as legal or tax advice to any particular investor.  Therefore, prospective investors should consult their own tax advisors with respect to the tax consequences of an investment in the shares.



U.S. Federal Income Tax Considerations

Unconnected U.S. Shareholders generally will treat the gross amount of distributions paid by the Registrant, including the amount of any Canadian tax withheld, as foreign source dividend income for U.S. federal income tax purposes to the extent of our current or accumulated earnings and profits, as computed for U.S. federal income tax purposes.  Distributions in excess of that amount will reduce an Unconnected U.S. Shareholders tax basis in the shares, but not below zero, and the remainder, if any, will be treated as taxable capital gain.  In general, in computing its U.S. federal income tax liability, an Unconnected U.S. Shareholder may elect for each taxable year whether to claim a deduction or, subject to the limitations described below, a credit for Canadian taxes withheld from dividends paid on its shares.  If the Unconnected U.S. Shareholder elects to claim a credit for such Canadian taxes, the election will be binding for all foreign taxes paid or accrued by the Unconnected U.S. Shareholder for such taxable year.  The Code applies various limitations on the amount of the foreign tax credit that may be available to a U.S. taxpayer based upon the segregation of foreign source income into separate categories, or baskets, of income.  For purposes of applying the foreign tax credit limitation, dividends are generally included in the passive income basket or the financial services income basket if received by a financial services entity.  The amount of credit that may be claimed with respect to the basket of income to which the dividend is allocated, and to which the foreign taxes are attributable, generally may not exceed the same proportion of the U.S. tax on worldwide taxable income, before applying the foreign tax credit as the U.S. holders foreign source taxable income allocable to such basket bears to such U.S. holders entire taxable income.  The foreign tax credit is disallowed for dividends on stock unless a minimum holding period requirement is satisfied and additional limitations may restrict the ability of some individuals to claim the foreign tax credit.  Accordingly, investors should consult their own tax advisors with respect to the potential consequences to them of the foreign tax credit limitations.  Dividends paid by the Registrant generally will constitute portfolio income for purposes of the limitation on the use of passive activity losses by investors and investment income for purposes of the limitation on investors investment interest expense.  Dividends paid by the Registrant will not be eligible for the dividends received deduction generally allowed with respect to dividends paid by U.S. corporations under



33



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Section 243 of the Code, but may be eligible for the dividends received deduction which may be claimed by 10% corporate shareholders under Section 245 of the Code.



For U.S. federal income tax purposes, the amount of any distributions made on shares to an Unconnected U.S. Shareholder in Canadian dollars will equal the U.S. dollar value of the Canadian dollars calculated by reference to the appropriate exchange rate in effect on the date of receipt of the distribution, regardless of whether the Canadian dollars are actually converted into U.S. dollars upon receipt.  Unconnected U.S. Shareholders should consult their own tax advisors regarding the treatment of foreign currency gain or loss, if any, on any Canadian dollars which are converted into U.S. dollars subsequent to receipt by the Unconnected U.S. Shareholder.



The sale of shares generally will result in the recognition of gain or loss to the Holder in an amount equal to the difference between the amount realized and the Holders adjusted basis in the shares.  Provided the Holder is not considered a dealer in the shares sold, gain or loss upon the sale of shares will generally be capital gain or loss.



Capital losses are deductible to the extent of capital gains.  Individual taxpayers may deduct excess capital losses up to $3,000 a year, $1,500 in the case of a married individual filing separately, from ordinary income.  Non-corporate taxpayers may carry forward unused capital losses indefinitely.  Unused capital losses of a corporation may be carried back three years and carried forward five years.



In the case of individuals, net capital gain from the disposition of property held for investment is excluded from investment income for purposes of computing the limitation on the deduction for investment interest applicable.  An individual may, however, elect to include such net capital gain in investment income if such taxpayer reduces the amount of its net capital gain that is otherwise eligible for preferential capital gains tax treatment by such amount.  In that event, such investment income would be taxable at ordinary income rates.



For any taxable year of the Registrant, if at least 75% of our gross income is passive income, as defined in the Code, or if at least 50% of our assets, by average fair market value, or, prior to fiscal year 1998, possibly by adjusted tax basis, are assets that produce or are held for the production of passive income, the Registrant will be a passive foreign investment company (PFIC).  If the Registrant is a PFIC for any taxable year during which an Unconnected U.S. Shareholder owns any shares, the Unconnected U.S. Shareholder will be subject to special U.S. federal income tax rules, set forth in Sections 1291 to 1298 of the Code, with respect to all of such Unconnected U.S. Shareholders shares.  If the Registrant were treated as a PFIC at any time during an Unconnected U.S. Shareholders holding period for shares, such Unconnected U.S. Shareholder generally would be subject to additional tax as well as interest charges with respect to the deferral of tax for the period during which such shares were held.  Any such additional tax and interest charges would apply upon the disposition of shares or the receipt of dividends.  Additionally, any gain realized on the disposition of shares would be treated as ordinary income or taxable at ordinary income rates rather than as capital gain or taxable at capital gains rates, and the tax basis of the shares held by an Unconnected U.S. Shareholder generally would not be stepped up to fair market value at death.  Under some circumstances, shareholders of a PFIC may elect to be taxed currently on their pro rata shares of PFIC income and capital gain or, in accordance with recently enacted legislation, report income currently on a mark to market basis with respect to their shares of stock in the PFIC.



The Registrant does not believe that it is likely to be a PFIC in the current or future taxable years; however, because the PFIC determination is made annually on the basis of facts and circumstances that may be beyond its control and because the principles and methodology for determining the fair market values of its assets are unclear, there can be no assurance that the Registrant will not be a PFIC for such years.  Special rules not described herein will also apply if the Registrant becomes a controlled foreign corporation for U.S. federal income tax purposes.  The Registrant would be treated as a controlled foreign corporation if U.S. Shareholders were to own, actually or constructively, more than 50% of the total combined voting power or total value of the Registrant.  For this purpose, the term U.S. Shareholder means a U.S. person who owns, actually or constructively, ten percent or more of the total combined voting power of the Registrant.  In light of the ownership requirements necessary for our productions to constitute Canadian-content productions and for the Registrant to claim Canadian tax benefits, it is not anticipated that the Registrant will become a controlled foreign corporation for U.S. federal income tax purposes.



U.S. Information Reporting and Backup Withholding

Under U.S. treasury regulations that are generally effective with respect to payments made after December 31, 2000 (the new withholding Regulations), the proceeds of a sale of shares through a U.S. or U.S. related broker will be subject to U.S. information reporting and may be subject to the 30% (for tax year 2002) U.S. backup withholding requirements.  Unconnected U.S. Shareholders generally can avoid the imposition of U.S. non-resident withholding tax by reporting their



34



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taxpayer identification number on an Internal Revenue Service Form W-9.  Non-U.S. shareholders generally can avoid the imposition of U.S. backup withholding tax by providing to their broker or paying agent a duly completed Internal Revenue Service Form W-8 BEN.  Any amounts withheld under the backup/non-resident withholding rules will be allowed as a refund or a credit against the shareholders U.S. Federal income tax, provided the required information is furnished to the Internal Revenue Service.



Dividends paid in the U.S. on the shares to Unconnected U.S. Shareholders or to non-U.S. shareholders through a U.S. or U.S. related person may be subject to the 30% (for tax year 2002) U.S. backup/non-resident withholding tax unless certification requirements are satisfied.



The New Withholding Regulations consolidate and modify the pre-2001 certification requirements and means by which a holder may claim exemption from U.S. federal income tax withholding and provide presumptions regarding the status of holders when payments to the holders cannot be reliably associated with appropriate documentation provided to the payor.  All holders should consult their tax advisors regarding the application of the New Withholding Regulations.



Canadian Tax Considerations

Dividends paid or credited, or that the Registrant deems to pay or credit, on the shares to Unconnected U.S. Shareholders will be subject to Canadian withholding tax.  Under the Convention, the maximum rate of withholding tax on dividends paid or credited on the shares is 15% if the beneficial owner of such dividends is an Unconnected U.S. Shareholder.  However, that rate is reduced to 5% under the Convention if the beneficial owner of such dividends is an Unconnected U.S. Shareholder that is a corporation that owns at least 10% of the voting stock of the Registrant.



An Unconnected U.S. Shareholder will not be subject to tax in Canada on any capital gain realized upon a disposition or deemed disposition of the shares, provided that the shares do not constitute taxable Canadian property of the Unconnected U.S. Shareholder within the meaning of the Tax Act.  The shares will not generally constitute taxable Canadian property of the Unconnected U.S. Shareholder unless, at any time in the five-year period that ends at the time of the disposition, the Unconnected U.S. Shareholder, either alone or together with persons with whom the Unconnected U.S. Shareholder did not deal at arms length, owned, had an interest in or the right to acquire 25% or more of the issued shares or any series or class of our capital stock.  Even if the shares are taxable Canadian property, under the Convention, gains derived by an Unconnected U.S. Shareholder would generally not be taxable in Canada unless the value of the shares is derived principally from real property situated in Canada.  The Registrant believe that the value of our shares is not currently principally derived, directly, or indirectly, from real property situated in Canada and do not expect this to change in the foreseeable future.



Canada does not currently impose any estate taxes or succession duties.



F)

DIVIDENDS AND PAYING AGENTS



This Form 20F is being filed as an Annual Report under the Exchange Act and, as such, there is no requirement to provide any information under this section.



G)

STATEMENTS BY EXPERTS



This Form 20F is being filed as an Annual Report under the Exchange Act and, as such, there is no requirement to provide any information under this section.



H)

DOCUMENTS ON DISPLAY



Any documents referred to in this document may be inspected at the head office of the Company, #1205  675 West Hastings Street, Vancouver, British Columbia, Canada, V6B 1N2 during normal business hours.



I)

SUBSIDIARY INFORMATION



There is no information relating to the Registrants subsidiaries which must be provided in Canada and which is not otherwise called for by the body of generally accepted accounting principles used in preparing the consolidated financial statements.







35



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ITEM XI

QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK



The Company is in the business of mineral exploration.  Metals prices and foreign exchange rates may fluctuate widely from time to time.  The Company has not entered into market instruments for trading or other purposes.  The Company has limited exposure to such risk at the present time.



ITEM XII

DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES



This Form 20F is being filed as an Annual Report under the Exchange Act and, as such, there is no requirement to provide any information under this section.



PART II



ITEM XIII

DEFAULTS, DIVIDENDS, ARREARS AND DELINQUENCIES

There has not been a material default in the payment of principal, interest, a sinking fund or purchase fund installment, or any other material default not cured within thirty days, relating to indebtedness of the Company.  There are no payments of dividend by the Registrant in arrears, nor has there been any other material delinquency relating to any class of preference shares of the Registrant.





ITEM XIV

MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS



Material modification to the rights of security holders

There have been no material modifications to the rights of security holders during the most current fiscal year.



Use of proceeds

This Form 20F is being filed as an Annual Report under the Exchange Act and, as such, there is no requirement to provide any information under this section.



ITEM XV

CONTROLS AND PROCEDURES



Evaluation and disclosure controls and procedures

Under the supervision and with the participation of the Companys management, including the Companys Chief Executive Officer and Chief Financial Officer, the Company evaluated the effectiveness of the design and operation of its disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended) as of a date (the Evaluation Date) being December 31, 2004.  Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that, as of the Evaluation Date, the Companys disclosure controls and procedures were effective in timely alerting them to the material information relating to the Company (or the Companys consolidated subsidiaries) required to be included in the Companys periodic SEC filings.



Changes in internal controls

There were no significant changes made in the Companys internal controls or, to the Companys knowledge, in other factors that could significantly affect these controls subsequent to the date of their evaluation.



ITEM XVI

AUDIT COMMITTEE FINANCIAL EXPERT



Audit Committee Financial Expert

The Registrant has an Audit Committee established by the Board of Directors. The members of the Audit Committee are C. Lawrence Page, QC., R.E. Gordon Davis, P. Eng., and John S. Brock. The Board does not currently have an audit committee financial expert, as that term is defined in Form 20-F.



Code of Ethics

The Registrant does not have a formal Code of Ethics.  The Registrant operates in compliance with regulations as applied by the TSX, the British Columbia Securities Commission, the Alberta Securities Commission, the Manitoba Securities Commission, the Ontario Securities Commission and the Securities and Exchange Commission.





36



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Principal Accountant Fees and Services

For the years ended December 31, 2005 and 2004, the Registrant was invoiced by PWC, the Company's independent auditors, for fees as set for below:



|     |            |                    |              |                     |               
|---- | ---------- | ------------------ | ------------ | ------------------- | --------------
|     | Audit Fees | Audit Related Fees | Tax Fees (1) | Other 
    Fees (2) | All Other Fees
|2005 | $26,700    | N/A                | N/A          | $500                | $3,500 (3)    
|2004 | $24,000    | N/A                | N/A          | $500                | $3,000 (4)    



(1)

Fees related to the preparation of the Company's T-2 corporate income tax return and the General Index of Financial Information required by CRA.

(2)

Fees in respect of read and comment procedures for the interim financial statements.

(3)

Fees in respect of read and comment procedures for the Companys 20F document.

(4)

Fees in respect of Sarbanes-Oxley Act, Section 404.



The Audit Committee has adopted procedures requiring Audit Committee review and approval in advance of all particular engagements for services to be provided by PWC.  Consitent with applicable laws, the procedures permit limited amounts of services, other than audit, review and attest services, to be approved by one or more members of the Audit Committee pursuant to authority delegated by the Audit Committee, provided the Audit Committee is informed of each particular service.   All of the engagements and fees for the years ended December 31, 2004 and 2005 were approved by the Audit Committee.  The Audit Committee reviews with PWC whether the non-audit services to be provided are compatible with maintaining the auditors' independence.  The Board has determined that, beginning with January 1, 2004, fees paid to the independent auditors for non-audit related services in any year will not exceed the fees paid for audit services during the year.  Permissible non-audit services will be limited to fees for tax services, accounting assistance or audits in connection with acquisitions, and other services specifically related to accounting or audit matters such as registration statements filings or private placements or public offerings.



PART III





ITEM XVII

FINANCIAL STATEMENTS



See the Financial Statements and Exhibits listed in Item XIX hereof and filed as part of this Annual Report.



These financial statements were prepared in accordance with Canadian GAAP and are expressed in Canadian dollars.  Such financial statements have been reconciled to U.S. GAAP (see note 10 therein).  For a history of exchange rates in effect for Canadian dollars as against U.S. dollars, see Item III - Key Information, Selected Financial Data  Exchange Rate Data.



ITEM XVIII

FINANCIAL STATEMENTS



Not applicable.



37



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ITEM XIX

EXHIBITS



Financial Statements

(i)

Managements Responsibility to Financial Reporting

(ii)

Auditors Report dated April 12, 2006

(iii)

Consolidated Balance Sheets as at December 31, 2005 and 2004

(iv)

Consolidated Statements of Loss and Deficit for the years ended December 31, 2005, 2004, and 2003

(v)

Consolidated Statements of Deferred Exploration and Mineral Property Expenditures for the years ended December 31, 2005, 2004, and 2003

(vi)

Consolidated Statements of Cash Flows for the years ended December 31, 2005, 2004, and 2003

(vii)

Notes to the Consolidated Financial Statements for the years ended December 31, 2005, 2004, and 2003 Financial Statements Schedules are omitted because they are not applicable, not required or because the required information is included in the consolidated financial statement or notes thereto filed within.



|      |   |                                                                                                                                                                                                     
|----- | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|1.1   | * | Certificate of Incorporation of Progressive Minerals Ltd., dated February 24, 1987                                                                                                                  
|1.2   | * | Certificate of Name Change to change corporate name to Northern Crown Mines Ltd. ("Registrant"), dated February 10, 1989                                                                            
|1.2.1 | * | Altered Memorandum as filed on June 18, 1997                                                                                                                                                        
|1.2.2 | * | Altered Memorandum as filed on August 23, 2000                                                                                                                                                      
|1.3   | * | Restated Articles of Registrant, as filed on May 4, 1990                                                                                                                                            
|1.3.1 | * | Amendment to Restated Articles of Registrant as filed on July 21, 1998                                                                                                                              
|1.3.2 | * | Amendment to Restated Articles of Registrant as filed on July 21, 1998                                                                                                                              
|2.1   | * | Warrant Transfer Agency Agreement between Registrant and Montreal Trust Company of Canada with respect to B Warrants, dated January 15, 1996                                                        
|2.2   | * | Amending Warrant Transfer Agency Agreement between Registrant and Montreal Trust Company of Canada with respect to B Warrants, dated January 31, 1996                                               
|2.3   | * | Agent's Warrant (Non-Transferable) for Purchase of Shares between Registrant and Canaccord Capital Corporation, dated January 15, 1996.                                                             
|2.4   | * | Form of Stock Option with respect to Common Shares without par value                                                                                                                                
|2.5   | * | Special Warrant Indenture between the Registrant and Montreal Trust Company of Canada dated as of November 28, 1996                                                                                 
|2.6   | * | Warrant Indenture between the Registrant and Montreal Trust Company of Canada dated as of November 28, 1996                                                                                         
|2.7   | * | Escrow and Custodial Agreement among Montreal Trust Company of Canada, Newcrest Capital, Inc., CIBC Wood Gundy Securities, Inc., and First Marathon Securities Limited dated as of November 28, 1996
|2.8   | * | Agent's Special Warrants to Acquire Agent's Warrants of Northern
Crown Mines Ltd. dated as of November 28, 1996                                                                                     
|2.9   | * | Agent's Compensation Warrants to Purchase Shares of Northern Crown Mines Ltd. dated as of November 28, 1996                                                                                         
|2.10  | * | Agency Agreement dated as of November 28, 1996                                                                                                                                                      
|3.1   | * | Administrative Services Agreement between Registrant and John S. Brock, dated January 1, 1996                                                                                                       
|3.2   | * | Exploration Program Management Agreement between John S. Brock Limited and Registrant, dated January 1, 1996                                                                                        
|3.3   | * | Letter of Understanding to Mr. Roy A. Martin from Registrant, dated June 3, 1991                                                                                                                    
|3.4   | * | Engagement Agreement among Registrant, Mr. Don Cross and Ms. Francine Quevillon, dated January 17, 1992                                                                                             
|3.5   | * | Declaration of Concession (Zamora), dated February 23, 1995 (in Spanish)                                                                                                                            



38



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|       |   |                                                                                                                                                                                                                                                                                 
|------ | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|3.6    | * | Declaration of Concession (Alcaraz), dated February 16, 1995 (in Spanish)                                                                                                                                                                                                       
|3.7    | * | Declaration of Concession (Ruiz), dated February 16, 1995 (in Spanish)                                                                                                                                                                                                          
|3.8    | * | Engagement Agreement between Registrant and Mr. Peter Risby, dated April 16, 1996                                                                                                                                                                                               
|3.9    | * | Option To Purchase Agreement between Registrant and Pan Atlantic Group Holdings Inc., dated March 25, 1996                                                                                                                                                                      
|3.10   | * | Agreement for Exploration and Unilateral Promise To Sell Agreement between Minera Campanillas, S.A. de C.V. and Minera Sierra Pacifico, S.A. de C.V., dated July 10, 1992, as amended December 15, 1993 (amendment in Spanish and English; underlying agreement in Spanish only)
|3.10.1 | * | Amending agreement between Minera Campanillas, S.A. de C.V. and Minera Tatemas, S.A. de C.V., dated July 14, 1997                                                                                                                                                               
|3.10.2 | * | Amending agreement between Minera Campanillas, S.A. de C.V. and Minera Tatemas, S.A. de C.V., dated September 29, 1998                                                                                                                                                          
|3.11   | * | Option Agreement between Minera Sierra Pacifico, S.A. de C.V. and Desarrollos Mineros Del Pacifico, S.A. de C.V., dated as of October 20, 1993, as amended by correspondence dated January 15, 1995, December 6, 1994, November 30, 1994 and September 15, 1994.                
|3.11.1 | * | Option Agreement amendment between Minera Sierra Pacifico, S.A. de C.V. and Desarrollos Mineros Del Pacifico, S.A. de C.V., dated April 15, 1998 and March 15, 1999                                                                                                             
|3.12   | * | Agreement with respect to the acquisition of the Mariposa Properties by the Company (for exploration and development) among certain individuals, Pan Atlantic Group Holdings Inc. and Northern Crown Mines Ltd. dated October 25, 1996.                                         
|3.12.1 | * | Agreement with respect to the settlement of debt for the acquisition of the Mariposa Properties by the Company (for exploration and development) among certain individuals, Pan Atlantic Group Holdings Inc. and Northern Crown Mines Ltd. dated January 17, 1997.              
|3.13   | * | Exploration Services and Program Management Agreement between the Registrant and John S. Brock Limited dated January 1, 1997.                                                                                                                                                   
|3.14   | * | Administrative Services Agreement with John S. Brock Limited dated January 1, 1997.                                                                                                                                                                                             
|3.15   | * | Corporate Development Services letter Agreement with Rescom Consultants Ltd. dated April 1, 1997                                                                                                                                                                                
|3.16   | * | Stock Option Plan effective May 7, 1997.                                                                                                                                                                                                                                        
|3.17   | * | Minera Tatemas incorporation document (in Spanish) dated February 13, 1997.                                                                                                                                                                                                     
|3.18   | * | Northern Crown Mines Ltd. Shareholders Rights Plan dated March 20, 1998.                                                                                                                                                                                                        
|3.19   | * | Minera Reina Isabel incorporation document (in Spanish) dated December 15, 1999.                                                                                                                                                                                                
|3.20   | * | Supplementary agreement (in Spanish) with respect to the sale of the shares of Minera Sierra Pacifico, dated December 3, 1999.                                                                                                                                                  
|3.21   | * | Option agreement (in Spanish) with respect to the sale of the shares of Minera Sierra Pacifico, dated November 10, 1999.                                                                                                                                                        
|3.22   | * | Sale of shares of Minera Sierra Pacifico agreement (in Spanish), dated November 10, 1999.                                                                                                                                                                                       
|3.23   | * | Exploration and option agreement between Minera Reina Isabel and Meridian, dated December 29, 2000.                                                                                                                                                                             
|3.24   | * | Exploration and option purchase agreement between Minera Tatemas and Meridian, dated December 29, 2000.                                                                                                                                                                         
|3.25   | * | Form of Stock Option agreement with respect to Common Shares without par value                                                                                                                                                                                                  
|3.26   | * | Funding and participation agreement with Teck Cominco dated December 4, 2001                                                                                                                                                                                                    
|3.27   | * | Amendment to the Funding and participation agreement with Teck Cominco dated February 20, 2002                                                                                                                                                                                  
|3.28   | * | Amendment to the Funding and participation agreement with Teck Cominco dated April 30, 2002                                                                                                                                                                                     
|3.29   | * | Amendment to the Funding and participation agreement with Teck Cominco September 15, 2002                                                                                                                                                                                       



39



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|     |   |                                                                                                                                                                                               
|---- | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|3.30 | * | Yukon Olympic property Assignment and assumption agreement between Western Prospector Group Ltd., Canadian Empire Exploration Corp. and Copper Ridge Exploration Inc. dated September 20, 2002
|3.31 | * | VMS property Assignment and assumption agreement between Western Prospector Group Ltd., Canadian Empire Exploration Corp. and Fayz Yacoub dated October 22, 2002                              
|3.32 | * | Big Bulk property agreement dated August 15, 2002                                                                                                                                             
|3.33 | * | Amos Property Option Agreement with Wheaton River Minerals Ltd. dated June 5, 2002                                                                                                            
|3.34 | * | Hemlo West and Amos properties agreement with Teck Cominco dated March 5, 2002                                                                                                                
|3.35 | * | Certificate of Name Change to change corporate name to Canadian Empire Exploration Corp. ("Registrant"), dated August 14, 2002                                                                
|3.36 | * | Atikokan West Property Option Agreement with Teck Cominco dated January 19, 2004                                                                                                              
|3.37 | * | Barrington Propety agreement with Dan Ethier dated June 16, 2004                                                                                                                              
|3.38 | * | Grubstake and McBride Property agreement with Mark Kilby dated July 1, 2004                                                                                                                   
|3.39 | * | Silver Hope Property agreement  with Sci-Tek Resources Ltd. dated October 4, 2004                                                                                                             
|3.40 | * | Notice of Articles issued October 27, 2004                                                                                                                                                    
|3.41 | * | Articles of Canadian Empire Exploration Corp. as filed on October 27, 2004                                                                                                                    





*Previously filed



40



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INDEX TO FINANCIAL STATEMENTS





|                                                                                                                                       
|---------------------------------------------------------------------------------------------------------------------------------------
|Managements Responsibility to Financial Reporting dated April 12, 2006                                                                
|Auditors Report dated April 12, 2006                                                                                                  
|Consolidated Balance Sheets as at December 31, 2005, and 2004                                                                          
|Consolidated Statements of Loss and Deficit for the years ended December 31, 2005, 2004, and 2003                                      
|Consolidated Statements of Deferred Exploration and Mineral Property Expenditures for the years ended December 31, 2005, 2004, and 2003
|Consolidated Statements of Cash Flows for the years ended December 31, 2005, 2004, and 2003                                            
|Notes to the Consolidated Financial Statements for the years December 31, 2005, 2004, and 2003                                         







41



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SIGNATURE



Pursuant to the requirements of the Securities Exchange Act of 1934, Canadian Empire Exploration Corp. certifies that it meets all of the requirements for filing on Form 20-F and has fully caused this Annual Report to be signed on its behalf by the undersigned, thereunto duly authorized.





CANADIAN EMPIRE EXPLORATION CORP.







By:

John S. Brock



John S. Brock, President









By:

Jeannine P. M. Webb



Jeannine P.M. Webb, Secretary





DATED:  May 19, 2006







42



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CERTIFICATIONS

CERTIFICATION





I, John S. Brock, certify that:



1.

I have reviewed this annual report on Form 20-F of Canadian Empire Exploration Corp.;



2.

Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;



3.

Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the company as of, and for, the periods presented in this report;



4.

The companys other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) [omitted pursuant to Transition Period provisions at Section III of Release 34-47986 of the Securities and Exchange Commission entitled Managements Reports on Internal Control over Financial Reporting and Certification of Disclosure in Exchange Act Periodic Reports] for the company and have:



(a)

Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;



(b)

Evaluated the effectiveness of the companys disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and



(c)

Disclosed in this report any change in the companys internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the companys internal control over financial reporting; and



5.

The companys other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the companys auditors and the audit committee of the companys board of directors (or persons performing the equivalent functions):



(a)

All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the companys ability to record, process, summarize and report financial information; and



(b)

Any fraud, whether or not material, that involves management or other employees who have a significant role in the companys internal control over financial reporting.



"John S. Brock"

John S. Brock

Chief Executive Officer

May 19, 2006



43



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CERTIFICATION





I, Jeannine P M Webb, certify that:



1.

I have reviewed this annual report on Form 20-F of Canadian Empire Exploration Corp.;



2.

Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;



3.

Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the company as of, and for, the periods presented in this report;



4.

The companys other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) [omitted pursuant to Transition Period provisions at Section III of Release 34-47986 of the Securities and Exchange Commission entitled Managements Reports on Internal Control over Financial Reporting and Certification of Disclosure in Exchange Act Periodic Reports] for the company and have:



(a)

Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;



(b)

Evaluated the effectiveness of the companys disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and



(c)

Disclosed in this report any change in the companys internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the companys internal control over financial reporting; and



5.

The companys other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the companys auditors and the audit committee of the companys board of directors (or persons performing the equivalent functions):



(a)

All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the companys ability to record, process, summarize and report financial information; and



(b)

Any fraud, whether or not material, that involves management or other employees who have a significant role in the companys internal control over financial reporting.



Jeannine P. M. Webb

Jeannine P. M. Webb,

Chief Financial Officer
May 19, 2006









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CERTIFICATION OF CHIEF EXECUTIVE OFFICER
AND CHIEF FINANCIAL OFFICER
PURSUANT TO 18 U.S.C. §1350,
AS ADOPTED PURSUANT TO
§906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the annual report on Form 20-F of Canadian Empire Exploration Corp. ("Company") for the year ending December 31, 2005 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), John S. Brock, as Chief Executive Officer and Jeannine P. M. Webb as Chief Financial Officer of the Company, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, hereby certify, to the best of their respective knowledge, that:

(1) The Report fully complies with the requirements of § 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.

John S. Brock

John S. Brock,
Chief Executive Officer

May 19, 2006







Jeannine P. M. Webb

Jeannine P. M. Webb,

Chief Financial Officer
May 19, 2006



This certification accompanies this Report pursuant to §906 of the Sarbanes-Oxley Act of 2002 and shall not be deemed filed by the Company for purposes of Section 18 of the Securities Exchange Act of 1934, as amended.





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Consent of Independent Accountants





We hereby consent to the inclusion in this Annual Report on Form 20-F of Canadian Empire Exploration Corp. (the Company) of our report dated April 12, 2006, relating to the consolidated financial statements of Canadian Empire Exploration Corp. as at December 31, 2005 and 2004 and for the years ended December 31, 2003, 2004 and 2005.





(signed) PricewaterhouseCoopers LLP



Chartered Accountants



Vancouver, BC, Canada

April 12, 2006







46