---



CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 2006 AND 2005, AND FOURTEEN MONTHS
ENDED DECEMBER 31, 2004

(Expressed in Canadian Dollars, unless otherwise stated)

---

****

KPMG LLP
      Telephone
      (604) 691-3000Chartered Accountants
      Fax
      (604) 691-3031PO Box 10426 777 Dunsmuir Street
      Internet
      www.kpmg.caVancouver BC V7Y 1K3Canada


**REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM**

To the Board of Directors
  Anooraq Resources Corporation

We have audited the accompanying consolidated balance sheets
  of Anooraq Resources Corporation (the Company) as of December 31, 2006 and 2005
  and the consolidated statements of operations, deficit and cash flows for the
  years ended December 31, 2006 and 2005 and the fourteen month period ended December
  31, 2004. These consolidated financial statements are the responsibility of
  the Company's management. Our responsibility is to express an opinion on these
  consolidated financial statements based on our audits.

We conducted our audits in accordance with the standards of
  the Public Company Accounting Oversight Board (United States). Those standards
  require that we plan and perform the audit to obtain reasonable assurance about
  whether the financial statements are free of material misstatement. An audit
  includes examining, on a test basis, evidence supporting the amounts and disclosures
  in the financial statements. An audit also includes assessing the accounting
  principles used and significant estimates made by management, as well as evaluating
  the overall financial statement presentation. We believe that our audits provide
  a reasonable basis for our audit opinion.

In our opinion, the consolidated financial statements referred
  to above present fairly, in all material respects, the financial position of
  the Company as of December 31, 2006 and 2005 and the results of its operations
  and its cash flows for the years ended December 31, 2006 and 2005 and the fourteen
  month period ended December 31, 2004 in accordance with Canadian generally accepted
  accounting principles.

The accompanying consolidated financial statements have been
  prepared assuming that the Company will continue as a going concern. As discussed
  in note 1 to the consolidated financial statements, the Company has insufficient
  financial resources to meet its planned business objectives that raise substantial
  doubt about its ability to continue as a going concern. Management’s plans
  in regard to these matters are also described in note 1. The consolidated financial
  statements do not include any adjustments that might result from the outcome
  of this uncertainty.

Canadian generally accepted accounting principles vary in
  certain significant respects from accounting principles generally accepted in
  the United States of America. Information relating to the nature and effect
  of such differences is presented in note 11 to the consolidated financial statements.



**KPMG LLP (Signed)**
  Chartered Accountants

Vancouver, Canada
  March 16, 2007, except as to note 11
       which is as of July 6, 2007

> KPMG LLP, a Canadian limited liability partnership
>               is the Canadian member firm of KPMG International, a Swiss cooperative.

---

|ANOORAQ RESOURCES CORPORATION  
|-------------------------------
|Consolidated Balance Sheets    
|(Expressed in Canadian Dollars)

|                                                        |   |             |   |   |             |  
|------------------------------------------------------- | - | ----------- | - | - | ----------- | -
|                                                        |   | December 31 |   |   | December 31 |  
|                                                        |   | 2006        |   |   | 2005        |  
|                                                        |   |             |   |   |             |  
|Assets                                                  |   |             |   |   |             |  
|                                                        |   |             |   |   |             |  
|Current assets                                          |   |             |   |   |             |  
|Cash and equivalents                                    | $ | 12,775,145  |   | $ | 4,590,284   |  
|Amounts receivable                                      |   | 159,079     |   |   | 78,772      |  
|Due from related parties (note 8)                       |   | 138,616     |   |   | 374,308     |  
|Prepaid expenses                                        |   | 104,164     |   |   | 116,069     |  
|                                                        |   | 13,177,004  |   |   | 5,159,433   |  
|                                                        |   |             |   |   |             |  
|Deferred financing costs(note 6)                        |   | 337,852     |   |   |            |  
|Equipment(note 4)                                       |   | 73,315      |   |   | 174,163     |  
|Mineral property
      interests(note 5)                |   | 8,240,751   |   |   | 8,502,000   |  
|                                                        |   |             |   |   |             |  
|                                                        | $ | 21,828,922  |   | $ | 13,835,596  |  
|                                                        |   |             |   |   |             |  
|                                                        |   |             |   |   |             |  
|Liabilities and Shareholders' Equity                    |   |             |   |   |             |  
|                                                        |   |             |   |   |             |  
|Current Liabilities                                     |   |             |   |   |             |  
|Accounts payable and accrued liabilities (note
      8) | $ | 1,034,144   |   | $ | 378,997     |  
|                                                        |   |             |   |   |             |  
|Term loan(note
      6)                                 |   | 11,818,677  |   |   |            |  
|                                                        |   | 12,852,821  |   |   | 378,997     |  
|                                                        |   |             |   |   |             |  
|Shareholders' equity                                    |   |             |   |   |             |  
|Share capital (note 7)                                  |   | 50,207,363  |   |   | 50,207,363  |  
|Contributed surplus (note 7(c))                         |   | 4,849,043   |   |   | 4,824,697   |  
|Deficit                                                 |   | (46,080,305 | ) |   | (41,575,461 | )
|                                                        |   | 8,976,101   |   |   | 13,456,599  |  
|                                                        |   |             |   |   |             |  
|Nature of operations (note 1)                           |   |             |   |   |             |  
|Commitments (notes 5(b), 6 and 7(d))                    |   |             |   |   |             |  
|Subsequent events (note 5(b))                           |   |             |   |   |             |  
|                                                        | $ | 21,828,922  |   | $ | 13,835,596  |  

See accompanying notes to consolidated financial
statements

Approved by the Board of Directors

|/s/ Tumelo M. Motsisi | /s/ Popo Molefe
|--------------------- | ---------------
|                      |                
|Tumelo M. Motsisi     | Popo Molefe    
|Director              | Director       

---

|ANOORAQ RESOURCES CORPORATION        
|-------------------------------------
|Consolidated Statements of Operations
|(Expressed in Canadian Dollars)      

|                                                                       |   |             |   |   |             |   |   |              |  
|---------------------------------------------------------------------- | - | ----------- | - | - | ----------- | - | - | ------------ | -
|                                                                       |   |             |   |   |             |   |   | Fourteen     |  
|                                                                       |   | Year ended  |   |   | Year ended  |   |   | months ended |  
|                                                                       |   | December 31 |   |   | December 31 |   |   | December 31  |  
|                                                                       |   | 2006        |   |   | 2005        |   |   | 2004         |  
|Expenses                                                               |   |             |   |   |             |   |   |              |  
|Accounting, audit and legal                                            | $ | 690,132     |   | $ | 474,422     |   | $ | 479,731      |  
|Conference and travel                                                  |   | 360,959     |   |   | 646,992     |   |   | 486,481      |  
|Consulting                                                             |   | 168,457     |   |   | 965,720     |   |   | 536,216      |  
|Exploration (schedule)                                                 |   | 751,325     |   |   | 5,240,321   |   |   | 7,860,266    |  
|Foreign exchange loss (gain)                                           |   | (34,817     | ) |   | 68,720      |   |   | 145,199      |  
|Gain on disposal of equipment                                          |   | (41,291     | ) |   |            |   |   |             |  
|Interest expense (note 6)                                              |   | 253,071     |   |   |            |   |   |             |  
|Interest income                                                        |   | (117,829    | ) |   | (119,779    | ) |   | (485,452     | )
|Office and administration                                              |   | 354,353     |   |   | 551,278     |   |   | 457,571      |  
|Salaries and benefits                                                  |   | 1,511,874   |   |   | 1,659,465   |   |   | 834,223      |  
|Stock-based compensation - office and
      administration (note 7(c)) |   | 9,137       |   |   | 1,822,010   |   |   | 1,426,006    |  
|Stock-based compensation -
      exploration (note 7(c))               |   | 15,209      |   |   | 714,243     |   |   | 1,040,542    |  
|Shareholders communications                                            |   | 289,824     |   |   | 260,155     |   |   | 342,848      |  
|Trust and filing                                                       |   | 415,440     |   |   | 85,254      |   |   | 159,633      |  
|Recovery of amounts receivable                                         |   |            |   |   |            |   |   | (256,000     | )
|Loss before the following                                              |   | 4,625,844   |   |   | 12,368,801  |   |   | 13,027,264   |  
|Future income tax recovery (notes 5(b) and 9)                          |   | (121,000    | ) |   | (65,000     | ) |   |             |  
|Loss for the period                                                    | $ | 4,504,844   |   | $ | 12,303,801  |   | $ | 13,027,264   |  
|                                                                       |   |             |   |   |             |   |   |              |  
|Basic and diluted loss per share                                       | $ | 0.03        |   | $ | 0.08        |   | $ | 0.18         |  
|                                                                       |   |             |   |   |             |   |   |              |  
|Weighted average number of common shares outstanding                   |   | 148,220,407 |   |   | 148,107,407 |   |   | 73,017,307   |  

See accompanying notes to consolidated financial
statements

Consolidated Statements of Deficit(Expressed in
Canadian Dollars)

|                             |   |             |   |   |             |   |   |              |  
|---------------------------- | - | ----------- | - | - | ----------- | - | - | ------------ | -
|                             |   |             |   |   |             |   |   | Fourteen     |  
|                             |   | Year ended  |   |   | Year ended  |   |   | months ended |  
|                             |   | December 31 |   |   | December 31 |   |   | December 31  |  
|                             |   | 2006        |   |   | 2005        |   |   | 2004         |  
|Deficit, beginning of period | $ | (41,575,461 | ) | $ | (29,271,660 | ) | $ | (16,244,396  | )
|Loss for the
      period    |   | (4,504,844  | ) |   | (12,303,801 | ) |   | (13,027,264  | )
|Deficit, end of the period   | $ | (46,080,305 | ) | $ | (41,575,461 | ) | $ | (29,271,660  | )

See accompanying notes to consolidated financial
statements

---

|ANOORAQ RESOURCES CORPORATION        
|-------------------------------------
|Consolidated Statements of Cash Flows
|(Expressed in Canadian Dollars)      

|                                                                          |   |             |   |   |             |   |   |              |  
|------------------------------------------------------------------------- | - | ----------- | - | - | ----------- | - | - | ------------ | -
|                                                                          |   |             |   |   |             |   |   | Fourteen     |  
|                                                                          |   | Year ended  |   |   | Year ended  |   |   | months ended |  
|                                                                          |   | December 31 |   |   | December 31 |   |   | December 31  |  
|                                                                          |   | 2006        |   |   | 2005        |   |   | 2004         |  
|Operating activities                                                      |   |             |   |   |             |   |   |              |  
|Loss for the period                                                       | $ | (4,504,844  | ) | $ | (12,303,801 | ) | $ | (13,027,264  | )
|Items not involving cash                                                  |   |             |   |   |             |   |   |              |  
|Amortization
      included in exploration expenses                       |   | 30,862      |   |   | 48,503      |   |   | 39,121       |  
|Amortization of deferred finance costs                                    |   | 13,879      |   |   |            |   |   |             |  
|Future income tax
      recovery                                          |   | (121,000    | ) |   | (65,000     | ) |   |             |  
|Accrued interest on term loan                                             |   | 253,071     |   |   |            |   |   |             |  
|Stock-based
      compensation (note 7(c))                                |   | 24,346      |   |   | 2,536,253   |   |   | 2,466,548    |  
|Gain on disposal of equipment                                             |   | (41,291     | ) |   |            |   |   |             |  
|Unrealized foreign
      exchange loss                                    |   | (114,000    | ) |   | (165,312    | ) |   |             |  
|Equity loss in exploration expenditures (note 5)                          |   | 555,677     |   |   | 317,709     |   |   | 195,387      |  
|Shares issued for
      property option payments                          |   |             |   |   |             |   |   |              |  
|included in exploration expenses                                          |   |            |   |   |            |   |   | 340,000      |  
|Changes in non-cash operating working capital                             |   |             |   |   |             |   |   |              |  
|Amounts receivable                                                        |   | (80,307     | ) |   | 434,717     |   |   | (539,032     | )
|Amounts due to and
      from related parties                             |   | 235,692     |   |   | (184,266    | ) |   |             |  
|Prepaid expenses                                                          |   | 11,905      |   |   | 22,573      |   |   | (77,823      | )
|Accounts payable and accrued liabilities                                  |   | 303,416     |   |   | (1,034,237  | ) |   | 884,957      |  
|Cash and equivalents used by operating activities                         |   | (3,432,594  | ) |   | (10,392,861 | ) |   | (9,718,106   | )
|                                                                          |   |             |   |   |             |   |   |              |  
|Investing activities                                                      |   |             |   |   |             |   |   |              |  
|Mineral property acquistion costs                                         |   |            |   |   |            |   |   | (4,489,745   | )
|Purchase of equipment                                                     |   | (9,066      | ) |   | (24,671     | ) |   | (220,126     | )
|Proceeds on disposal of equipment                                         |   | 120,343     |   |   |            |   |   |             |  
|Equity investment (note 5)                                                |   | (59,428     | ) |   | (95,039     | ) |   |             |  
|Cash and
      equivalents (provided by) used by investing activities     |   | 51,849      |   |   | (119,710    | ) |   | (4,709,871   | )
|                                                                          |   |             |   |   |             |   |   |              |  
|Financing activities                                                      |   |             |   |   |             |   |   |              |  
|Issuance of common shares                                                 |   |            |   |   | 157,500     |   |   | 23,958,934   |  
|Term loan                                                                 |   | 10,710,078  |   |   |            |   |   |             |  
|Cash and equivalents provided by financing activities                     |   | 10,710,078  |   |   | 157,500     |   |   | 23,958,934   |  
|                                                                          |   |             |   |   |             |   |   |              |  
|Effect of exchange rate changes on cash and
      equivalents             |   | 855,528     |   |   |            |   |   |             |  
|Increase (decrease) in cash and equivalents                               |   | 8,184,861   |   |   | (10,355,071 | ) |   | 9,530,957    |  
|Cash and equivalents, beginning of period                                 |   | 4,590,284   |   |   | 14,945,355  |   |   | 5,414,398    |  
|Cash and
      equivalents, end of period                                 | $ | 12,775,145  |   | $ | 4,590,284   |   | $ | 14,945,355   |  
|                                                                          |   |             |   |   |             |   |   |              |  
|                                                                          |   |             |   |   |             |   |   |              |  
|Supplementary information                                                 |   |             |   |   |             |   |   |              |  
|Interest paid                                                             | $ | 145,991     |   | $ | 73,855      |   | $ | 23,584       |  
|Interest received                                                         | $ | (239,329    | ) | $ | (193,634    | ) | $ | (509,036     | )
|Taxes paid                                                                | $ |            |   | $ |            |   | $ |             |  
|                                                                          |   |             |   |   |             |   |   |              |  
|Non-cash operating, financing and investing
      activities              |   |             |   |   |             |   |   |              |  
|Increase in mineral property for future
      income taxes                | $ |            |   | $ |            |   | $ | 1,385,255    |  
|Financing costs accrued in accounts payable and accrued
      liabilities | $ | 351,641     |   | $ |            |   | $ |             |  
|Fair value of options allocated to shares
      issued on exercise        | $ |            |   | $ | 75,506      |   | $ |             |  

See accompanying notes to consolidated financial
statements

---

|ANOORAQ RESOURCES CORPORATION                 
|----------------------------------------------
|Consolidated Schedules of Exploration Expenses
|(Expressed in Canadian Dollars)               

|                                                   |   |             |  |   |             |  |   |              | 
|-------------------------------------------------- | - | ----------- |  | - | ----------- |  | - | ------------ | 
|                                                   |   |             |  |   |             |  |   | Fourteen     | 
|Republic of South Africa                           |   | Year ended  |  |   | Year ended  |  |   | months ended | 
|                                                   |   | December 31 |  |   | December 31 |  |   | December 31  | 
|                                                   |   | 2006        |  |   | 2005        |  |   | 2004         | 
|Northern Limb of the Bushveld
      Complex        |   |             |  |   |             |  |   |              | 
|Amortization                                       | $ | 30,862      |  | $ | 48,503      |  | $ | 39,121       | 
|Assays and analysis                                |   | 17,125      |  |   | 1,112,445   |  |   | 1,550,516    | 
|Drilling                                           |   |            |  |   | 2,023,315   |  |   | 2,972,042    | 
|Engineering                                        |   | 53,423      |  |   | 501,068     |  |   | 788,238      | 
|Environmental and socioeconomic                    |   | 10,126      |  |   | 63,316      |  |   | 68,689       | 
|Geological and consulting                          |   | 55,582      |  |   | 718,439     |  |   | 993,136      | 
|Graphics                                           |   | 2,426       |  |   | 2,661       |  |   | 47,101       | 
|Property fees and assessments                      |   | 18,168      |  |   | 78,777      |  |   | 68,628       | 
|Property option payments                           |   | 32,548      |  |   | 31,108      |  |   | 369,765      | 
|Site activities                                    |   | 34,484      |  |   | 247,249     |  |   | 480,387      | 
|Transportation                                     |   | 2,098       |  |   | 99,561      |  |   | 229,157      | 
|                                                   |   | 256,842     |  |   | 4,926,442   |  |   | 7,606,780    | 
|                                                   |   |             |  |   |             |  |   |              | 
|Eastern Limb of the Bushveld Complex               |   |             |  |   |             |  |   |              | 
|Assays and analysis                                |   | 21,268      |  |   | 20,963      |  |   |             | 
|Drilling                                           |   | 376,406     |  |   | 182,014     |  |   |             | 
|Engineering                                        |   | 88,361      |  |   | 37,101      |  |   | 93,539       | 
|Geological and consulting                          |   | 8,448       |  |   | 40,896      |  |   | 29,294       | 
|Graphics                                           |   |            |  |   | 1,200       |  |   | 8,060        | 
|Environmental and socioeconomic                    |   |            |  |   |            |  |   | 1,554        | 
|Property fees and assessments                      |   |            |  |   | 1,440       |  |   | 2,783        | 
|Site activities                                    |   |            |  |   | 29,950      |  |   | 4,533        | 
|Transportation                                     |   |            |  |   | 315         |  |   | 113,723      | 
|                                                   |   | 494,483     |  |   | 313,879     |  |   | 253,486      | 
|                                                   |   |             |  |   |             |  |   |              | 
|Exploration expenses before the
      following    |   | 751,325     |  |   | 5,240,321   |  |   | 7,860,266    | 
|Stock-based
      compensation (note 7(c))         |   | 15,209      |  |   | 714,243     |  |   | 1,040,542    | 
|Exploration expenses                               |   | 766,534     |  |   | 5,954,564   |  |   | 8,900,808    | 
|Cumulative
      expenditures, beginning of period |   | 22,846,780  |  |   | 16,892,216  |  |   | 7,991,408    | 
|Cumulative expenditures, end of period             | $ | 23,613,314  |  | $ | 22,846,780  |  | $ | 16,892,216   | 

See accompanying notes to consolidated financial
statements

---

|ANOORAQ RESOURCES CORPORATION                                 
|--------------------------------------------------------------
|Notes to Consolidated Financial Statements                    
|For the years ended December 31, 2006 and 2005,               
|and the fourteen months ended December 31, 2004               
|(Expressed in Canadian
      Dollars, unless otherwise stated)

|1. | NATURE OF OPERATIONS
|-- | --------------------

Anooraq Resources Corporation (the "Company"
  or "Anooraq") is incorporated in the Province of British Columbia, Canada and
  its principal business activity is the exploration of mineral property interests.
  Since 1999, the Company has focused on mineral property interests located in
  the Republic of South Africa, with particular attention on the Bushveld Complex
  (note 5).

During 2004, the Company changed its
  fiscal year end from October 31 to December 31.

The Company is in the process of exploring
  its mineral property interests and has not yet determined whether its mineral
  property interests contain economically recoverable mineral reserves. The underlying
  value and the recoverability of the amounts shown for mineral property interests
  are entirely dependent upon the existence of economically recoverable mineral
  reserves, the ability of the Company to obtain the necessary financing to complete
  the exploration and development of the mineral property interests, and future
  profitable production or proceeds from the disposition of the mineral property
  interests.

The consolidated financial statements
  are prepared on the basis that the Company will continue as a going concern.
  Management recognizes that the Company will need to generate additional financial
  resources in order to meet its planned business objectives. However, there can
  be no assurances that the Company will continue to obtain additional financial
  resources and/or achieve profitability or positive cash flows. If the Company
  is unable to obtain adequate additional financing, the Company will be required
  to curtail operations and exploration activities. Furthermore, failure to continue
  as a going concern would require that the Companys assets and liabilities
  be restated on a liquidation basis which would differ significantly from the
  going concern basis.

|2. | BASIS OF PRESENTATION AND PRINCIPLES OF CONSOLIDATION
|-- | -----------------------------------------------------

These financial statements have been
  prepared in accordance with Canadian generally accepted accounting principles.
  The consolidated financial statements include the accounts of the Company and
  its subsidiaries, all of which are wholly owned.

The Company's investment in the Ga-Phasha
  joint venture (note 5) is accounted for using the equity method.

All material intercompany balances and
  transactions have been eliminated.

A reconciliation of material measurement
  differences between these principles and accounting principles generally accepted
  in the United States is shown in note 11.

---

|ANOORAQ RESOURCES CORPORATION                                 
|--------------------------------------------------------------
|Notes to Consolidated Financial Statements                    
|For the years ended December 31, 2006 and 2005,               
|and the fourteen months ended December 31, 2004               
|(Expressed in Canadian
      Dollars, unless otherwise stated)

|3. | SIGNIFICANT ACCOUNTING POLICIES
|-- | -------------------------------

|(a) | Cash and equivalents                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|    | Cash and equivalents consist of cash and highly liquid
        investments, having maturity dates of three months or less from the date
        of purchase, that are readily convertible to known amounts of cash.                                                                                                                                                                                                                                                                                                                      
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|(b) | Equipment                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|    | Equipment is carried at cost less accumulated amortization.
        Amortization is provided on a declining balance basis at various rates
        ranging from 15% to 30% per annum.                                                                                                                                                                                                                                                                                                                                                    
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|(c) | Mineral property interests                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|    | Exploration expenses incurred prior to determination
        of the feasibility of mining operations and periodic option payments are
        expensed as incurred. Mineral property acquisition costs, and exploration
        and development expenditures incurred subsequent to the determination
        of the feasibility of mining operations and approval of development by
        the Company, are capitalized until the property to which they relate is
        placed into production, sold, allowed to lapse or abandoned.
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|    | Mineral property acquisition costs include the cash
        consideration and the fair market value of common shares and warrants
        issued for mineral property interests, pursuant to the terms of the relevant
        agreement. These costs will be amortized over the estimated life of the
        property following commencement of commercial production, or written off
        if the property is sold, allowed to lapse or abandoned or when an impairment
        in value has been determined to have occurred.      
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|(d) | Investments                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|    | Investments in entities over which the Company exercises
        significant influence are accounted for using the equity method. Investments
        in joint ventures which the Company jointly controls, which are not variable
        interest entities, are accounted for using the proportionate consolidation
        method. Other investments are recorded at cost and written down only when
        the Company has determined that a decline in value that is other than
        temporary has occurred.                    
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|(e) | Share capital                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|    | The Company records proceeds from share issuances net
        of issue costs. Shares issued for consideration other than cash are valued
        at the quoted market price on the date the agreement to issue the shares
        was reached and announced for business combinations and at the date of
        issuance for other non-monetary transactions.                                                                                                                                                                           
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|(f) | Income taxes                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|    | The Company uses the asset and liability method of accounting
        for income taxes. Under this method, future income tax assets and liabilities
        are computed based on differences between the carrying amounts of assets
        and liabilities on the balance sheet and their corresponding tax values,                                                                                                                                                                                                                    

---

|ANOORAQ RESOURCES CORPORATION                                 
|--------------------------------------------------------------
|Notes to Consolidated Financial Statements                    
|For the years ended December 31, 2006 and 2005,               
|and the fourteen months ended December 31, 2004               
|(Expressed in Canadian
      Dollars, unless otherwise stated)

|    | using the substantively enacted or enacted income tax
        rates expected to apply to taxable income in the years in which those
        temporary differences are expected to be recovered or settled. Future
        income tax assets also result from unused loss carry forwards and other
        deductions. Future tax assets are recognized to the extent that they are
        considered more likely than not to be realized. The carrying value of
        future income tax assets is adjusted, if necessary, by the use of a valuation
        allowance to reflect the amount that is considered to be more likely than
        not of realization.                                                                                                                          
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|(g) | Loss per share                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|    | Basic loss per share is calculated by dividing the loss
        available to common shareholders by the weighted average number of common
        shares outstanding during the period. For all periods presented, loss
        available to common shareholders equals the reported loss.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|    | Diluted loss per common share is calculated using the
        treasury stock method. Under the treasury stock method, the weighted average
        number of common shares outstanding used for the calculation of diluted
        loss per share assumes that the proceeds to be received on the exercise
        of dilutive share options and warrants are used to repurchase common shares
        at the average market price during the year. In the periods presented,
        diluted loss per share is the same as basic loss per share as the effect
        of including outstanding options and warrants in the loss per share calculation
        would be anti-dilutive.                                                                                                        
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|(h) | Fair value of financial instruments                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|    | The carrying amounts of cash and equivalents, amounts
        receivable, and accounts payable and accrued liabilities approximate their
        fair values due to their short-term nature. The carrying values of the
        term loan approximate its fair value based on market rates of interest.
        It is not practicable to determine the fair values of amounts receivable
        due from to related parties (note 8) due to the related party nature of
        such amounts and the absence of a secondary market for such instruments.                                                                                                                                                                                                                                     
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|(i) | Translation of foreign currencies                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|    | All of the Company's foreign operations are integrated.
        Monetary assets and liabilities denominated in a foreign currency are
        translated into Canadian dollars at exchange rates in effect at the balance
        sheet date. Non-monetary assets and liabilities are translated at historical
        exchange rates unless such items are carried at market, in which case
        they are translated at the exchange rates in effect on the balance sheet
        date. Revenues and expenses, except amortization, are translated at the
        average exchange rates for the year. Amortization is translated at the
        same exchange rate as the assets to which it relates. Gains or losses
        on translation are recorded in the statement of operations.
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|(j) | Use of estimates                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|    | The preparation of financial statements requires management
        to make estimates and assumptions that affect the reported amounts of
        assets and liabilities and the disclosure of contingent assets and liabilities
        at the date of the financial statements, and the reported amounts of revenues
        and                                                                                                                                                                                                                                                                                                                                                                                                                                                            

---

|ANOORAQ RESOURCES CORPORATION                                 
|--------------------------------------------------------------
|Notes to Consolidated Financial Statements                    
|For the years ended December 31, 2006 and 2005,               
|and the fourteen months ended December 31, 2004               
|(Expressed in Canadian
      Dollars, unless otherwise stated)

|    | expenses during the reporting year. Significant areas
        requiring the use of management estimates include the determination of
        the impairment of mineral property interests, determination of reclamation
        obligations, determination of valuation allowances for future income tax
        assets, and the assumptions used in determining fair value of non-cash
        stock-based compensation. Actual results could differ from these estimates.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|(k) | Stock-based compensation                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|    | The Company has a share option plan which is described
        in note 7(c). The Company records all stock-based payments granted using
        the fair value method.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|    | Under the fair value method, stock-based payments are
        measured at the fair value of the consideration received or the fair value
        of the equity instruments issued or liabilities incurred, whichever is
        more reliably measurable, and are charged to operations over the vesting
        period with a corresponding credit to contributed surplus.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|    | Consideration received on the exercise of stock options
        is recorded as share capital and the related contributed surplus is transferred
        to share capital.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|(l) | Asset retirement obligations                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|    | The Company recognizes statutory, contractual or other
        legal obligations related to the retirement of tangible long-lived assets
        when such obligations are incurred, if a reasonable estimate of fair value
        can be made. These obligations are measured initially at fair value and
        the resulting costs are capitalized to the carrying value of the related
        asset. In subsequent periods, the liability is adjusted for any changes
        in the amount or timing and for the discounting of the underlying future
        cash flows. The capitalized asset retirement cost is amortized to operations
        over the life of the asset.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|(m) | Variable interest entities                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|    | The Company accounts for variable interest entities
        (VIE) in accordance with the Canadian Institute of Chartered
        Accountants (CICA) Accounting Guideline 15, "Consolidation
        of Variable Interest Entities" ("AcG15"). AcG15 prescribes the application
        of consolidation principles for entities that meet the definition of a
        VIE and for which the Company is considered the primary beneficiary. VIEs
        are entities in which equity investors do not have the characteristics
        of a controlling financial interest or do not have sufficient equity at
        risk for the entity to finance its activities without additional subordinated
        financial support from other parties. The primary beneficiary is the party
        that has exposure to a majority of the expected losses and/or expected
        residual returns of the VIE. An enterprise holding other than a voting
        interest in a VIE could, subject to certain conditions, be required to
        consolidate the VIE if it is considered its primary beneficiary. The Company
        has concluded that the Ga-Phasha Project qualifies as a VIE but that the
        Company is not the primary beneficiary.

---

|ANOORAQ RESOURCES CORPORATION                                 
|--------------------------------------------------------------
|Notes to Consolidated Financial Statements                    
|For the years ended December 31, 2006 and 2005,               
|and the fourteen months ended December 31, 2004               
|(Expressed in Canadian
      Dollars, unless otherwise stated)

|(n) | Segment disclosures                                                                                                                            
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                
|    | The Company operates in a single operating segment,
        being the exploration of mineral properties in South Africa.                       
|    |                                                                                                                                                
|(o) | Comparative figures                                                                                                                            
|    |                                                                                                                                                
|    | Certain of the prior years comparative figures
        have been restated to conform to the presentation adopted for the current
        year.

|4. | EQUIPMENT
|-- | ---------

| |          |   | December 31, 2006 |  |   | December 31, 2005 | 
| | -------- | - | ----------------- |  | - | ----------------- | 
| |          |   |                   |  |   | Accumulated       | 
| |          |   | Cost              |  |   | amortization      | 
| | Office   | $ | 10,651            |  | $ | 6,144             | 
| | Vehicles |   | 116,368           |  |   | 47,560            | 
| |          | $ | 127,019           |  | $ | 53,704            | 

|5. | MINERAL PROPERTY INTERESTS
|-- | --------------------------

| |                                                           |   | Year ended        |   |   | Year ended        |  
| | --------------------------------------------------------- | - | ----------------- | - | - | ----------------- | -
| |                                                           |   | December 31, 2006 |   |   | December 31, 2005 |  
| | Ga-Phasha Project (note 5(b))                             |   |                   |   |   |                   |  
| | Balance, beginning of year                                | $ | 4,302,000         |   | $ | 4,294,358         |  
| | Equity loss  exploration
      expenses                  |   | (555,677          | ) |   | (317,709          | )
| | Net investments during the period                         |   | 59,428            |   |   | 95,039            |  
| | Equity gain  future
      income tax recovery            |   | 121,000           |   |   | 65,000            |  
| | Equity
      gain  foreign exchange                      |   | 114,000           |   |   | 165,312           |  
| | Ga-Phasha Project, end of year                            |   | 4,040,751         |   |   | 4,302,000         |  
| | Platreef Properties
       acquisition costs (note 5(a)) |   | 4,200,000         |   |   | 4,200,000         |  
| | Balance, end of year                                      | $ | 8,240,751         |   | $ | 8,502,000         |  

|(a) | Northern Limb of the Bushveld Complex, South
      Africa
|--- | ---------------------------------------------------------

Platreef

In October 1999, the Company acquired
  a two-stage right to purchase up to 100% of Pinnacle Resources Inc.'s ("Pinnacle")
  South African subsidiary, Plateau Resources (Proprietary) Limited ("Plateau"),
  which holds the Platreef platinum group mineral ("PGM") properties located on
  the Northern Limb of the Bushveld Complex in South Africa.

---

|ANOORAQ RESOURCES CORPORATION                                 
|--------------------------------------------------------------
|Notes to Consolidated Financial Statements                    
|For the years ended December 31, 2006 and 2005,               
|and the fourteen months ended December 31, 2004               
|(Expressed in Canadian
      Dollars, unless otherwise stated)

Pursuant to the acquisition agreement,
  the Company issued 378,500 shares during the period October 1999 to November
  2003. On November 13, 2003, the Company issued an additional 400,000 common
  shares as full and final negotiated settlement under this agreement and thereby
  completed its acquisition of Plateau.

In South Africa, many mineral claim
  areas were historically defined by farm boundaries and are commonly referred
  to as "farms".

On May 23, 2000, the Company added to
  its mineral rights in the region by acquiring through Plateau the option to
  purchase a 100% interest in portion 2 of the Elandsfontein 766LR farm located
  contiguous to the pre-existing Platreef properties, pursuant to an agreement
  with MSA Projects (Proprietary) Limited. The option required staged issuances
  of a maximum of 500,000 common shares of the Company (of which 412,500 shares
  have been issued to December 31, 2006 and no further share issuances are expected)
  and aggregate cash payments up to a maximum of US$350,000 (of which US$84,250
  and US$15,000 have been paid).

In July 2001, Plateau acquired the right
  to purchase a 100 percent interest in the farm Hamburg 737LR (2,126 hectares)
  and Portion 1 of the farm Elandsfontein 766LR (428 hectares), located contiguous
  to the north end of the pre-existing Platreef properties. The Company has allowed
  the option to purchase the farms to lapse during the year.

In August 2002, the Company entered
  into a five year prospecting contract, expiring August 2007, with an option
  to extend the agreement for an additional three years with the South African
  Department of Mines and Energy (DME) for farm Noord Holland 775LR
  (1,229 hectares) bringing the aggregate land package of its Platreef Property
  to approximately 13,400 hectares. Annual option fees ranging from South African
  Rand ("ZAR") 3 per hectare to ZAR 18 per hectare are payable to the DME.

Rietfontein

On October 10, 2001, the Company completed
  an agreement with African Minerals Ltd., now Ivanhoe Nickel and Platinum Ltd.
  (Ivanplats), a private affiliate of Ivanhoe Capital Corporation,
  whereby Ivanplats has the right to earn a 50% interest in the Company's 2,900
  hectare Rietfontein 2KS farm ("Rietfontein"). Under the terms of this agreement,
  Ivanplats must incur at least $750,000 in expenditures pursuant to exploration
  activities undertaken on Rietfontein in accordance with an approved program
  in each of the ensuing two years (of which the year one program has been completed)
  to obtain the right to form a 50/50 joint venture with the Company on Rietfontein.
  There is disagreement over budgets, compilation and analysis of the exploration
  results, and the overall adequacy and completeness of Ivanplats exploration
  activities. The Company and Ivanplats are currently in discussions over these
  matters, both outside of and within a formal arbitration process, pursuant to
  the terms of the earn-in agreement.

Kwanda (Rustenburg)

On May 16, 2002, the Company completed
  an agreement with Rustenburg Platinum Mines Limited ("Rustenburg"), a wholly
  owned subsidiary of Anglo American Platinum

---

|ANOORAQ RESOURCES CORPORATION                                 
|--------------------------------------------------------------
|Notes to Consolidated Financial Statements                    
|For the years ended December 31, 2006 and 2005,               
|and the fourteen months ended December 31, 2004               
|(Expressed in Canadian
      Dollars, unless otherwise stated)

Corporation Limited ("Anglo Platinum"),
  for the right to acquire up to an 80% interest in twelve PGM properties located
  on the Northern Limb of the Bushveld Complex.

Under the agreements with Anglo Platinum,
  the Company has acquired an initial 50% interest in the PGM rights to the twelve
  farms and can maintain this interest by making staged exploration expenditure
  totalling ZAR 25 million within five years. The Company is required to, and
  did, spend ZAR 2.5 million in year one, ZAR 5 million in year two, and is required
  to spend ZAR 5 million in each of years three and four and ZAR 7.5 million in
  year five. The Company has not yet fulfilled its expenditure requirements in
  respect of year three through five, but is in negotiations with Rustenburg to
  amend the exploration expenditure schedule.

If a mineral resource is identified,
  the Company can earn an additional 30% interest by bringing the property into
  commercial production. Rustenburg will retain a 20% interest in the joint venture.
  The agreements also include plans to involve local communities in future development
  of the properties. Any participation by local and regional communities will
  be provided out of Rustenburg's interest and any participation in the venture
  by a Historically Disadvantaged South Africans ("HDSA") partner will be provided
  out of the Company's interest.

Boikgantsho (Drenthe-Overysel)

On November 26, 2003, the Company announced
  that it had entered into a Joint Venture Agreement with Potgietersrust Platinums
  Limited ("PPRust"), a wholly owned subsidiary of Anglo Platinum. The Joint Venture
  was formed to explore and develop PGMs, gold and nickel mineralization on the
  Company's Drenthe 778LR and Witrivier 777LR farms and a portion of PPRust's
  adjacent Overysel 815LR farm. These farms are located on the Northern Limb of
  the Bushveld Complex.

The objective is to explore and develop
  a large-scale open pit deposit with the potential to utilize nearby milling,
  smelting and refining facilities which could provide substantial cost advantages
  to a new mining project. The Company contributed its rights to the Drenthe 778LR
  farm on which a large PGM-nickel resource has been outlined in the Drenthe deposit,
  and will contribute the Witrivier 777LR farm if the deposit extends north on
  to Witrivier 777LR. PPRust is contributing its rights to the northern portion
  of the Overysel 815LR farm which lies south of and contiguous to the Drenthe
  778LR farm.

Pursuant to the terms of the Joint Venture
  Agreement, the Company and Anglo Platinum formed an initial 50/50 Joint Venture
  (the "Boikgantsho JV") to explore these farms for a period of up to five years.
  During that period, Anooraq will operate the exploration programs, and spend
  up to ZAR 12.35 million (of which the entire amount has been spent) on behalf
  of the Boikgantsho JV. Anooraq will then have the option to proceed on a year-by-year
  basis and to take the project to a bankable feasibility study ("BFS") level.

Once a BFS has been completed, the parties,
  by agreement, may proceed to exploitation subject to relevant regulatory requirements.
  If both partners decide to proceed, then a joint management committee will be
  established to oversee development and operations. At commencement of exploitation,
  the joint venture interest allotted to each of Anooraq and Anglo Platinum will
  be determined in proportion to the relative value of the metals

---

|ANOORAQ RESOURCES CORPORATION                                 
|--------------------------------------------------------------
|Notes to Consolidated Financial Statements                    
|For the years ended December 31, 2006 and 2005,               
|and the fourteen months ended December 31, 2004               
|(Expressed in Canadian
      Dollars, unless otherwise stated)

contained in each contributed property
  as reflected in the BFS. Anooraq or Anglo Platinum, as the case may be, each
  has the right to make a cash payment to the other party or to fund additional
  capital contributions to equalize their respective contributions. During development,
  the Boikgantsho JV will be seeking a Black Economic Empowerment ("BEE") partner
  to participate in the project (which may be Anooraq itself) with the original
  Boikgantsho JV partners dividing the remaining interest.

Should the Company choose not to proceed,
  Anglo Platinum has the option of acquiring the Company's interest at the aggregate
  of (i) the net present value of exploiting the Company's mineral rights as a
  stand alone mining operation, by applying an agreed discount rate as determined
  in the BFS, and (ii) all exploration expenditures (as defined in the agreement)
  incurred by the Company up to the completion of the BFS. Should Anglo Platinum
  decide not to contribute to exploitation, its interest will be diluted over
  time pursuant to a formula taking into account expenditure on the project by
  the contributory parties. Anglo Platinum will remain entitled to a minimum 12.5%
  non-contributory interest, adjusted depending on the final PGM royalty to be
  established under the South African Mineral and Petroleum Royalty Bill, to a
  maximum of 15%.

Anglo Platinum has the right to enter
  into a PGM Ore or Concentrate Purchase and Disposal Agreement at the exploitation
  phase, based on standard commercial terms, whereby PGM produced from the operation
  would be treated at Anglo Platinum's facilities.

|(b) | Eastern Limb of the Bushveld Complex, South
      Africa
|--- | --------------------------------------------------------

Ga-Phasha Project

In January 2004, the Company announced
  it had agreed to terms whereby the Company and Pelawan Investments (Proprietary)
  Limited ("Pelawan"), a private South African BEE company, would combine their
  respective PGM assets, comprising the Company's Northern and Western Limb PGM
  projects and Pelawan's 50% participation interest in the Ga-Phasha (previously
  known as Paschaskraal) PGM Project ("Ga-Phasha") on the Eastern Limb of the
  Bushveld Complex in South Africa. The Ga-Phasha property consists of four farms
   Portion 1 of Paschaskraal 466KS, and the whole of farms Klipfontein 465KS,
  De Kamp 507KS and Avoca 472KS  covering an area of approximately 9,700
  hectares.

The mineral title relating to the Ga-Phasha
  Project is held by Micawber 277 (Proprietary) Limited ("Micawber"), a private
  South African corporation which was owned 50% by Anglo Platinum and 50% by Pelawan.

Pursuant to the terms of the agreement
  between the Company and Pelawan, the Company acquired Pelawan's 50% shareholding
  in Micawber and the rights to its 50% participation interest in the Ga-Phasha
  Project in return for 91.2 million common shares of the Company (the "Consideration
  Shares") and cash payments totalling ZAR 15,652,744 ($3,055,416). Approximately
  83 million Consideration Shares are being held in escrow until the earlier of
  September 29, 2010 or twelve months after the commencement of commercial production
  from the Ga-Phasha Project at which time they will be released.

---

|ANOORAQ RESOURCES CORPORATION                                 
|--------------------------------------------------------------
|Notes to Consolidated Financial Statements                    
|For the years ended December 31, 2006 and 2005,               
|and the fourteen months ended December 31, 2004               
|(Expressed in Canadian
      Dollars, unless otherwise stated)

The transaction was completed on September
  29, 2004 and consequently Anooraq became a BEE company, by virtue of being majority
  owned by HDSAs. The Ga-Phasha Project is a 50/50 joint venture between
  the Company, through Plateau, and Anglo Platinum, through its wholly owned subsidiary
  Rustenburg Platinum Mines Limited, governed by, among other things, a shareholders'
  agreement relating to Micawber entered into in September 2004. Work on the Ga-Phasha
  Project is continuing toward the preparation of a pre-feasibility study.

The transaction constituted a reverse
  take-over under the policies of the TSX Venture Exchange. This transaction
  was accounted for as an acquisition by Anooraq of Micawber's 50% interest in
  its mineral properties. However, because neither the fair value of the Anooraq
  shares issued, nor the fair value of the mineral property interests acquired
  could be readily determined, the acquisition was recorded at the net book value,
  as determined in accordance with Canadian generally accepted accounting principles,
  of Micawber's net assets acquired, being nil, plus related transaction costs.

The acquisition costs were accounted
  for as follows:

| | Cash payments totaling ZAR 15,652,744        | $ | 3,055,416 | 
| | -------------------------------------------- | - | --------- | 
| | Financial, legal, advisory, and other fees   |   | 1,419,329 | 
| | Estimated South African stamp duties         |   | 15,000    | 
| | Book value of Micawber's net assets acquired |   |          | 
| | Future income taxes                          |   | 1,385,255 | 
| | Acquisition cost,
      Ga-Phasha Project    | $ | 5,875,000 | 

Commencing September 29, 2004, the date
  of completion of the reverse take-over transaction, the Company accounts for
  its interest in Micawber, which holds the Ga-Phasha Project, using the equity
  method.

The share exchange agreement which gave
  effect to the combination provided that if any financings in relation to the
  Ga-Phasha and Drenthe-Overysel (subsequently renamed "Boikgantsho") Projects
  (the Projects) took place prior to a particular date (the Finalization
  Date) and the shareholder dilution associated with of such financings
  caused Pelawans shareholding in Anooraq to fall below a 52% minimum shareholding,
  Anooraq would issue additional common shares to Pelawan in order to maintain
  that minimum. Such 52% minimum shareholding would allow for compliance with
  BEE equity requirements under South African mineral legislation and was also
  a requirement of the South African Reserve Bank for approving the transaction.
  Originally, the Finalization Date was September 30, 2005 but that date, by agreement
  in November 2005 between Anooraq and Pelawan, was extended.

The share exchange agreement further
  provided that, to the extent that if no such dilutive financings had taken place
  by the Finalization Date, certain dilutive financings were deemed to have occurred
  by that date. The purpose was to make allowance for the dilutive effect on Pelawans
  shareholding of the anticipated financings for mine development of the Projects
  and safeguard the status of Anooraq as a BEE company. For the purposes of calculating
  whether, by virtue of such deemed dilutive financings, any common shares were
  required to be issued to Pelawan in order to maintain a minimum 52% shareholding,
  the share exchange agreement provided that the quantum of such

---

|ANOORAQ RESOURCES CORPORATION                                 
|--------------------------------------------------------------
|Notes to Consolidated Financial Statements                    
|For the years ended December 31, 2006 and 2005,               
|and the fourteen months ended December 31, 2004               
|(Expressed in Canadian
      Dollars, unless otherwise stated)

deemed financings would equal: (a) 30%
  of the estimated development costs in accordance with the bankable feasibility
  studies in respect of the Projects, less cash on hand, or (b) to the extent
  that such bankable feasibility studies had not been prepared as at the Finalization
  Date, $70.8 million related to the Ga-Phasha Project and $27.6 million related
  to the Drenthe-Overysel Project, less cash on hand (the Deemed Dilutive
  Financings). Following the Finalization Date, Anooraq has the right but
  not the obligation to issue additional common shares to Pelawan in order to
  maintain Pelawans minimum shareholding.

Neither additional financings nor bankable
  feasibility studies for the Projects had been completed by Anooraq as at September
  30, 2005 and, in the absence of an amending agreement between the parties, a
  dilutive financing totaling $98.4 million and share issuances (based on the
  share price at the date of the deemed dilutive financing) would have been deemed
  to have taken place as at such date and the Company would have been obligated
  to issue to Pelawan that number of shares which, after notionally giving effect
  to the Deemed Dilutive Financings, would have resulted in Pelawan continuing
  to hold a 52% interest in the Company. In November 2005, Anooraq and Pelawan
  agreed to extend the Finalization Date to the earlier of:

| | (a) | the first date at which both the Drenthe-Overysel financing
        and the Ga- Phasha financings shall, in fact, have occurred;                
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                 
| | (b) | any date which is within a 60-day period following an
        announcement by Anooraq of a further material transaction, as defined;
        and
| |     |                                                                                                                                                 
| | (c) | December 31, 2006.                                                                                                                              

In December 2006, the Company entered
  into a Settlement Agreement with Pelawan to waive the deemed dilutive financing
  contemplated in the 2004 share exchange agreement. Under the terms of the Settlement
  Agreement:

| | (i)   | Anooraq will issue to Pelawan 36 million common shares
        (Adjustment Consideration Shares). The Company is currently
        awaiting regulatory approval for the issuance of the Adjustment Consideration
        Shares.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| | ----- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| | (ii)  | Anooraq will issue to Pelawan share purchase warrants
        for the purchase of 167 million common shares in Anooraq (BEE Warrants).
        The BEE Warrants are exercisable until December 31, 2008. The BEE Warrants
        can be exercised at the higher of (a) $1.35 if exercised on or before
        December 31, 2007 or $1.48 if exercised after December 31, 2007 or (b)
        at a price that is 50% less than the price per Anooraq common share payable
        by arms length parties under an equity financing undertaken by the Company
        that either raises an amount of at least $98.4 million or is undertaken
        pursuant to a material transaction (a Concurrent Financing).
        The Company is currently awaiting regulatory approval for the issuance
        of the BEE Warrants.
| |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| | (iii) | From the date of issue of the Adjustment Consideration
        Shares to Pelawan in (i) above or as a result of the exercise of any of
        the BEE Warrants up to the closing date of the Concurrent Financing, the
        common shares issued to Pelawan pursuant                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          

---

|ANOORAQ RESOURCES CORPORATION                                 
|--------------------------------------------------------------
|Notes to Consolidated Financial Statements                    
|For the years ended December 31, 2006 and 2005,               
|and the fourteen months ended December 31, 2004               
|(Expressed in Canadian
      Dollars, unless otherwise stated)

| |      | thereto will be subject to a lock up arrangement and
        Pelawan will not be entitled to dispose of any of these shares, save for
        the exemption referred to in (iv) below. After the closing date of the
        Concurrent Financing, the disposal of such shares shall remain subject
        to the original lock up agreement entered into between Pelawan and Anooraq
        under the terms of the original RTO transaction (the BEE Lock Up).                                                                                                                                                                                                                                                                                                                                             
| | ---- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| | (iv) | Anooraq has agreed to grant Pelawan an exemption to
        the BEE Lock Up for the purposes of facilitating Pelawans financing
        of the exercise of the BEE Warrants. In the event that Pelawan exercises
        any BEE Warrants, Pelawan shall, in its sole discretion, be entitled to
        dispose that number of common shares up to 25% (or such greater amount
        as is required to facilitate the financing of the exercise of the BEE
        Warrants) of the aggregate common shares issued to Pelawan pursuant to
        such exercise, provided that all of the proceeds received by Pelawan from
        such disposal shall be applied by Pelawan to support the financing of
        the exercise of the BEE Warrants and reasonable expenses related to such
        exercise.
| |      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| | (v)  | On the occurrence of a Concurrent Financing, Pelawan
        shall be obliged to exercise the BEE Warrants to ensure, at a minimum,
        that Anooraq retains its status as a 52% controlled BEE company, in compliance
        with undertakings given by Pelawan and the Company in favour of the South
        African Reserve Bank and Anglo Platinum Limited.                                                                                                                                                                                                                                                                                                                                                                                                                                           

|c) | Western Limb of the Bushveld Complex, South
      Africa
|-- | --------------------------------------------------------

Thusong Joint Venture

In May 2003, the Company entered into
  a joint venture agreement with Rustenburg to form a joint venture to explore
  and develop PGMs, gold and nickel mineralization on the Wachteenbietjieslaagte
  4JQ, Vogelstruiskraal 400KQ and Cyferkuil 1JQ farms, which are located on the
  western limb of the Bushveld Complex, approximately 75 kilometres north of the
  town of Rustenburg, adjacent to Anglo Platinums Union operations.

Pursuant to the terms of the joint venture
  agreement, the Company and Anglo Platinum could have formed an initial 50/50
  joint venture (the "Thusong JV") to explore the three farms for a period of
  up to five years from the date of the agreement. In October 2006, the Company
  terminated the Thusong JV in order to focus development of the Ga-Phasha project.

---

|ANOORAQ RESOURCES CORPORATION                                 
|--------------------------------------------------------------
|Notes to Consolidated Financial Statements                    
|For the years ended December 31, 2006 and 2005,               
|and the fourteen months ended December 31, 2004               
|(Expressed in Canadian
      Dollars, unless otherwise stated)

|6. | TERM LOAN
|-- | ---------

| |           |   | December 31 |  |   | December 31 | 
| | --------- | - | ----------- |  | - | ----------- | 
| |           |   | 2006        |  |   | 2005        | 
| | Term loan | $ | 11,818,677  |  | $ |            | 
| |           | $ | 11,818,677  |  | $ |            | 

In November 2006, the Company, through
  its wholly owned subsidiary Plateau, entered into a 70 million ZAR term loan
  agreement with Rustenburg Platinum Mines Limited, a wholly owned subsidiary
  of Anglo Platinum Limited. The loan bears interest at prime plus two percent,
  as quoted by the Standard Bank of South Africa.

The first interest payment is due and
  payable in January 2008, with other subsequent interest payments due and payable
  in six month intervals thereafter. The final repayment date for the loan will
  be on September 30, 2010, however, the agreement allows for early repayment.
  In connection with the loan, the Company incurred financing fees of $351,730
  equal to 3% of the loan. As at December 31, 2006, finance costs of $337,851
  have been deferred and are being amortized over the term of the loan.

The Company is required to spend 85%
  of the loan amount to fund work towards the preparation of and operational expenditures
  contemplated in a bankable feasibility study for the Ga-Phasha project.

Accrued interest expense on the term
  loan amounted to $253,071 (ZAR 1,498,346) for the year ended December 31, 2006
  and has been included in the carrying value of the term loan.

Pursuant to security agreements entered
  into in connection with the loan, the Company has ceded as security, its interest
  in Micawber.

---

|ANOORAQ RESOURCES CORPORATION                                 
|--------------------------------------------------------------
|Notes to Consolidated Financial Statements                    
|For the years ended December 31, 2006 and 2005,               
|and the fourteen months ended December 31, 2004               
|(Expressed in Canadian
      Dollars, unless otherwise stated)

|7. | SHARE CAPITAL
|-- | -------------

|(a) | Authorized share capital                                                                                          
|--- | ------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                   
|    | The Company's authorized share capital consists of an
        unlimited number of common shares without par value.
|    |                                                                                                                   
|(b) | Issued and outstanding common shares                                                                              

| |                                                                          |   |       |  |  | Number of   |  |   | Dollar     |  
| | ------------------------------------------------------------------------ | - | ----- |  |  | ----------- |  | - | ---------- | -
| |                                                                          |   | Price |  |  | Shares      |  |   | Amount     |  
| | Balance, October 31, 2003                                                |   |       |  |  | 40,164,172  |  | $ | 25,086,863 |  
| | Issued during fiscal 2004                                                |   |       |  |  |             |  |   |            |  
| | Shares issued for property option
      (note 5(a))                      | $ | 0.85  |  |  | 400,000     |  |   | 340,000    |  
| | Fair value of stock options allocated to shares
      issued on exercise |   |      |  |  |            |  |   | 588,560    |  
| | Share purchase options exercised                                         | $ | 0.75  |  |  | 3,419,300   |  |   | 2,555,390  |  
| | Share purchase warrants exercised                                        | $ | 0.85  |  |  | 3,313,125   |  |   | 2,822,529  |  
| | Private placement, net of issue
      costs (note 7(e))                  | $ | 2.10  |  |  | 9,523,810   |  |   | 18,635,143 |  
| | Shares issued to acquire Ga-Phasha Project (note
      5(b))             |   |       |  |  | 91,200,000  |  |   |           |  
| | Share issue cost of Ga-Phasha project                                    |   |       |  |  |            |  |   | (54,128    | )
| | Balance, December 31, 2004                                               |   |       |  |  | 148,020,407 |  |   | 49,974,357 |  
| | Share purchase options exercised                                         | $ | 0.79  |  |  | 200,000     |  |   | 157,500    |  
| | Fair
      value of stock options allocated to shares issued on exercise |   |      |  |  |            |  |   | 75,506     |  
| | Balance, December 31, 2005 and 2006                                      |   |       |  |  | 148,220,407 |  | $ | 50,207,363 |  

|(c) | Share option plan                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|    | The Company has a share option plan approved by the
        Companys shareholders that allows it to grant options, subject to
        regulatory terms and approval, to its directors, employees, officers,
        and consultants to, as at December 31, 2006, acquire up to 13,453,200
        common shares, of which 3,988,200 options were outstanding and 9,465,000
        remained available to grant. The exercise price of each option is set
        by the Board of Directors at the time of grant but cannot be less than
        the market price (less permissible discounts) on the TSX Venture Exchange.
        Options have a term of up to a maximum of ten years (however, the Company
        has historically granted options for up to a term of five years), and
        terminate 30 days following the termination of the optionees employment
        or term of engagement, except in the case of retirement or death. Vesting
        of options is at the discretion of the Board of Directors at the time
        the options are granted.

---

|ANOORAQ RESOURCES CORPORATION                                 
|--------------------------------------------------------------
|Notes to Consolidated Financial Statements                    
|For the years ended December 31, 2006 and 2005,               
|and the fourteen months ended December 31, 2004               
|(Expressed in Canadian
      Dollars, unless otherwise stated)

The continuity of share purchase options
  is as follows:

| |                            |   |                |  |  |                   |   |  | Contractual      | 
| | -------------------------- | - | -------------- |  |  | ----------------- | - |  | ---------------- | 
| |                            |   | Weighted       |  |  |                   |   |  | weighted average | 
| |                            |   | average        |  |  |                   |   |  | remaining life   | 
| |                            |   | exercise price |  |  | Number of options |   |  | (years)          | 
| | Balance, October 31, 2003  | $ | 1.12           |  |  | 5,200,000         |   |  | 1.36             | 
| | Granted                    |   | 1.89           |  |  | 897,500           |   |  |                  | 
| | Exercised                  |   | 0.75           |  |  | (3,419,300        | ) |  |                  | 
| | Cancelled                  |   | 0.97           |  |  | (68,200           | ) |  |                  | 
| | Balance, December 31, 2004 | $ | 1.87           |  |  | 2,610,000         |   |  | 1.54             | 
| | Granted                    |   | 1.39           |  |  | 4,233,200         |   |  |                  | 
| | Exercised                  |   | 0.79           |  |  | (200,000          | ) |  |                  | 
| | Expired                    |   | 2.00           |  |  | (1,522,500        | ) |  |                  | 
| | Cancelled                  |   | 1.60           |  |  | (342,500          | ) |  |                  | 
| | Balance, December 31, 2005 | $ | 1.47           |  |  | 4,778,200         |   |  | 3.61             | 
| | Cancelled                  |   | 1.90           |  |  | (235,000          | ) |  |                  | 
| | Expired                    |   | 1.84           |  |  | (555,000          | ) |  |                  | 
| | Balance, December 31, 2006 | $ | 1.39           |  |  | 3,988,200         |   |  | 3.23             | 

Options outstanding and exercisable at
  December 31, 2006 were as follows:

| |                            |   |              |  |   | Number of   | 
| | -------------------------- | - | ------------ |  | - | ----------- | 
| |                            |   |              |  |   | options     | 
| | Expiry date                |   | Option price |  |   | outstanding | 
| | July 1, 2007               | $ | 0.95         |  |   | 100,000     | 
| | September 28, 2007         | $ | 1.40         |  |   | 415,000     | 
| | December 14, 2007          | $ | 1.40         |  |   | 408,200     | 
| | December 17, 2010          | $ | 1.40         |  |   | 3,065,000   | 
| | Total                      |   |              |  |   | 3,988,200   | 
| | Average option
      price |   |              |  | $ | 1.39        | 

The exercise prices of all share purchase
  options granted during the period were equal to or greater than the market price
  at the grant date. Using an option pricing model with the assumptions noted
  below, the estimated fair value of all options granted have been reflected in
  the consolidated statement of operations as follows:

| |                                                             |   |             |  |   |             |   |   | Fourteen     |  
| | ----------------------------------------------------------- | - | ----------- |  | - | ----------- | - | - | ------------ | -
| |                                                             |   | Year ended  |  |   | Year ended  |   |   | months ended |  
| |                                                             |   | December 31 |  |   | December 31 |   |   | December 31  |  
| |                                                             |   | 2006        |  |   | 2005        |   |   | 2004         |  
| | Stock-based compensation  Exploration                      | $ | 15,209      |  | $ | 714,243     |   | $ | 1,040,542    |  
| | Stock-based compensation
       Office and administration  |   | 9,137       |  |   | 1,822,010   |   |   | 1,426,006    |  
| | Credited to contributed surplus during the
      period     |   | 24,346      |  |   | 2,536,253   |   |   | 2,466,548    |  
| | Share purchase options exercised, credited to share capital |   |            |  |   | (75,506     | ) |   | (588,560     | )
| | Contributed surplus, beginning of the period                |   | 4,824,697   |  |   | 2,363,950   |   |   | 485,962      |  
| | Contributed surplus,
      end of period                    | $ | 4,849,043   |  | $ | 4,824,697   |   | $ | 2,363,950    |  

The assumptions used to estimate the
  fair value of options granted during the period were:

| |                         | 2006 | 2005    | 2004   
| | ----------------------- | ---- | ------- | -------
| | Risk free interest rate |     | 3%      | 3%     
| | Expected life           |     | 4 years | 2 years
| | Volatility              |     | 82%     | 88%    
| | Expected dividends      |     | nil     | nil    

There were no options granted during
  the year ended December 31, 2006.

---

|ANOORAQ RESOURCES CORPORATION                                 
|--------------------------------------------------------------
|Notes to Consolidated Financial Statements                    
|For the years ended December 31, 2006 and 2005,               
|and the fourteen months ended December 31, 2004               
|(Expressed in Canadian
      Dollars, unless otherwise stated)

|(d) | Share purchase warrants
|--- | -----------------------

The continuity of share purchase warrants
  is as follows:

| | Expiry date                         |   | Dec.
      21, |   |   | Dec.
      27, |   |   | June
      1, |   |  |            |  
| | ----------------------------------- | - | -------------- | - | - | -------------- | - | - | ------------- | - |  | ---------- | -
| |                                     |   | 2003           |   |   | 2003           |   |   | 2005          |   |  |            |  
| | Exercise price                      | $ | 0.85           |   | $ | 0.88           |   | $ | 2.50          |   |  | TOTAL      |  
| | Balance, October 31, 2003           |   | 3,100,718      |   |   | 212,407        |   |   |              |   |  | 3,313,125  |  
| | Issued                              |   |               |   |   |               |   |   | 5,333,334     |   |  | 5,333,334  |  
| | Exercised                           |   | (3,100,718     | ) |   | (212,407       | ) |   |              |   |  | (3,313,125 | )
| | Balance, December 31, 2004          |   |               |   |   |               |   |   | 5,333,334     |   |  | 5,333,334  |  
| | Issued                              |   |               |   |   |               |   |   |              |   |  |           |  
| | Exercised                           |   |               |   |   |               |   |   |              |   |  |           |  
| | Expired                             |   |               |   |   |               |   |   | (5,333,334    | ) |  | (5,333,334 | )
| | Balance, December 31, 2005 and 2006 |   |               |   |   |               |   |   |              |   |  |           |  

The Company is committed to issue 167,000,000
  share purchase warrants (BEE warrants) pursuant to the Settlement
  Agreement in note 5(b). Each BEE warrant is exercisable for one common share
  of the Company. The BEE warrants expire on December 31, 2008 and have an exercise
  price of the higher of (i) $1.35 if exercised on or before December 31, 2007
  or $1.48 if exercised after December 31, 2007 or (ii) a price per BEE warrant
  that is 50% less than the common share price payable by arms length parties
  under an equity financing undertaken by the Company that either raises an amount
  of at least $98,400,000 or is undertaken pursuant to a concurrent financing.

|(e) | Private placement, December 2003                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|    | During December 2003, the Company completed a $20 million
        private placement financing of 9,523,810 units at a price of $2.10 per
        unit. Each unit was comprised of one common share and one-half of a common
        share purchase warrant, with each whole warrant exercisable at $2.50 per
        common share until June 1, 2005. The agents received 571,429 share purchase
        warrants each exercisable into one common share at $2.50 per common share
        until June 1, 2005. The fair value of warrants issued has been presented
        on a net basis in share capital. During the year ended December 31, 2005,
        these warrants expired unexercised.

---

|ANOORAQ RESOURCES CORPORATION                                 
|--------------------------------------------------------------
|Notes to Consolidated Financial Statements                    
|For the years ended December 31, 2006 and 2005,               
|and the fourteen months ended December 31, 2004               
|(Expressed in Canadian
      Dollars, unless otherwise stated)

|8. | RELATED PARTY TRANSACTIONS AND BALANCES
|-- | ---------------------------------------

| |                                           |  |      |  |   |             |  |   |             |  |   | Fourteen    | 
| | ----------------------------------------- |  | ---- |  | - | ----------- |  | - | ----------- |  | - | ----------- | 
| |                                           |  |      |  |   |             |  |   |             |  |   | months      | 
| |                                           |  |      |  |   | Year ended  |  |   | Year ended  |  |   | ended       | 
| |                                           |  | Note |  |   | December 31 |  |   | December 31 |  |   | December 31 | 
| | Services rendered
      by                |  | ref  |  |   | 2006        |  |   | 2005        |  |   | 2004        | 
| | Hunter Dickinson Inc.                     |  | (a)  |  | $ | 1,023,633   |  | $ | 1,297,159   |  | $ | 1,512,441   | 
| | Hunter Dickinson Group Inc.               |  | (b)  |  |   |            |  |   | 9,600       |  |   | 17,360      | 
| | Pelawan Investments (Proprietary) Limited |  | (c)  |  |   |            |  |   | 658,035     |  |   | 745,438     | 
| | CEC Engineering Ltd.                      |  | (d)  |  |   | 127,781     |  |   | 166,662     |  |   | 135,104     | 

| |                                                   |  |     |  |   | December 31 |  |   | December 31 |  |  |  | 
| | ------------------------------------------------- |  | --- |  | - | ----------- |  | - | ----------- |  |  |  | 
| | Related party balances
      receivable           |  |     |  |   | 2006        |  |   | 2005        |  |  |  | 
| | Hunter Dickinson Inc.                             |  | (a) |  | $ | 98,820      |  | $ | 233,205     |  |  |  | 
| | Southgold
      Exploration (Proprietary) Limited |  | (e) |  |   | 39,796      |  |   | 141,103     |  |  |  | 
| | Receivable from related parties                   |  |     |  | $ | 138,616     |  | $ | 374,308     |  |  |  | 
| |                                                   |  |     |  |   |             |  |   |             |  |  |  | 
| | Related party balances payable                    |  |     |  |   | December 31 |  |   | December 31 |  |  |  | 
| | (included in accounts
      payable)              |  |     |  |   | 2006        |  |   | 2005        |  |  |  | 
| | CEC Engineering Ltd.                              |  | (d) |  |   | 6,435       |  | $ | 48,506      |  |  |  | 

|(a) | Hunter Dickinson Inc. ("HDI") is a private company owned
        equally by nine public companies, one of which is the Company. HDI has
        certain directors in common with the Company and provides geological,
        corporate development, administrative and management services to, and
        incurs third party costs on behalf of, the Company and its subsidiaries
        on a full cost recovery basis pursuant to an agreement dated December
        31, 1996.     
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|(b) | Hunter Dickinson Group Inc. ("HDGI") was a private company
        with certain directors in common with the Company that provided consulting
        services to, and incurs costs on behalf of, the Company, at market rates.                                                                                                                                                                                                                                                         
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|(c) | Pelawan is a private South African BEE company which
        is a significant shareholder of the Company and which has certain directors
        in common with the Company (note 5(b)). Pelawan became a majority shareholder
        on September 29, 2004. During the year ended December 31, 2006, the Company
        paid $nil (2005  $658,035) for technical, administrative and management
        services provided to, and repayment of costs paid on behalf of, the Company.
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|(d) | During the year ended December 31, 2006, the Company
        paid or accrued $127,781 (2005  $166,662) to CEC Engineering Ltd
        ("CEC"), a private company owned by a former director, for engineering
        and project management services at market rates.                                                                                                                                                                                                                  
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|(e) | Southgold Exploration (Proprietary) Limited ("Southgold")
        is a wholly-owned subsidiary of Great Basin Gold Ltd., a Canadian public
        company which has certain directors in common with the Company. Southgold
        shares certain premises and other facilities with the Company pursuant
        to a cost-sharing arrangement based on a full cost recovery basis.                                                                                                  
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|(f) | Micawber is a private South African corporation which
        is owned 50% by Anglo Platinum and 50% by the Company; hence it is a related
        party. The Company accounts for its investment in Micawber using the equity
        method.                                                                                                                                                                                                                                          

---

|ANOORAQ RESOURCES CORPORATION                                 
|--------------------------------------------------------------
|Notes to Consolidated Financial Statements                    
|For the years ended December 31, 2006 and 2005,               
|and the fourteen months ended December 31, 2004               
|(Expressed in Canadian
      Dollars, unless otherwise stated)

|9. | INCOME TAXES
|-- | ------------

As at December 31, 2006 and 2005 the
  tax effect of the significant components of the Companys future tax asset
  (liability) were as follows:

| |                                   |   | December 31, |   |   | December 31, |  
| | --------------------------------- | - | ------------ | - | - | ------------ | -
| |                                   |   | 2006         |   |   | 2005         |  
| |                                   |   |              |   |   |              |  
| | Future income tax assets          |   |              |   |   |              |  
| | Mineral property interests        | $ | 4,157,000    |   | $ | 4,428,000    |  
| | Loss carry forwards               |   | 5,789,000    |   |   | 4,408,000    |  
| | Equipment                         |   | 17,000       |   |   | 20,000       |  
| | Other tax pools                   |   | 1,386,000    |   |   | 582,000      |  
| | Subtotal                          |   | 11,349,000   |   |   | 9,438,000    |  
| | Valuation allowance               |   | (11,349,000  | ) |   | (9,438,000   | )
| | Net
      future income tax asset |   |             |   |   |             |  
| |                                   |   |              |   |   |              |  
| | Future income tax liability       |   |              |   |   |              |  
| | Mineral property interests        | $ | 1,038,130    |   | $ | 1,154,943    |  

The Companys future income tax
  liability relates to its equity investment in the Ga-Phasha Project and forms
  part of its equity investment (note 5(b)).

Income tax expense differs from the amount
  that would result from applying the Canadian federal and provincial tax rates
  to earnings before income taxes. These differences result from the following
  items:

| |                                             |   | December 31, |   |   | December 31, |   |   | December 31, |  
| | ------------------------------------------- | - | ------------ | - | - | ------------ | - | - | ------------ | -
| |                                             |   | 2006         |   |   | 2005         |   |   | 2004         |  
| | Combined Canadian federal and provincial    |   | 34.12%       |   |   | 34.87%       |   |   | 35.62%       |  
| | statutory rate                              |   |              |   |   |              |   |   |              |  
| |                                             |   |              |   |   |              |   |   |              |  
| | Income tax at statutory rates               | $ | (1,578,000   | ) | $ | (4,313,000   | ) | $ | (4,640,000   | )
| | Non-deductible items                        |   | 70,000       |   |   | 905,000      |   |   | 709,000      |  
| | Difference in foreign tax rates             |   | (299,000     | ) |   | 455,000      |   |   | 616,000      |  
| | Reduction in statutory tax rates            |   | 336,000      |   |   | 223,000      |   |   | 58,000       |  
| | Benefit of unrealized foreign currency loss |   | (561,000     | ) |   | (237,000     | ) |   |             |  
| | Valuation allowance                         |   | 1,911,000    |   |   | 2,902,000    |   |   | 3,257,000    |  
| |                                             | $ | (121,000     | ) | $ | (65,000      | ) | $ |             |  

At December 31, 2006, the Company had
  losses available for income tax purposes in Canada totalling approximately $
  10.9 million (2005  $8.6 million), expiring in various periods from 2007
  to 2026. The Company has losses available for income tax purposes in South Africa
  totaling $8.3 million (2005  $4.7 million) which can be carried forward
  indefinitely.

---

|ANOORAQ RESOURCES CORPORATION                                 
|--------------------------------------------------------------
|Notes to Consolidated Financial Statements                    
|For the years ended December 31, 2006 and 2005,               
|and the fourteen months ended December 31, 2004               
|(Expressed in Canadian
      Dollars, unless otherwise stated)

|10. | SEGMENTED INFORMATION
|--- | ---------------------

| | For the year ended       |   |            |   |   |         |   |   |                    |   |   |            |  
| | ------------------------ | - | ---------- | - | - | ------- | - | - | ------------------ | - | - | ---------- | -
| | December 31, 2006        |   | Canada     |   |   | Mexico  |   |   | South
      Africa |   |   | Total      |  
| | Exploration expenditures | $ |           |   | $ |        |   | $ | 751,325            |   | $ | 751,325    |  
| | Loss for the year        |   | (1,894,272 | ) |   | (726    | ) |   | (2,609,846         | ) |   | (4,504,844 | )
| | Total assets             |   | 1,252,044  |   |   | 31,441. |   |   | 20,545,437         |   |   | 21,828,922 |  
| | Equipment                |   |           |   |   |        |   |   | 73,315             |   |   | 73,315     |  

| | For the year ended       |   |            |   |   |         |   |   |                    |   |   |             |  
| | ------------------------ | - | ---------- | - | - | ------- | - | - | ------------------ | - | - | ----------- | -
| | December 31, 2005        |   | Canada     |   |   | Mexico  |   |   | South
      Africa |   |   | Total       |  
| | Exploration expenditures | $ |           |   | $ |        |   | $ | 5,240,321          |   | $ | 5,240,321   |  
| | Loss for the year        |   | (4,302,015 | ) |   | (8,841  | ) |   | (7,992,945         | ) |   | (12,303,801 | )
| | Total assets             |   | 4,645,858  |   |   | 32,166. |   |   | 9,157,572          |   |   | 13,835,596  |  
| | Equipment                |   |           |   |   |        |   |   | 174,163            |   |   | 174,163     |  

| | For the 14 months ended  |   |            |   |   |        |   |   |                    |   |   |             |  
| | ------------------------ | - | ---------- | - | - | ------ | - | - | ------------------ | - | - | ----------- | -
| | December 31, 2004        |   | Canada     |   |   | Mexico |   |   | South
      Africa |   |   | Total       |  
| | Exploration expenditures | $ |           |   | $ |       |   | $ | 7,860,266          |   | $ | 7,860,266   |  
| | Loss for the year        |   | (4,086,230 | ) |   | (4,323 | ) |   | (8,936,711         | ) |   | (13,027,264 | )

---

|ANOORAQ RESOURCES CORPORATION                                 
|--------------------------------------------------------------
|Notes to Consolidated Financial Statements                    
|For the years ended December 31, 2006 and 2005,               
|and the fourteen months ended December 31, 2004               
|(Expressed in Canadian
      Dollars, unless otherwise stated)

|**11.** | **DIFFERENCES BETWEEN CANADIAN AND UNITED STATES
        GENERALLY ACCEPTED ACCOUNTING PRINCIPLES**
      The consolidated financial statements have been prepared
        in accordance with Canadian generally accepted accounting principles (“Canadian
        GAAP”), which differ in certain material respects from those principles
        that the Company would have followed had its consolidated financial statements
        been prepared in accordance with United States generally accepted accounting
        principles (“US GAAP”).
      There are no material differences between Canadian GAAP
        and US GAAP in the consolidated balance sheet or the consolidated statements
        of operations and cash flows for the years ended December 31, 2006, and
        2005 and the fourteen months ended December 31, 2004. For all periods
        presented, comprehensive loss is equal to net loss.
      **a) Stock based compensation**
      In the fourteen months ended December 31, 2004 the Company
        adopted the fair value based method of accounting for employee stock-based
        compensation as prescribed by FASB Statement No. 123, “*Accounting
        for Stock-Based Compensation*” (“SFAS 123”). The
        Company adopted the fair value base method on a prospective basis from
        November 1, 2003 as permitted by FASB Statement No. 148, “*Accounting
        for Stock-Based Compensation – Transition and Disclosure*”,
        and amendment of FASB Statement No. 123. The prospective adoption of this
        new US GAAP policy creates no differences with the Company’s stock-based
        compensation expense reported under Canadian GAAP.
      In December 2004, Financial Accounting Standards Board
        ("FASB") issued Statement of Financial Accounting Standards
        No. 123 (Revised 2006), "*Share-Based Payment*" ("SFAS
        123R"), which is a revision of SFAS 123 "Accounting for Stock-Based
        Compensation". SFAS 123R supercedes APB Opinion No. 25, "*Accounting
        for Stock Issued to Employees*". SFAS 123R requires all share-based
        payments to employees, including grants of employee stock options, to
        be recognized in the income statement based on their fair values. In calculating
        compensation to be recognized, SFAS 123R requires the Company to estimate
        future forfeitures. Prior to adoption of SFAS 123R, the Company's accounting
        for stock based compensation for US GAAP purposes was consistent with
        that used for Canadian GAAP. For Canadian GAAP purposes, the Company uses
        the fair value method to account for all stock option grants but accounts
        for forfeitures as they occur, as permitted by Canadian GAAP.
      Prior to 2003 under US GAAP, the Company accounted for
        its employee stock option plan under the principles of Accounting Principles
        Board Opinion No. 25, “*Accounting for Stock Issued to Employees*”
        (“APB 25”) and other Interpretations. No compensation expense
        was recognized under APB 25 because the exercise price of the Company’s
        employee stock options equalled the market price of the underlying stock
        on the date of the grant.
      For the years ended December 31, 2006 and 2005 and the
        fourteen months ended December 31, 2004, there were no differences in
        stock-based compensation expense in respect of employee or non-employee
        share options which would be required to be charged to operations under
        both Canadian and US GAAP. However, for US GAAP purposes, stock-based
        compensation would be
|------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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|ANOORAQ RESOURCES CORPORATION                                 
|--------------------------------------------------------------
|Notes to Consolidated Financial Statements                    
|For the years ended December 31, 2006 and 2005,               
|and the fourteen months ended December 31, 2004               
|(Expressed in Canadian
      Dollars, unless otherwise stated)

| | classified in the consolidated
        statements of operations by the nature of the services provided and not
        as a separate line item.
      **b) Exploration stage company:**
      Pursuant to US GAAP, the Company would be subject to
        the disclosure requirements applicable to an exploration stage enterprise
        as the Company is devoting its efforts to establishing commercially viable
        mineral properties. However, the identification of the Company as such
        for accounting purposes does not impact the measurement principles applied
        to these financial statements.
      **c) Income taxes:**
      Under Canadian GAAP, future tax assets and liabilities
        are recorded at substantially enacted tax rates. Under US GAAP, deferred
        tax assets and liabilities are recorded at enacted tax rates. There were
        no significant differences between enacted and substantively enacted tax
        rates for the periods presented.
      **d) Deferred finance costs:**
      Under Canadian GAAP, costs incurred in connection with
        the issue of long term debt are deferred and amortized on a straight line
        basis over the term of the debt. For US GAAP purposes, these costs would
        be amortized using the effective interest rate method. However, this difference
        does not have a material impact on the consolidated financial statements.
      **e) Impact of recent United States accounting
        pronouncements:**
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
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| | (i)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
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| | (ii)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
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| | (iii)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             

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|ANOORAQ RESOURCES CORPORATION                                 
|--------------------------------------------------------------
|Notes to Consolidated Financial Statements                    
|For the years ended December 31, 2006 and 2005,               
|and the fourteen months ended December 31, 2004               
|(Expressed in Canadian
      Dollars, unless otherwise stated)

| | (iv) | In September 2006, the US Securities and Exchange
        Commission issued Staff Accounting Bulletin No. 108 which provides guidance
        on the consideration of the effects of prior year misstatements in quantifying
        misstatements in current year financial statements. This guidance was
        applicable for annual statements ending after November 15, 2006 and adoption
        of this interpretation in 2006 had no impact on the Company’s financial
        position, results of operations or cash flows.
| | ---- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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