---

UNITED STATES**SECURITIES AND EXCHANGE COMMISSION**Washington, D.C. 20549

**FORM 20-F**

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

OR

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

For the Fiscal year ended **December 31,
2005**

OR

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

OR

[]
  SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
  ACT OF 1934

For the transition period from _______________ to
_______________

Commission file number **0-30622**

ANOORAQ RESOURCES
CORPORATION(Exact name of Registrant specified in its
charter)

NOT APPLICABLE(Translation of Registrant's
name into English)

BRITISH COLUMBIA, CANADA(Jurisdiction of
incorporation or organization)

Suite 1020, 800 West Pender Street Vancouver, British
Columbia, Canada, V6C 2V6(Address of principal executive
offices)

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- 2 -

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

|Title of Each Class | Name of each exchange on which registered
|------------------- | -----------------------------------------
|**Common Shares**   | **The American Stock Exchange**          

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

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

Number of outstanding shares of Registrants only class of
common as of December 31, 2005:

**148,220,407 Common Shares**

and the number of outstanding common shares as of June 30, 2006
is 148,220,407

Indicate by check mark whether Registrant is a well-known seasoned
  issuer, as defined in Rule 405 
  Yes   []     
  No    [ x ]

If this report is an annual or transition report, indicate by
  check mark if Registrant is not required to file 
  reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of
  1934.
  Yes   []     
  No    [ x ]

Indicate by check mark whether Registrant is a large accelerated
filer, an accelerated filer, or a non-accelerated filer. See definition of
accelerated filer and large accelerated filer in Rule 126-2 of the
Exchange Act. (check one):

Large accelerated Filer []                            
  Accelerated Filer []                               
  Non-accelerated Filer  [ x ]

Indicate by check mark which financial statement item Registrant
  has elected to follow: 
  Item 17 []    
   Item 18 [ x ]

If this is an annual report, indicate by check mark whether Registrant
  is a shell company (as defined in Rule 
  126-2 of the Exchange Act.
  Yes   []     
  No    [ x ]

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

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

**NOT APPLICABLE**

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- 3 -

CURRENCY AND EXCHANGE RATES

All monetary amounts contained in this Annual Report are,
unless otherwise indicated, expressed in Canadian Dollars. On June 30, 2006, the
Federal Reserve noon rate for Canadian Dollars was US$1.00: Cdn$1.1150 (see Item
3  "Key Information" for further historical exchange rate information).

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T A B L E   O F   C O N T
  E N T S

|        | GLOSSARY OF TERMS                                                                  | 4      
|------- | ---------------------------------------------------------------------------------- | -------
|        |                                                                                    |        
|ITEM 1  | IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS                              | 8      
|        |                                                                                    |        
|ITEM 2  | OFFER STATISTICS AND EXPECTED TIMETABLE                                            | 9      
|        |                                                                                    |        
|ITEM 3  | KEY INFORMATION                                                                    | 10     
|        |                                                                                    |        
|ITEM 4  | INFORMATION ON THE COMPANY                                                         | 21     
|        |                                                                                    |        
|ITEM 5  | OPERATING AND FINANCIAL REVIEW AND PROSPECTS                                       | 58     
|        |                                                                                    |        
|ITEM 6  | DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES                                         | 64     
|        |                                                                                    |        
|ITEM 7  | MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS                                  | 79     
|        |                                                                                    |        
|ITEM 8  | FINANCIAL INFORMATION                                                              | 83     
|        |                                                                                    |        
|ITEM 9  | THE OFFER AND LISTING                                                              | 84     
|        |                                                                                    |        
|ITEM 10 | ADDITIONAL INFORMATION                                                             | 86     
|        |                                                                                    |        
|ITEM 11 | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
      RISK                   | **99** 
|        |                                                                                    |        
|ITEM 12 | DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES                             | 100    
|        |                                                                                    |        
|ITEM 13 | DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES                                    | 102    
|        |                                                                                    |        
|ITEM 14 | MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS
      AND USE OF PROCEEDS | **103**
|        |                                                                                    |        
|ITEM 15 | CONTROLS AND PROCEDURES                                                            | 104    
|        |                                                                                    |        
|ITEM 16 | **AUDIT COMMITTEE, CODE OF ETHICS, ACCOUNTANT FEES,
      AND EXEMPTIONS**         | 105    
|        |                                                                                    |        
|ITEM 17 | FINANCIAL STATEMENTS                                                               | 109    
|        |                                                                                    |        
|ITEM 18 | FINANCIAL STATEMENTS                                                               | 110    
|        |                                                                                    |        
|ITEM 19 | EXHIBITS                                                                           | 111    



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- 2 -

PART 1

In this Annual Report on Form 20-F, all references to the
"Company" or to "Anooraq" refer to Anooraq Resources Corporation and its
subsidiaries, unless the context clearly otherwise requires. Certain terms used
herein are defined in the text and others are included in this glossary of
terms.

Anooraq uses the Canadian dollar as its reporting currency. All
references in this document to "dollars" or "$" are expressed in Canadian
dollars, unless otherwise indicated. On June 30, 2006 the Federal Reserve noon
rate for Canadian dollars was US$1.00:Cdn$ 1.1150. See also Item 3 - "Key
Information" for more detailed currency and conversion information.

Except as noted, the information set forth in this Annual
Report is as of June 30, 2006 and all information included in this document
should only be considered correct as of such date.

References to this "Annual Report" are references to this
Annual Report on Form 20-F for the fiscal period ended December 31, 2005. During
fiscal 2004, the Company changed its year end from October 31 to December 31,
2004. Accordingly, the fiscal period ended December 31, 2005 is for the twelve
month period ended December 31, 2005. Reference to fiscal periods 2004 and 2003
relate to the fourteen month period ending December 31, 2004 and the twelve
month period ending October 31, 2003, respectively.

FORWARD LOOKING STATEMENTS

This Annual Report on Form 20-F contains statements that
constitute "forward-looking statements" within the meaning of Section 27A of the
Securities Act of 1933 and Section 21E of the Securities Exchange Act
of 1934. These statements appear in a number of different places in this
Annual Report and can be identified by words such as "anticipates", "estimates",
"projects", "expects", "intends", "believes", "plans", or their negatives or
other comparable words. Such forward-looking statements involve known and
unknown risks, uncertainties and other factors which may cause the Company's
actual results, performance or achievements to be materially different from any
future results, performance or achievements that may expressed or implied by
such forward-looking statements. The statements, including the statements
contained in Item 3D "Risk Factors", Item 4B "Business Overview", Item 5
"Operating and Financial Review and Prospects" and Item 11 "Quantitative and
Qualitative Disclosures About Market Risk", are inherently subject to a variety
of risks and uncertainties that could cause actual results, performance or
achievements to differ significantly. Forward-looking statements include
statements regarding the outlook for the Company's future operations, plans and
timing for its exploration programs, statements about future market conditions,
supply and demand conditions, forecasts of future costs and expenditures, the
outcome of legal proceedings, and other expectations, intentions and plans that
are not historical facts. Readers are cautioned that any such forward-looking
statements are not guarantees and may involve risks and uncertainties. The
Company's actual results may differ materially from those in the forward-looking
statements due to risks facing the Company or due to actual facts differing from
the assumptions underlying the Company's predictions. Some of these risks and
assumptions include:

- general economic and business conditions, including changes in interest
  rates;
- prices of natural resources, costs associated with mineral exploration and
  other economic conditions;
- natural phenomena;
- actions by government authorities, including changes in government
  regulation;
- uncertainties associated with legal proceedings;

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- 3 -

- changes in the resources market;
- future decisions by management in response to changing conditions;
- the Company's ability to execute prospective business plans; and
- misjudgements in the course of preparing forward-looking statements.

The Company advises you that these cautionary remarks expressly
qualify in their entirety all forward-looking statements attributable to the
Company or persons acting on its behalf. The Company assumes no obligation to
update its forward-looking statements to reflect actual results, changes in
assumptions or changes in other factors affecting such statements. You should
carefully review the cautionary statements and risk factors contained in this
and other documents that the Company files from time to time with the Securities
and Exchange Commission.

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- 4 -

|GLOSSARY OF TERMS
|-----------------

Certain terms used herein are defined as follows:

Anglo Platinum
    Anglo American Platinum Corporation Limited, a public
      company incorporated under the laws of South Africa.August 2004 Circular
    The management information circular dated August 11, 2004
      in respect of the extraordinary general meeting of the Company dated
      September 10, 2004, available on SEDAR at www.sedar.com.AMEX
    The American Stock Exchange.BEE
    Black Economic Empowerment, a strategy aimed at
      substantially increasing participation by HDP at all levels in the economy
      of South Africa. BEE is aimed at redressing the imbalances of the past
      caused by the apartheid system in South Africa by seeking to substantially
      and equitably increase the ownership and management of South Africa's
      resources by the majority of its citizens and so ensure broader and more
      meaningful participation in the economy by HDP.Charter
    The Broad Based Socio-Economic Empowerment Charter for
      the South African mining industry, released in October 2002 and formally
      published in August 2004.DME
    South Africas Department of Minerals and Energy.Ga-Phasha Project
    The Ga-Phasha PGM Project, a joint venture with Anglo
      Platinum located on the Eastern Limb of the Bushveld Complex in South
      Africa.HDI
    Hunter Dickinson Inc., a corporation incorporated under
      the laws of Canada which is a related party to Anooraq.HDP
    Historically Disadvantaged Persons, being South Africans
      (and entities controlled by them) who suffered under the discriminatory
      practices of the system of apartheid.Micawber
    Micawber 277 (Proprietary) Limited, a private company
      incorporated under the laws of South Africa and which holds the mineral
      title in respect of the Ga-Phasha Project.MineralDevelopment Act
    The Mineral and Petroleum Resources Development
      Act, 2002 (South Africa).Pelawan
    Pelawan Investments (Proprietary) Limited, a private
      company incorporated under the laws of South Africa.Pelawan RTO ShareExchange
      Agreement
    The Share Exchange Agreement between Pelawan and Anooraq
      made as of January 21, 2004 and as amended from time to time.Pelawan RTOShareholdersAgreement
    The Shareholders Agreement between Pelawan, Anooraq and
      the Pelawan Trust made as of September 19, 2004.Pelawan Trust
    The trust established in accordance with a Trust Deed
      dated September 2, 2004, the present trustees of which are Deneys Reitz
      Trustees (Proprietary) Limited, Tumelo Moathlodi Motsisi and Asna Chris
      Harold Motaung.PGM
    Platinum Group Metals.Plateau
    Plateau Resources (Proprietary) Limited, a corporation
      incorporated under the laws of South Africa, being an indirect wholly
      owned subsidiary of Anooraq.


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- 5 -

Platreef Project
    The Platreef PGM Project located on the Northern Limb of
      the Bushveld Complex in South Africa, which includes the Kwanda JV, the
      Boikgantsho JV, and the Rietfontein and Central Block properties.PPRust
    Potgietersrust Platinum Limited, a private company
      incorporated under the laws of South Africa, being a wholly owned
      subsidiary of Anglo Platinum.Royalty Bill
    The Mineral and Petroleum Royalty Bill, placed
      before the parliament of South Africa as a money bill by the South African
      Minister of Finance on March 10, 2003 in relation to proposed royalties to
      be levied by South Africa in respect of mining rights.RPM or Rustenburg
    Rustenburg Platinum Mines Limited, a public company
      incorporated under the laws of South Africa, being a wholly owned
      subsidiary of Anglo Platinum.SARB
    The Exchange Control Department of the South African
      Reserve Bank.South Africa
    The Republic of South Africa.Thusong Project
    The Thusong Platinum Mine Joint Venture located on the
      Western Limb of the Bushveld Complex in South Africa.TSXV
    TSX Venture Exchange Inc.ZAR
    South African Rand, the currency of South Africa.


Geological/Exploration Terms

Farm
    A term commonly used in South Africa to describe the area
      of a mineral interest.Feldspar
    A group of abundant rock-forming minerals, the most
      widespread of any mineral group and constituting 60% of the earth's
      crust.Feldspathic
    Containing feldspar as a principal ingredient.Gabbro
    Course grained mafic igneous rock.Mafic
    Composed of dark ferromagnesian minerals.Mineral Deposit
    A deposit of mineralization that may or may not be ore.
      Ore is determined by a full feasibility study.Mineral Symbols
    Pt  Platinum; Pd  Palladium; Au  Gold; Ag  Silver; Cu
       Copper; Cr  Chromium; Ni  Nickel; Pb  Lead; Rh  Rhodium; Ru 
      Ruthenium.Mineralized Material
    A mineralized body that has been delineated by
      appropriately spaced drilling and/or underground sampling to support a
      sufficient tonnage and average grade of metals to warrant further
      exploration. Such a deposit does not qualify as a reserve, until a
      comprehensive evaluation based upon unit cost, grade, recoveries, and
      other materials factors conclude legal and economic feasibility.
      "Mineralized material" does not include materials classed as "inferred", a
      classification that is acceptable under Canadian regulations (see
      "Resource Category (Classification) Definitions" below).Norite
    A coarse-grained plutonic rock in which the chief
      constituent is basic plagioclase feldspar (labradorite) and the dominant
      mafic mineral is orthopyroxene (hypersthene).Pyroxenite
    A medium or coarse-grained rock consisting essentially of
      pyroxene, a common rock-forming mineral.


---

- 6 -

Resource Category (Classification) Definitions

mineral reserve
    Industry Guide 7  "Description of Property by Issuers
      Engaged or to be Engaged in Significant Mining Operations" of
      the Securities and Exchange Commission defines a reserve as that part of
      a mineral deposit which could be economically and legally extracted or
      produced at the time of the reserve determination. Reserves consist of:(1) Proven (Measured) Reserves.Reserves for which:
          (a) quantity is computed from dimensions revealed in outcrops, trenches,
          workings or drill holes; grade and/or quality are computed from the
          results of detailed sampling; and (b) the sites for inspection, sampling
          and measurement are spaced so closely and the geologic character is
          so well defined that size, shape, depth and mineral content of reserves
          are well-established.(2) Probable (Indicated) Reserves.Reserves
          for which quantity and grade and/or quality are computed from information
          similar to that used for proven (measured) reserves, but the sites for
          inspection, sampling and measurement are farther apart or are otherwise
          less adequately spaced. The degree of assurance, although lower than
          that for proven (measured) reserves, is high enough to assume continuity
          between points of observation.mineral resource
    Canadian National Instrument 43-101 Standards of Disclosure
          for Mineral Projects("NI 43-101") defines a "Mineral Resource"
          as a concentration or occurrence of natural, solid, inorganic or fossilized
          organic material in or on the Earth's crust in such form and quantity
          and of such a grade or quality that it has reasonable prospects for
          economic extraction. The location, quantity, grade, geological characteristics
          and continuity of a Mineral Resource are known, estimated or interpreted
          from specific geological evidence and knowledge.Mineral Resources are sub-divided, in order of increasing
          geological confidence, into Inferred, Indicated and Measured categories.
          An Inferred Mineral Resource has a lower level of confidence than that
          applied to an Indicated Mineral Resource. An Indicated Mineral Resource
          has a higher level of confidence than an Inferred Mineral Resource but
          has a lower level of confidence than a Measured Mineral Resource.(1) Inferred Mineral Resource.An Inferred
          Mineral Resource is that part of a Mineral Resource for which
          quantity and grade or quality can be estimated on the basis of geological
          evidence and limited sampling and reasonably assumed, but not verified,
          geological and grade continuity. The estimate is based on limited information
          and sampling gathered through appropriate techniques from locations
          such as outcrops, trenches, pits, workings and drill holes.
        (2) Indicated Mineral Resource.An Indicated
          Mineral Resource is that part of a Mineral Resource for which
          quantity, grade or quality, densities, shape and physical characteristics
          can be estimated with a level of confidence sufficient to allow the
          appropriate application of technical and economic


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- 7 -

parameters, to support mine planning and evaluation of
          the economic viability of the deposit. The estimate is based on detailed
          and reliable exploration and testing information gathered through appropriate
          techniques from locations such as outcrops, trenches, pits, workings
          and drill holes that are spaced closely enough for geological and grade
          continuity to be reasonably assumed.(3) Measured Mineral Resource.A Measured
          Mineral Resource is that part of a Mineral Resource for which
          quantity, grade or quality, densities, shape, physical characteristics
          are so well established that they can be estimated with confidence sufficient
          to allow the appropriate application of technical and economic parameters,
          to support production planning and evaluation of the economic viability
          of the deposit. The estimate is based on detailed and reliable exploration,
          sampling and testing information gathered through appropriate techniques
          from locations such as outcrops, trenches, pits, workings and drill
          holes that are spaced closely enough to confirm both geological and
          grade continuity.
        Industry Guide 7  "Description of Property
          by Issuers Engaged or to be Engaged in Significant Mining Operations"of the Securities and Exchange Commission does not define or recognize
          resources. As used in this Annual Report, "resources" are as defined
          in NI 43-101.


Currency and Measurement

All currency amounts in this Annual Report are stated in
Canadian dollars unless otherwise indicated.

Conversion of metric units into imperial equivalents is as
follows:

Metric Units
    Multiply by
    Imperial Unitshectares
    2.471
    = acresmetres
    3.281
    = feetkilometres
    0.621
    = miles (5,280 feet)grams
    0.032
    = ounces (troy)tonnes
    1.102
    = tons (short) (2,000 lbs)grams/tonne
    0.029
    = ounces (troy)/ton


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- 8 -

|ITEM 1      IDENTITY OF DIRECTORS,
      SENIOR MANAGEMENT AND ADVISERS
|-----------------------------------------------------------------------

Not applicable

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- 9 -

|ITEM 2      OFFER STATISTICS AND
      EXPECTED TIMETABLE
|---------------------------------------------------------

Not applicable

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- 10 -

|ITEM 3KEY INFORMATION
|---------------------

A.      Selected Financial
Data

The following table presents selected financial data for the
Company for the last five fiscal periods. This information should be read in
conjunction with the consolidated financial statements included elsewhere in
this document.

The Companys annual financial statements have been audited by
its current independent registered public accounting firm, KPMG LLP, Chartered
Accountants for the fiscal year ended December 31, 2005 and the fourteen month
fiscal year ended December 31, 2004, and by its former independent registered
public accounting firm, De Visser Gray, Chartered Accountants, for each of the
previous fiscal years. The financial statements have been prepared in accordance
with Canadian generally accepted accounting principles ("Canadian GAAP"). Note
12 to the financial statements included herein provides descriptions of the
material measurement differences between Canadian GAAP and United States
generally accepted accounting principles ("US GAAP") as they relate to the
Company and a reconciliation to US GAAP of the Company's financial statements.

The selected financial data is presented in Canadian dollars
and in accordance with Canadian GAAP and United States GAAP.

CONSOLIDATED BALANCE SHEET DATA

|(Thousands of Canadian dollars) |   |              |   |   |              | As at |   |             |   |   |             |   |  
|------------------------------- | - | ------------ | - | - | ------------ | ----- | - | ----------- | - | - | ----------- | - | -
|                                |   | December 31, |   |   | December 31, |       |   | Decmber 31, |   |   | October 31, |   |  
|                                |   | 2005         |   |   | 2004         |       |   | 2003        |   |   | 2003        |   |  
|Period End Balances             |   |              |   |   |              |       |   | (unaudited) |   |   |             |   |  
|Total assets                    | $ | 13,836       |   | $ | 24,480       |       | $ | 30,991      |   | $ | 9,857       |   | $
|Total liabilities               |   | 379          |   |   | 1,413        |       |   | 179         |   |   | 528         |   |  
|Share capital and               |   |              |   |   |              |       |   |             |   |   |             |   |  
|contributed surplus             |   | 55,032       |   |   | 52,338       |       |   | 48,283      |   |   | 25,573      |   |  
|Deficit                         |   | (41,575      | ) |   | (29,271      | )     |   | (17,471     | ) |   | (16,244     | ) |  

|(Thousands of Canadian dollars) |   |              |  |   |              | As at |   |              |  |   |             |  |  
|------------------------------- | - | ------------ |  | - | ------------ | ----- | - | ------------ |  | - | ----------- |  | -
|                                |   | December 31, |  |   | December 31, |       |   | December 31, |  |   | October 31, |  |  
|                                |   | 2005         |  |   | 2004         |       |   | 2003         |  |   | 2003        |  |  
|Period End Balances             |   |              |  |   |              |       |   | (unaudited)  |  |   |             |  |  
|Working capital                 | $ | 4,781        |  | $ | 14,375       |       | $ | 26,599       |  | $ | 5,111       |  | $
|Equipment, net                  |   | 174          |  |   | 198          |       |   | 13           |  |   | 17          |  |  
|Mineral property interests      |   | 8,502        |  |   | 8,494        |       |   | 4,200        |  |   | 4,200       |  |  
|Shareholders' equity            |   | 13,457       |  |   | 23,067       |       |   | 30,812       |  |   | 9,328       |  |  
|Number of shares                |   |              |  |   |              |       |   |              |  |   |             |  |  
|outstanding                     |   | 148,220,407  |  |   | 148,020,407  |       |   | 54,009,607   |  |   | 40,164,172  |  |  

No cash or other dividends have been declared.

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- 11 -

CONSOLIDATED STATEMENT OF OPERATIONS DATA

|(Thousands of Canadian dollars) |   |             |   |   |             |   |   |                |   |   |            |   |   |            |   |   |           |  
|------------------------------- | - | ----------- | - | - | ----------- | - | - | -------------- | - | - | ---------- | - | - | ---------- | - | - | --------- | -
|                                |   | 12 months   |   |   | 14 months   |   |   | 2 months ended |   |   | 12 months  |   |   | 12 months  |   |   | 12 months |  
|                                |   | ended       |   |   | ended       |   |   | December 31    |   |   | ended      |   |   | ended      |   |   | ended     |  
|Statement of                    |   | December 31 |   |   | December 31 |   |   | 2003           |   |   | October 31 |   |   | October 31 |   |   | October   |  
|Operations Data                 |   | 2005        |   |   | 2004        |   |   | (unaudited)    |   |   | 2003       |   |   | 2002       |   |   | 31 2001   |  
|Investment and other            |   |             |   |   |             |   |   |                |   |   |            |   |   |            |   |   |           |  
|income                          | $ | 120         |   | $ | 486         |   | $ | 24             |   | $ | 46         |   | $ | 38         |   | $ | 41        |  
|General and administrative      |   |             |   |   |             |   |   |                |   |   |            |   |   |            |   |   |           |  
|expenses                        |   | 6,469       |   |   | 4,612       |   |   | 387            |   |   | 1,903      |   |   | 1,426      |   |   | 316       |  
|Exploration expenditures        |   | 5,955       |   |   | 8,901       |   |   | 864            |   |   | 1,973      |   |   | 976        |   |   | 1,445     |  
|Loss                            |   | (12,304     | ) |   | (13,027     | ) |   | (1,227         | ) |   | (3,829     | ) |   | (2,364     | ) |   | (1,838    | )
|Loss per common share           |   | (0.08       | ) |   | (0.18       | ) |   | (0.03          | ) |   | (0.11      | ) |   | (0.08      | ) |   | (0.11     | )

See Item 17 for accompanying consolidated financial statements
reconciled to United States generally accepted accounting principles for further
details.

Annual Exchange Rates

The following table sets out the exchange rates, based on noon
buying rates as certified by the Bank of Canada, for the conversion of United
States Dollars (USD) into Canadian Dollars (CAD) in effect at the end of the
following periods, and the average exchange rates and the range of high and low
exchange rates for such periods.

USD/CAD

|                    |  | 12
      months |  |  | 14
      months |  |  | 12
      months |  |  | 12
      months |  |  | 12
      months | 
|------------------- |  | --------------- |  |  | --------------- |  |  | --------------- |  |  | --------------- |  |  | --------------- | 
|                    |  | ended           |  |  | ended           |  |  | ended           |  |  | ended           |  |  | ended           | 
|                    |  | December 31     |  |  | December 31     |  |  | October 31      |  |  | October 31      |  |  | October 31      | 
|Fiscal period ended |  | 2005            |  |  | 2004            |  |  | 2003            |  |  | 2002            |  |  | 2001            | 
|End of Period       |  | 1.16            |  |  | 1.20            |  |  | 1.32            |  |  | 1.56            |  |  | 1.59            | 
|Average for Period  |  | 1.21            |  |  | 1.30            |  |  | 1.44            |  |  | 1.57            |  |  | 1.54            | 
|High for Period     |  | 1.27            |  |  | 1.38            |  |  | 1.54            |  |  | 1.62            |  |  | 1.59            | 
|Low for Period      |  | 1.15            |  |  | 1.20            |  |  | 1.32            |  |  | 1.50            |  |  | 1.49            | 

The following table sets out the exchange rates, based on noon
buying rates as certified by the Bank of Canada, for the conversion of Canadian
Dollars (CAD) into South African Rand (ZAR) in effect at the end of the
following periods, and the average exchange rates and the range of high and low
exchange rates for such periods.

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- 12 -

CAD/ZAR

|                     |  | 12
      months |  |  | 14
      months |  |  | 12
      months |  |  | 12
      months |  |  | 12
      months | 
|-------------------- |  | --------------- |  |  | --------------- |  |  | --------------- |  |  | --------------- |  |  | --------------- | 
|                     |  | ended           |  |  | ended           |  |  | ended           |  |  | ended           |  |  | ended           | 
|                     |  | December 31     |  |  | December 31     |  |  | October 31      |  |  | October 31      |  |  | October 31      | 
|Fiscal period ended  |  | 2005            |  |  | 2004            |  |  | 2003            |  |  | 2002            |  |  | 2001            | 
|End of Period        |  | 0.184           |  |  | 0.213           |  |  | 0.192           |  |  | 0.156           |  |  | 0.168           | 
|Average for Period   |  | 0.191           |  |  | 0.202           |  |  | 0.181           |  |  | 0.147           |  |  | 0.190           | 
|High for Period      |  | 0.213           |  |  | 0.222           |  |  | 0.202           |  |  | 0.168           |  |  | 0.204           | 
|Low
      for Period |  | 0.175           |  |  | 0.178           |  |  | 0.156           |  |  | 0.117           |  |  | 0.166           | 

Monthly Exchange Rates

The following table sets out the high and low exchange rates,
based on noon buying rates as certified by the Bank of Canada, for the
conversion of United States Dollars ("USD") into Canadian Dollars ("CAD") in
effect at the end of the following months.

USD/CAD

|                          |  | January |  |  | February |  |  | March  |  |  | April  |  |  | May    |  |  | June   | 
|------------------------- |  | ------- |  |  | -------- |  |  | ------ |  |  | ------ |  |  | ------ |  |  | ------ | 
|                          |  | 2006    |  |  | 2006     |  |  | 2006   |  |  | 2006   |  |  | 2006   |  |  | 2006   | 
|Low for the period        |  | 1.1390  |  |  | 1.1366   |  |  | 1.1314 |  |  | 1.1132 |  |  | 1.0995 |  |  | 1.0990 | 
|High
      for the period |  | 1.1706  |  |  | 1.1584   |  |  | 1.1719 |  |  | 1.1722 |  |  | 1.1214 |  |  | 1.1245 | 

The following table sets out the high and low exchange rates,
based on noon buying rates as certified by the Bank of Canada, for the
conversion of Canadian Dollars ("CAD") into South African Rand ("ZAR") in effect
at the end of the following months.

CAD/ZAR

|                          |  | January |  |  | February |  |  | March  |  |  | April  |  |  | May    |  |  | June   | 
|------------------------- |  | ------- |  |  | -------- |  |  | ------ |  |  | ------ |  |  | ------ |  |  | ------ | 
|                          |  | 2006    |  |  | 2006     |  |  | 2006   |  |  | 2006   |  |  | 2006   |  |  | 2006   | 
|Low for the period        |  | 0.1839  |  |  | 0.1846   |  |  | 0.1826 |  |  | 0.1826 |  |  | 0.1689 |  |  | 0.1512 | 
|High
      for the period |  | 0.1945  |  |  | 0.1911   |  |  | 0.1896 |  |  | 0.1935 |  |  | 0.1854 |  |  | 0.1659 | 

B.      Capitalization and
Indebtedness

Not applicable

C.      Reasons for the Offer and
Use of Proceeds

Not applicable

D.      Risk Factors

Investment in developmental stage ventures such as Anooraq is
highly speculative and subject to numerous and substantial risks.

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- 13 -

The Company faces risks in executing its business plan and
achieving revenues. The following risks are material risks that the Company
faces. The Company also faces the risks identified elsewhere in this Annual
Report. If any of these risks occur, the Company's business and its operating
results and financial condition could be seriously harmed and the Company may
not be able to continue business operations as a going concern.

Exploration and Development

The exploration for and development of mineral deposits
involves significant risks, which even a combination of careful evaluation,
experience and knowledge may not eliminate. Although the discovery of an ore
body may result in substantial rewards, few properties explored are ultimately
developed into producing mines. Significant expenditures may be required to
locate and establish ore reserves, to develop metallurgical processes and to
construct mining and processing facilities at a particular site. It is
impossible to ensure that the current exploration programs planned by Anooraq
and its joint venture partners will result in a profitable commercial mining
operation, (see Item 30  Joint Venture Risks). Significant capital investment
is required to achieve commercial production from successful exploration
efforts.

The commercial viability of a mineral deposit is dependent upon
a number of factors. These include deposit attributes such as size, grade and
proximity to infrastructure, current and future metal prices (which can be
cyclical), and government regulations, including those relating to prices,
taxes, royalties, land tenure, land use, importing and exporting of minerals and
necessary supplies and environmental protection. The complete effect of these
factors, either alone or in combination, cannot be entirely predicted, and their
impact may result in Anooraq not receiving an adequate return on invested
capital.

The figures for mineral resources presented herein are
estimates and no assurance can be given that the anticipated tonnages and grades
will be achieved or that the indicated level of recovery will be realized.
Market fluctuations and the prices of metals may render resources uneconomic.
Moreover, short-term operating factors relating to the mineral deposits, such as
the need for orderly development of the deposits or the processing of new or
different grades of ore, may cause a mining operation to be unprofitable in any
particular accounting period.

No Ore

All of the Companys projects are in the exploration as opposed
to the development stage and have no known body of economic mineralization. The
known mineralization at these projects has not been determined to be
commercially minerable, economic ore. Although the Company believes that
exploration data available is encouraging, particularly in respect to the
Platreef and Ga-Phasha properties, there can be no assurance that commercially
mineable ore bodies exist. There is no certainty that any expenditure made in
the exploration of the Company's mineral properties will result in discoveries
of commercially recoverable quantities of ore. Such assurance will require
completion of final comprehensive feasibility studies and, possibly, further
associated exploration and other work to determine if a potential mine at any of
these projects is likely to be economic. In order to carry out exploration and
development programs of any economic ore body and place it into commercial
production, the Company must raise substantial additional funding.

Economic Risk

The likelihood of the future profitability of Anooraq's
operations may be significantly affected by changes in the market price of the
metals it mines or for which it explores. The prices of PGM are volatile, and

---

- 14 -

are affected by numerous factors beyond Anooraq's control. The
level of interest rates, the rate of inflation, the world supply of PGM and the
volatility of exchange rates can all cause fluctuations in these prices. Such
external economic factors are in turn influenced by changes in international
investment patterns, monetary systems and political developments. The prices of
PGM have fluctuated in recent years, and future significant price declines could
cause commercial production to be uneconomic and may have a material adverse
effect on Anooraq's business, results of operations and financial condition.

Additional Funding Requirements

The further development and exploration of the various mineral
properties in which Anooraq holds interests is dependent upon its ability to
obtain financing through any or all of the joint venturing of projects, debt
financing, equity financing or other means. The Companys cash resources at June
30, 2006 are not sufficient for its present needs, specifically to continue
administrative and exploration operations at current levels through the end of
the year 2006. There is no assurance that Anooraq will be successful in
obtaining the required financing. The Report of Independent Registered
Accounting Firm on Anooraqs 2005 consolidated financial statements which report
is included herein includes an explanatory paragraph that describes conditions
that exists that cause substantial doubt about the Companys ability to continue
as a going concern. The consolidated financial statements do not include any
adjustments that might result from the outcome of that uncertainty.

Mining

Mining operations generally involve a high degree of risk.
Anooraq's operations are subject to all the hazards and risks normally
encountered in the exploration, development and production of minerals. These
include unusual and unexpected geological formations, rock falls, flooding and
other conditions involved in the drilling and removal of material, any of which
could result in damage to, or destruction of, mines and other producing
facilities, damage to life or property, environmental damage and possible legal
liability. Although adequate precautions to minimize risk will be taken, milling
operations are subject to hazards such as equipment failure or failure of
retaining dams which may result in environmental pollution and consequent
liability which will have a material adverse effect on Anooraq's business and
results of operation and financial condition.

Government Regulation

The exploration and mining activities of Anooraq are subject to
various South African national, provincial and local laws governing prospecting,
development, production, taxes, labour standards and occupational health, mine
safety, toxic substance and other matters. Exploration activities and mining are
also subject to various national, provincial and local laws and regulations
relating to the protection of the environment. These laws mandate, among other
things, the maintenance of certain air and water quality standards, and land
reclamation. These laws also set forth limitations on the generation,
transportation, storage and disposal of solid and hazardous waste. Although
Anooraq's activities are currently carried out in accordance with all applicable
rules and regulations, to the best of its knowledge and belief no assurance can
be given that new rules and regulations will not be enacted or that existing
rules and regulations will not be applied in a manner which could limit or
curtail production or development. Amendments to current laws and regulations
governing operations and activities of exploration, mining and milling or more
stringent implementation thereof could have a material adverse effect on
Anooraq's business, results of operation and financial condition.

In March 2003, the Government of South Africa released the
Royalty Bill outlining the state's policies with regard to the payment of
royalties by mining companies. The Royalty Bill proposes that companies

---

- 15 -

producing PGM pay a royalty of 4% from the sales of those
metals. The royalty would be payable on gross revenue. If enacted, the
Royalty Bill may reduce the viability of projects undertaken by the
Company. The Royalty Bill is presently under discussion and comment. In
his budget speech on February 18, 2004, the South African Minister of Finance
announced that the implementation of the Royalty Bill, even once
finalized, will not occur until 2009.

The mining industry in South Africa, where the Company's
projects are located, is subject to extensive regulation. The regulatory
environment is developing, lacks clarity in a number of areas and is subject to
interpretation, review and amendment as the mining industry is further developed
and liberalized. In addition, the regulatory process entails a public comment
process, which makes the outcome of legislation and regulary controls uncertain
and may cause delays in the regulatory process. A number of significant matters
have not been finalized, including the Royalty Bill as well as
legislation dealing with beneficiation. Anooraq cannot predict the outcome or
timing of any amendments or modifications to applicable regulations or the
interpretation thereof, the release of new regulations or their impact on its
business.

South African Government Empowerment Initiatives

In order to address inequalities to HDP engendered by South
Africas former apartheid system, the South African Government has initiated
certain government empowerment initiatives.

In October 2002, the South African Government enacted the
Mineral Development Act that deals with the state's policy towards the future of
ownership of minerals rights and the procedures for conducting mining
transactions in South Africa. The Mineral Development Act is a statute with
wide-ranging objectives, including sustainable development and the promotion of
equitable access to South Africas mineral wealth by the inclusion of HDP into
the industry. The Mineral Development Act came into effect in May 2004. The
South African Government has stated that, under the Mineral Development Act, it
will be issuing permits and licenses for prospecting and mining rights to
applicants using a "scorecard" approach. Applicants will need to demonstrate
their eligibility for consideration based upon the number of credits accumulated
in terms of quantifiable ownership transformation criteria, such as employment
equity and human resource development.

Future amendments to, and interpretations of, the economic
empowerment initiatives by the South African Government and the South African
courts could adversely affect the business of Anooraq and its results of
operations and its financial condition.

Joint Venture Risks

Anooraq holds the bulk of its assets in its wholly owned
subsidiary, Plateau, in joint ventures. Plateau's interests in these projects
are subject to the risks normally associated with the conduct of joint ventures.
The existence or occurrence of one or more of the following circumstances and
events could have a material adverse impact on Plateau's profitability or the
viability of its interests held through joint ventures, which could have a
material adverse impact on Anooraq's future cash flows, earnings, results of
operations and financial condition: (i) disagreement with joint venture partners
on how to proceed with exploration programs and how to develop and operate mines
efficiently; (ii) inability of joint venture partners to meet their obligations
to the joint venture or third parties; and (iii) litigation between joint
venture partners regarding joint venture matters. See Item 4D  "Further
Particulars of Anooraq's Properties  The Platreef Project  Location and
Property Description - Rietfontein Block" for a discussion of a current dispute
with a joint venture partner.

---

- 16 -

Title Matters

While Anooraq has no reason to believe that the existence and
extent of any of its properties is in doubt, title to mining properties is
subject to potential claims by third parties claiming an interest in them. The
mineral properties may be subject to previous unregistered agreements or
transfers, and title may be affected by undetected defects or changes in mineral
tenure laws. The Company's mineral interests consist of mineral claims, which
have not been surveyed, and therefore, the precise area and location of such
claims or rights may be in doubt. The failure to comply with all applicable laws
and regulations, including the failure to pay taxes or to carry out and file
assessment work, may invalidate title to portions of the properties where the
mineral rights are held by Anooraq, which could have a material adverse effect
on the Company's results of operations and its financial condition.

Insurance and Uninsured Risks

Anooraq's exploration operations are subject to a number of
risks and hazards generally, including adverse environmental conditions,
industrial accidents, labor disputes, unusual or unexpected geological
conditions, ground or slope failures, cave-ins, changes in the regulatory
environment and natural phenomena such as inclement weather conditions, floods
and earthquakes. Such occurrences could result in damage to mineral properties
or production facilities, personal injury or death, environmental damage to
Anooraq's properties or the properties of others, delays in mining, monetary
losses and possible legal liability.

Although Anooraq maintains insurance to protect against certain
risks in such amounts as it considers is reasonable, its insurance will not
cover all the potential risks associated with a mining company's operations.
Anooraq may also be unable to maintain insurance to cover these risks at
economically feasible premiums.

Insurance coverage may not continue to be available or may not
be adequate to cover any resulting liability. Moreover, insurance against risks
such as environmental pollution or other hazards as a result of exploration and
production is not generally available to Anooraq or to other companies in the
mining industry on acceptable terms. Anooraq might also become subject to
liability for pollution or other hazards which may not be insured against or
which Anooraq may elect not to insure against because of premium costs or other
reasons. Losses from these events may cause Anooraq to incur significant costs
that could have a material adverse effect upon its financial performance and
results of operations.

Political Risk

Substantially all of the assets of Anooraq are located in a
jurisdiction outside of Canada. As a result, it may be difficult for investors
in Canada to enforce judgments obtained against Anooraq in Canada.

South Africa has recently undergone major constitutional
changes to effect majority rule, and also to effect mineral title. Accordingly,
many laws may be considered relatively new, resulting in risks such as possible
misinterpretation of new laws, modification of mining or exploration rights,
operating restrictions, increased taxes, environmental regulation, mine safety
and other risks arising out of a new sovereignty over mining, any or all of
which could have an adverse impact upon Anooraq. Anooraq's operations may also
be affected in varying degrees by political and economic instability, terrorism,
crime, extreme fluctuations in currency exchange rates and inflation.

Changes, if any, in mining or investment policies or shifts in
political attitude in South Africa may adversely affect Anooraq's operations or
likelihood of future profitability. Operations may be affected in

---

- 17 -

varying degrees by government regulations with respect to, but
not limited to, restrictions on production, price controls, export controls,
currency remittance, income taxes, expropriation of property, foreign
investment, maintenance of claims, environmental legislation, land use, land
claims of local people, water use and mine safety.

The political situation in South Africa introduces a certain
degree of risk with respect to Anooraq's activities. The Government of South
Africa exercises control over such matters as exploration and mining licensing,
permitting, exporting and taxation, which may adversely impact on Anooraq's
ability to carry out exploration, development and mining activities. Failure to
comply strictly with applicable laws, regulations and local practices relating
to mineral right applications and tenure could result in loss, reduction or
expropriation of entitlements or in the imposition of additional local or
foreign parties as joint venture partners with existing or other interests.

Competition

The mineral exploration and mining business is competitive in
all of its phases. Anooraq competes with numerous other companies and
individuals, including competitors with greater financial, technical and other
resources than Anooraq, in the search for and the acquisition of attractive
mineral properties. Anooraq's ability to acquire properties in the future will
depend not only on its ability to develop its present properties, but also on
its ability to select and acquire suitable producing properties or prospects for
mineral exploration. There is no assurance that Anooraq will continue to be able
to compete successfully with its competitors in acquiring such properties or
prospects.

Environmental Risks

Environmental legislation is evolving in a manner that will
require stricter standards and enforcement, increased fines and penalties for
non-compliance, more stringent environmental assessments of proposed projects
and a heightened degree of responsibility for companies and their officers,
directors and employees. There can be no assurance that future changes to
environmental regulation, if any, will not adversely affect Anooraq's
operations. Environmental hazards may exist on the properties in which Anooraq
holds interests which are unknown to Anooraq at present and which have been
caused by previous or existing owners or operators of the properties.
Furthermore, compliance with environmental reclamation, closure and other
requirements may involve significant costs and other liabilities. In particular,
Anooraq's operations and exploration activities are subject to South African
national and provincial laws and regulations governing protection of the
environment. These laws are continually changing and, in general, are becoming
more restrictive.

Dependence on Key Personnel

Anooraq is dependent on a relatively small number of key
employees and contractors, the loss of any of whom could have an adverse effect
on Anooraq. The high prevalence of HIV/AIDS in southern Africa could impact
negatively on the pool of human resources available to the Company.

Exchange Rate Fluctuations

The Company conducts operations in currencies other than
Canadian dollars. Of particular significance is that operations in South Africa
are almost entirely paid for in South African rand, which until recently has
shown strength against most major world currencies, including the Canadian
dollar and the United States dollar. The strengthening in the South African
rand, if it continues, will negatively impact the potential profitability of the
Company's mining operations.

---

- 18 -

The market prices of PGM are typically denominated in United
States dollars and, accordingly, the Company's revenues, if any, will be
denominated and received in United States dollars. In contrast, most expenses
are and will be payable in the local currency in the jurisdiction where the
applicable property is located. As a result, fluctuations in the Canadian dollar
against the United States dollar and against each of the local currencies of the
jurisdictions where the Company's properties are located could have a material
adverse effect on the Company's financial results, which are denominated and
reported in Canadian dollars.

Foreign Subsidiaries

Anooraq conducts operations through foreign subsidiaries and
joint ventures, and substantially all of its assets are held in such entities.
Accordingly, any limitation on the transfer of cash or other assets between the
parent corporation and such entities, or among such entities, could restrict
Anooraq's ability to fund its operations efficiently. Any such limitations, or
the perception that such limitations may exist in the future, could have an
adverse impact upon Anooraq's valuation and stock price.

Anooraq Has No History of Earnings and No Foreseeable
Earnings

Anooraq has a long history of losses and there can be no
assurance that Anooraq will ever be profitable. Anooraq has paid no dividends on
its shares since incorporation, and does not intend to declare or pay any cash
dividends in the foreseeable future. Payment of any future dividends is at the
discretion of Anooraqs board of directors after taking into account many
factors including Anooraqs operating results, financial conditions and
anticipated cash needs. Anooraq anticipates that it will retain future earnings
and other cash resources for the future operation and development of its
business.

Going Concern Assumption

Anooraqs consolidated financial statements have been prepared
on the basis that Anooraq will continue as a going concern. At December 31,
2005, Anooraq had working capital of approximately $4.8 million, which may not
be sufficient to meet its planned business objectives. Management recognizes
that Anooraq may need to generate additional financial resources in order to
meet its planned business objectives. There can be no assurances that Anooraq
will continue to obtain additional financial resources and/or achieve
profitability or positive cash flows. If Anooraq is unable to obtain adequate
additional financing, Anooraq will be required to curtail operations and
exploration activities. Furthermore, failure to continue as a going concern
would require that Anooraq's assets and liabilities be restated on a liquidation
basis which would differ significantly from the going concern basis. The Report
of Independent Registered Accounting Firm on Anooraqs 2005 consolidated
financial statements which report is included herein includes an explanatory
paragraph that describes conditions that exists that cause substantial doubt
about the Companys ability to continue as a going concern. The consolidated
financial statements do not include any adjustments that might result from the
outcome of that uncertainty.

The Companys cash resources at June 30, 2006 are not
sufficient for its present needs, specifically to continue administrative and
exploration operations at current levels through the end of the year 2006. The
Company anticipates that it may effect equity or debt financing (or a
combination thereof) to raise necessary funds. Any issuance of additional shares
of the Company may have a depressing effect on the market for the Companys
shares.

---

- 19 -

Anooraqs Share Price is Volatile

The market price of a publicly traded stock, especially a
resource issuer like Anooraq, is affected by many variables not directly related
to the exploration success of Anooraq. These include the market for junior
resource stocks, the strength of the overall economy, the availability and
attractiveness of alternative investments, and the breadth of the public market
for the stock. The effect of these and other factors on the market price of the
common shares suggests Anooraqs shares will continue to be volatile.

Penny Stock Classification Could Affect the Marketability of
the Company's Common Stock and Shareholders Could Find It Difficult to Sell
Their Stock

The Company's stock may be subject to "penny stock" rules as
defined in Securities and Exchange Act of 1934 rule 3a51-1. The Securities and
Exchange Commission has adopted rules which regulate broker-dealer practices in
connection with transactions in penny stocks. Penny stocks generally are equity
securities with a price of less than U.S. $5.00 (other than securities
registered on certain national securities exchanges or quoted on the NASD
system, provided that current price and volume information with respect to
transactions in such securities is provided by the exchange or system).

The Companys common shares may be subject to these penny stock
rules, which could have cost implications. Transaction costs associated with
purchases and sales of penny stocks are likely to be higher than those for other
securities. The penny stock rules require a broker-dealer, prior to a
transaction in a penny stock not otherwise exempt from the rules, to deliver a
standardized risk disclosure document that provides information about penny
stocks and the nature and level of risks in the penny stock market. The
broker-dealer also must provide the customer with current bid and offer
quotations for the penny stock, the compensation of the broker-dealer and its
salesperson in the transaction, and monthly account statements showing the
market value of each penny stock held in the customers account. The bid and
offer quotations, and the broker-dealer and salesperson compensation
information, must be given to the customer orally or in writing prior to
effecting the transaction and must be given to the customer in writing before or
with the customers confirmation.

Further, the penny stock rules require that prior to a
transaction in a penny stock not otherwise exempt from such rules; the
broker-dealer must make a special written determination that the penny stock is
a suitable investment for the purchaser and receive the purchasers written
agreement to the transaction. These disclosure requirements may have the effect
of reducing the level of trading activity in the secondary market for the
Companys common shares in the United States and shareholders may find it more
difficult to sell their shares.

Certain of Anooraqs Directors and Officers Serve as
Directors and Officers of Other Companies

Some of the directors and officers of Anooraq serve as officers
and/or directors of other resource exploration companies and are engaged in, and
will continue to be engaged in, the search for additional resource opportunities
on their own behalf and on behalf of other companies, and situations may arise
where these directors and officers will be in direct competition with Anooraq.
Such potential conflicts, if any, will be dealt with in accordance with the
relevant provisions of British Columbia corporate and common law. In order to
avoid the possible conflict of interest which may arise between the directors
duties to Anooraq and their duties to the other companies on whose boards they
serve, the directors and officers of Anooraq expect that participation in
exploration prospects offered to the directors will be allocated between the
various companies that they serve on the basis of prudent business judgment and
the relative financial abilities and needs of the companies to participate.

---

- 20 -

Likely Passive Foreign Investor Company (PFIC) Status Has
Possible Adverse Tax Consequences for U.S. Investors

Potential investors who are U.S. taxpayers should be aware that
Anooraq expects to be a passive foreign investment company ("PFIC") for the
current fiscal year, and may also have been a PFIC in prior years and may also
be a PFIC in subsequent years. If Anooraq is a PFIC for any year during a U.S.
taxpayer's holding period, then such U.S. taxpayer generally will be required to
treat any so-called "excess distribution" received on its common shares, or any
gain realized upon a disposition of common shares, as ordinary income and to pay
an interest charge on a portion of such distribution or gain, unless the
taxpayer makes a qualified electing fund ("QEF") election or a mark-to-market
election with respect to the shares of Anooraq. In certain circumstances, the
sum of the tax and the interest charge may exceed the amount of the excess
distribution received, or the amount of proceeds of disposition realized, by the
taxpayer. A U.S. taxpayer who makes a QEF election generally must report on a
current basis its share of Anooraq's net capital gain and ordinary earnings for
any year in which Anooraq is a PFIC, whether or not Anooraq distributes any
amounts to its shareholders. A U.S. taxpayer who makes the mark-to-market
election generally must include as ordinary income each year the excess of the
fair market value of the common shares over the taxpayer's tax basis therein.
U.S. taxpayers are advised to seek the counsel of their professional tax
advisors.

Significant Potential Equity Dilution

At June 30, 2006, there were 4,568,200 share purchase options
of Anooraq outstanding, of which none were in-the-money. As a consequence of the
passage of time since the date of their original sale and issuance, no options
or warrants of Anooraq remain subject to any hold period restrictions in Canada
or the United States as of June 30, 2006. The unrestricted resale of outstanding
shares from the exercise of dilutive securities may have a depressing effect on
the market for the Company's shares.

Dilutive securities represent approximately 3% of Anooraq's
issued shares as of June 30, 2006.

---

- 21 -

|ITEM 4 INFORMATION
      ON THE COMPANY
|---------------------------------------

SUMMARY

A.      History and Development of
the Company

*1.*     *Name, Address
and Incorporation*

Anooraq Resources Corporation was incorporated on April 19,
1983 under the laws of the Province of British Columbia, Canada. The Company was
transitioned under the Business Corporations Acton June 11, 2004, on
which date the Company altered its Notice of Articles to change its authorized
share structure from 200,000,000 common shares without par value to an unlimited
number of common shares without par value.

The head office of the Company is located at Suite 1020  800
West Pender Street, Vancouver, British Columbia, Canada V6C 2V6, telephone (604)
684-6365, facsimile (604) 684-8092 and the registered office is in care of its
Canadian attorneys McCarthy Tétrault LLP at Suite 1300  777 Dunsmuir Street,
Vancouver, British Columbia, Canada V7Y 1K2, telephone (604) 643-7100, facsimile
(604) 643-7900.

*2.*     *Summary
Corporate History and Intercorporate Relationships*

From 1996 to mid-1999, the Companys mineral exploration was
focused on metal prospects located in Mexico. In October 1999, the Company
refocused its exploration on a South African PGM project, the Platreef Project
(see Item 4D  "Further Particulars of Anooraq's Properties  The Platreef
Project"). The Company has two active Cayman Islands subsidiaries, N1C Resources
Inc. ("N1C") and N2C Resources Inc. ("N2C"). These two subsidiaries were
incorporated on December 2, 1999 under the laws of the Cayman Islands, and their
use represents a common method for Canadian mining companies to hold foreign
resource assets through outside-of-Canada corporations. The Company holds 100%
of the shares of N1C, which in turn holds 100% of the N2C shares. N2C holds 100%
of the shares of Plateau, a private South African mining corporation purchased
by Anooraq on August 28, 2001. Plateau holds the legal rights to the mineral
interests ("farms") comprising the Platreef Project.

In January 2004, the Company announced it had agreed to terms
whereby the Company and Pelawan, a private South African company, would combine
their respective PGM assets, comprising the Company's PGM projects on the
Northern and Western Limbs of the "Bushveld Complex" and Pelawan's 50%
participation interest in the Ga-Phasha (previously known as "Paschaskraal")
Project on the Eastern Limb of the Bushveld in the Republic of South Africa. The
Ga-Phasha property, located approximately 250 kilometres northeast of
Johannesburg, has significant mineral resources already outlined as well as
encouraging potential. 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, a private South African corporation owned 50% by Anglo Platinum and
50% by a BEE partner, Pelawan (now the Company, through its wholly owned
subsidiary, Plateau, as described below), pursuant to Anglo Platinum's planned
PGM project expansion on the Eastern Limb. The Ga-Phasha Project is a 50/50
joint venture between Anooraq's wholly owned South African subsidiary, Plateau,
and Rustenburg, a wholly owned subsidiary of Anglo Platinum, governed by, among
other things, a shareholders' agreement relating to Micawber entered into on
September 22, 2004, (the Share Exchange Agreement).

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- 22 -

Pursuant to the terms of the Share Exchange Agreement, the
Pelawan transaction, which was completed in September 2004 and which constitutes
a reverse take-over ("RTO") under the policies of the TSXV, 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 Anooraq common
shares (the "Consideration Shares") and cash payments totalling ZAR 15.7
million. The number of Consideration Shares issued takes into account the
potential dilutive effect of financings expected to be undertaken in the future
to develop PGM mines, for example on the Ga-Phasha and the Drenthe-North
Overysel deposits, such that Pelawan's ownership (initially 63%) of the issued
and outstanding shares of Anooraq will remain at a certain minimum level
(currently defined as 52%) on a going forward basis to maintain Anooraq as a BEE
company, and consequently affording Anooraq with additional opportunities and
greater flexibility under South Africa's new mining laws. Further, the dilution
calculation allowed for approximately 7.9 million Consideration Shares to be
sold by Pelawan during the twelve month period subsequent to the closing, all of
which shares were sold by Pelawan on March 28, 2005. Of the remaining
Consideration Shares, approximately 83.3 million shares (the "Lock up
Shareholding") must remain held in escrow until the earlier of September 29,
2010 or twelve months after the commencement of commercial production from the
Ga-Phasha Project. Under the Mineral Development Act, and as specified in the
agreements in respect of the Ga-Phasha Project related to the terms of BEE
requirements, Pelawan will at all future times be required to hold a certain
minimum number of the Consideration Shares, currently defined as 52%, in order
to ensure that Anooraq retains its classification as a BEE company.

The Share Exchange Agreement provides that if any financings in
relation to the Ga-Phasha and Drenthe-Overysel (subsequently renamed
"Boikgantsho") Projects (the Projects) take place prior to a particular date
(the Finalization Date) and the shareholder dilution associated with of such
financings cause Pelawans shareholding in Anooraq to fall below a 52% minimum
shareholding, Anooraq will issue additional common shares to Pelawan in order to
maintain that minimum. Such 52% minimum shareholding allows 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 provides that, to the
extent that no such dilutive financings have actually taken place by the
Finalization Date, certain dilutive financings are 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, in this way, 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 are required to be issued to Pelawan in order to
maintain a minimum 52% shareholding, the Share Exchange Agreement provides that
the quantum of such deemed financings will 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 have 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 to 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 totalling $98.4 million 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

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- 23 -

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.                                                                                                                          

Accordingly, the additional common shares which would, under
the original terms of the Share Exchange Agreement, have become issuable to
Pelawan by Anooraq as of September 30, 2005 are not required to be issued and
the determination of whether any additional common shares will be required to be
issued to Pelawan in light of any actual or deemed dilutive financings will be
made in due course on the Finalization Date, as amended. The method for
determining whether such additional common shares will be issuable upon the
Finalization Date remains as described above. Upon the Finalization Date, the
dilutive financings for the purposes of calculating whether any additional
common shares are issuable to Pelawan will be the actual dilutive financings
undertaken in relation to the Projects as of that date and, to the extent that
no such financings have been undertaken, the Deemed Dilutive Financings
described above.

Pursuant to the agreement with Pelawan, the nine positions on
the Anooraq board were to be comprised of three independents and three
appointees from each of the current boards of HDI and Pelawan. From HDI, Mr.
Ronald W. Thiessen, B.Comm., CA, retained his role as President, Chief Executive
Officer and Director, Scott D. Cousens assumed the position of Vice President,
Capital Finance and Director, and Robert A. Dickinson, B.Sc., M.Sc., assumed the
position of Co-Chairman of the Board of Directors. The three Pelawan appointed
directors, two of whom have also assumed positions as officers of the Company,
were: Tumelo Motsisi, B.A., LLM, MBA, Deputy Chief Executive Officer, Harold
Motaung, B.Sc., MBA, Chief Operating Officer, and Rizelle M. Sampson, former
Chief of Staff for the Ministry of Communications, South Africa. The independent
members of the board were Popo S. Molefe, PhD., Co-Chairman of the Board of
Directors, appointed by Pelawan, Walter T. Segsworth, P.Eng., who was retained
on the board as a nominee of HDI, and Sipho Nkosi, B.Comm, MBA, who was jointly
appointed by Pelawan and HDI.

There have been changes since that time, resulting in eleven
board positions. Phumzile Langeni, B.Comm., Executive Director, Investor
Relations, was appointed as an independent member of to the Anooraq board
effective December 9, 2004. Mr. Segsworth resigned from the Anooraq board
effective January 4, 2005. David Elliott, B.Comm., CA, was appointed as an
independent director of the Anooraq board as of April 20, 2005, and another
independent director, Wayne Kirk, LLB, was appointed to the Board in July
2005.

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- 24 -



Documents incorporated by reference in this Annual Report
include all audited and interim financial statements, proxy circulars, news
releases and other continuous disclosure documents filed by Anooraq, copies of
which are available on request from the offices of the Company or on SEDAR at
www.sedar.com.

*3.*     *Principal
Capital Expenditures and Divestitures*

The Companys principal capital expenditures (there have been
no material divestitures) over the three fiscal years ended December 31, 2005,
December 31, 2004, and October 31, 2003 are as follows:

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- 25 -

Amounts CapitalizedFiscal Year
      Platreef Project
      Ga-Phasha Project12 months ended December 31, 2005
    
    14 months ended December 31, 2004
    
    $ 5,875,00012 months ended October 31, 2003
    
    


B.      Business Overview

*1.*     *Anooraq's
Business Strategy and Principal Activities*

Anooraq is in the business of acquiring and exploring
prospective mineral properties. During 2004, the Company's principal focus was
exploration of a PGM prospect on the Drenthe and Witrivier farms (held through
its South African subsidiary Plateau) and the northern part of the Overysel Farm
(held by a subsidiary of Anglo Platinum) through the Boikgantsho Joint Venture
(the "Boikgantsho JV"). The Drenthe and Witrivier farms are portions of the
"Platreef Project". The Company also acquired a 50% interest in the Ga-Phasha
Project on the Eastern Limb of the Bushveld Complex in 2004, through the
transaction with Pelawan (see Item 4A2  "Summary Corporate History and
Intercorporate Relationships"). The area covered by the Boikgantsho and
Ga-Phasha Projects is of interest geologically because it is a layered mafic
intrusive complex, a geological setting known to be associated with PGM
deposits.

Prior to January 2004, Anooraq had mainly focused on the
acquisition and exploration of mineral properties (called "farms" in South
Africa) on the Northern Limb of the Bushveld Complex, approximately 250
kilometres north of Johannesburg. The Northern Limb has excellent potential for
discovery and development of large scale PGM deposits that are amenable to open
pit mining. In 2003, programs were carried out in three areas of Anooraq's large
land package in the Northern Limb, with promising results from the Drenthe farm
and the Rietfontein farm.

Work in 2004 continued to delineate the mineralization within
the Platreef horizon on the Drenthe and Witrivier farms and the northern part of
the Overysel farm, under the Boikgantsho JV, between Anooraq and a subsidiary of
Anglo Platinum. The objective is to advance the project toward feasibility
studies. As a result of on-going drilling programs under the Boikgantsho JV, the
Company expanded the Drenthe PGM deposit and the newly discovered Overysel North
PGM deposit, and announced estimates of the indicated and inferred mineral
resources for the deposits in the fourth quarter of fiscal 2004. Preliminary
results of metallurgical test work for the deposits were also released.

At the Rietfontein farm, located 25 kilometres to the south,
Ivanhoe Platinum and Nickel Ltd. (previously known as African Minerals Ltd.), a
private affiliate of Ivanhoe Capital Corporation, is currently carrying out the
exploration activities.

As a result of the transaction with Pelawan (see Item 4A2 
"Summary Corporate History and Intercorporate Relationships") in 2004, the
Company acquired a 50% interest in the Ga-Phasha Project on the Eastern Limb of
the Bushveld Complex. Ga-Phasha has measured, indicated and inferred resources
outlined in the UG2 and Merensky reefs. Operations that mine the UG2 and
Merensky reefs usually do so by underground methods.

Anooraq also has interests in earlier stage exploration
prospects on the Northern Limb (part of the Platreef Project) and the Western
Limb of the Bushveld Complex.

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- 26 -

Anooraq does not have any operating revenue, although
historically it has had annual interest revenue as a consequence of investing
surplus funds pending the completion of exploration programs.

The Company does not have any resource properties on which
commercial mining operations exist. No ore is known to exist on any of the
Company's projects and a great deal of exploration is required before economic
feasibility can be considered.

The Company is not dependent on any patents, licenses or
commercial or financial contracts; however, its work is dependent on the
acquisition of prospecting permits, and ultimately, if economic mineral deposits
are found, on the acquisition of environmental and mining permits. Further
information on mineral rights, and prospecting and mining permits is provided
below.

*2.*     *Mining and
Exploration in South Africa Generally*

The South African mining sector has undergone a series of
significant legislative changes in the past few years.

In order to understand these legislative changes, the form of
"old order" mineral tenure that currently prevails in South Africa and which
will be significantly altered and replaced by a "new order" form of mineral
tenure by virtue of such changes must first be discussed.

Old Order Mineral Tenure in South Africa

South African mineral tenure is currently governed primarily by
the common law and the Minerals Act 1991 ("Minerals Act 1991"). The South
African system of mineral rights developed over many years under a dual system
in which some of the mineral rights are owned by the State, and some by private
holders. The State controlled the exercise of prospecting and mining rights
under the administrative system of prospecting permits and mining authorizations
referred to below. Mineral rights were officially registered and were tradable.
They have historically been the subject of considerable financial investment
that has resulted in the acquisition and registration of rights by prospectors
and miners over relevant areas of interest.

Old order mineral rights represent a parcel of rights including
the rights to prospect and mine (although the exercise of such rights is subject
to authorization under the Minerals Act) together with ancillary rights
to do what is reasonably necessary in order to effectively carry on prospecting
or mining operations. The holder of mineral rights could grant subordinate
rights to prospect under a prospecting contract or grant subordinate rights to
mine under a mineral lease or could sell or otherwise dispose of the rights. The
mineral rights owner is ordinarily compensated by the exploiter of the minerals
for the depletion of the non-renewable resource through the outright purchase of
the mineral rights, or (less commonly) through the payment of royalties.

The mineral right owner was not permitted to prospect or mine
for minerals without first having obtained a prospecting permit or mining
authorization from the State. These licenses were not transferable. They were
aimed at controlling prospecting and mining, having regard to considerations of
health and safety, environmental rehabilitation and the responsible extraction
of the ore. Conversely, a prospecting permit or mining authorization could not
be granted unless the applicant was the holder of the relevant mineral right or
had acquired the holder's consent to prospect or mine. Reconnaissance work could
and did take place without the necessity to hold a permit, provided the work did
not fall within the definition of "prospecting" in the Minerals Act.

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- 27 -

New Order Mineral Tenure in South Africa

The Mineral Development Act was assented to on October
3, 2002 and came into effect on May 1, 2004. The Mineral Development Act
is an ambitious statute with wide-ranging objectives, including sustainable
development and the promotion of equitable access to South Africa's mineral
wealth by the inclusion of Historically Disadvantaged Persons into the
industry.

The Mineral Development Act legislates the abolition of
private mineral rights in South Africa and replaces them with a system of state
licensing based on the patrimony over minerals being vested in the nation, as is
the case with the bulk of minerals in other established mining jurisdictions
such as Canada and Australia. "Use it or lose it" principles will now apply in
respect of mineral rights. Provision is made in the Minerals Act for
compensation to be paid to any person who is able to establish their property
has been expropriated under the Mineral Development Act. On May 3, 2004,
the DME announced that it was seeking legal advice on the implications of the
Mineral Development Act in light of South Africa's international
agreements. Most of the complexity of the new regime lies in the transitional
provisions which deal with the conversion of so called "old order" rights to
"new order" rights. Private holders of old order mineral rights have limited
exclusive time periods to convert these rights to new order rights once the
Mineral Development Act has come into effect. Holders of old-order mining
rights in respect of which a mining authorization has been granted under the
Minerals Act1991 have until April 30, 2009 to lodge their rights for
conversion into new order mineral rights. Old order mineral rights in respect of
which a prospecting permit has been issued under the Minerals Act 1991
are to be converted to new order prospecting or mining rights no later than
April 30, 2006. All old order rights will continue in force during the
conversion period, subject to terms and conditions under which they were
granted. Security of tenure will thereafter be guaranteed for a period of up to
5 years with respect to prospecting rights, and up to 30 years with respect to
mining rights, subject to a rights holder's ongoing compliance with the
conditions of grant.

In order to be able to convert old order rights to new order
rights, the holder:

- must hold the underlying right (to mine or prospect, as the case may be)
  in terms of the common law or legislation prevailing immediately before May 1,
  2004;
- must hold a mining authorization or prospecting permit, as the case may
  be, issued in terms of the Minerals Act 1991;
- must be actively conducting mining or prospecting operations, as the case
  may be, on the relevant property on May 1, 2004 (that is, the right must not
  be an "unused old order right");
- must lodge its old order right for conversion at the relevant office of
  the DME;
- for mining rights, is required (under Schedule II, item 7, of the
  Mineral Development Act) to "give effect to" the BEE and socio-economic
  objectives set out in Sections 2(d) and (f) of the Mineral Development Act(the "Objectives"); and
- for mining rights, must submit a prescribed social and labor plan.

If the above requirements have been met, DME must grant the
conversion of the old order right to a new order mining right.

In relation to any old order right with respect to which a
mining authorization or prospecting permit was not issued, or in respect of
which prospecting or mining was not being conducted, on May 1, 2004 (that is, an
"unused old order right") the holder had an exclusive right to apply for a new
order right no later than May 1, 2005. A person converting an existing mining
right had to commit to giving effect to the Objectives. In general, these
Objectives are embodied in the Charter and are discussed below. No

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- 28 -

undertaking to promote the Objectives is expressly required
under the Mineral Development Act for the conversion of existing
prospecting rights.

A person applying for a new mining right (as opposed to
converting an old order mining right) will have to demonstrate, among other
requirements, that the Objectives and the imperatives of the Charter will be
advanced by the grant of the right. In practice, this will probably mean that
the applicant will already have to have met the BEE targets set out in the
Charter for the purposes of that application. In relation to applications for
new prospecting rights, it is unclear whether the DME will require applicants to
be in strict compliance with these targets.

In general, the Objectives are embodied in the Charter which
was signed by the DME, the South African Chamber of Mines and others on October
11, 2002, and which was followed on February 18, 2003 by the release of the
appendix to the Charter known as the Scorecard. The Charter and Scorecard were
published for information during August 2004. The Charter is based on seven key
principles, two of which are focused on ownership targets for HDP and
beneficiation (mineral processing), and five of which are operationally oriented
and cover areas focused on improving conditions for HDPs.

Regarding ownership targets, the Charter (as read with the
Scorecard) requires each mining company to achieve the following HDP ownership
targets for the purpose of qualifying for the grant of new order rights: (i) 15%
ownership by HDP in that company or its attributable units of production by May
1, 2009, and (ii) 26% ownership by HDP in that company or its attributable units
of production by May 1, 2014. The Charter states that such transfers must take
place in a transparent manner and for fair market value. It also states that the
South African mining industry will assist HDP companies in securing financing to
fund HDP participation, in the amount of ZAR 100 billion within the first five
years. The Charter does not specify the nature of the assistance to be
provided.

The Scorecard is a checklist that requires mining companies to
indicate the extent of their achievement in the aspirational areas for
empowerment identified by the Charter. Each company's points on the Scorecard
will be used by the Minister in deciding applications for new order rights by
that company.

In March 2003, the South African Government released the
Royalty Bill outlining the state's policies with regard to the payment of
royalties by mining companies. The Royalty Bill proposes that companies
producing PGM pay a royalty of 4% from the sales of those metals. The royalty
would be payable on gross revenue. The Royalty Bill is presently under
discussion and comment. In his annual budget speech on February 18, 2004 the
South African Minister of Finance announced that the implementation of the
Royalty Bill, even once finalized, will not occur until 2009.

Currently, State prospecting fees range from ZAR 3 per hectare
in year one to ZAR 7 per hectare in year five. Currently, State royalties on
precious metals are 1% of gross revenue. This royalty rate is currently being
reviewed and may be amended by the State. These amounts will become payable to
the State upon conversion of "old order" rights to "new order" rights, and do
not take existing commitments towards current mineral rights holders into
account.

New Order Mineral Tenure status of Anooraq

Anooraq has been advised that:

- the old order prospecting rights held by Plateau in relation to the
  Platreef Project constitute "used" old order rights, in relation to which
  Plateau has until the earlier of the expiry dates of the relevant prospecting
  permits (which range from October 2005 to

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- 29 -

- the old order mining rights held by Micawber in relation to the Ga-Phasha
  Project constitute "used" old order rights, in relation to which Micawber has
  until April 30, 2009 to apply for conversion to new order mining rights; and
- the old order prospecting rights in relation to the Thusong Project
  constitute "used" old order rights and are held and administered by Rustenburg
  on behalf of the Thusong Joint Venture. Rustenburg has made application for
  conversion to new order prospecting rights.

C.      Organizational
Structure

Anooraq operates through one indirect wholly-owned principal
subsidiary, Plateau, which holds various rights to the mineral projects in South
Africa.

Anooraq is part of the HDI group of companies. HDI is a private
corporation, consisting of technical and financial specialists that have been
managing projects for publicly listed companies throughout the world for twenty
years. A key aspect of HDI's approach to project development is to develop and
maintain strong relationships with local communities, employees and government
authorities from the start of exploration and as the project advances towards
becoming a mine. Personnel have experience in multiple foreign jurisdictions,
and the perspective gained has assisted with the integration of local
communities in the exploration and development programs.

Activities are guided by two simple principles - projects must
be developed in a manner that respects local socio-economic priorities and
incorporates the highest quality of environmental management. This is done by
actively fostering close partnerships with local governments and community
leaders to ensure that projects create the kind of local benefits that residents
both want and need. When undertaking projects in the developing world, HDI seeks
opportunities to improve local infrastructure such as roads and educational
systems. Training is undertaken to ensure local residents are equipped to gain
employment, and high standards of occupational health and safety are an integral
part of the Company's work.

For example, the consortium of about 16 groups that comprises
Pelawan includes community-based organizations, some of which are the
beneficiaries of underlying trusts. These include professional organizations,
educational organizations, health and women's groups.

Beyond compliance with government regulations and standards,
the Company is committed to structuring the best environmental management plan
for each specific site through innovation, experience and the contributions of
specialized consultants and local experts. Environmental management programs
begin with rigorous baseline assessments, and include ongoing monitoring of
water quality, wildlife impacts and other key indicators. The ecological
footprint of all project components is minimized, operational impacts are
consistently monitored and controlled, and site restoration is conducted at the
end of each project's working life.

The Company has approximately ten employees, and much of its
work is done by consultants at the request of management of the Company. Many of
the Company's technical, financial and legal services are provided by HDI and
Pelawan.

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- 30 -

D.      Property, Plant and
Equipment

The principal properties of Anooraq are the Platreef Project on
the Northern Limb of the Bushveld Complex, and the Ga-Phasha Project on the
Eastern Limb of the Bushveld Complex. The Company also holds the Thusong Project
on the Western Limb of the Bushveld Complex. For further information about the
Company's mineral projects, see "Further Particulars of Anooraq Properties",
below. None of the projects have any material tangible fixed assets located
thereon although the Platreef Project has miscellaneous exploration equipment
and motor vehicles on site.

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- 31 -

FURTHER PARTICULARS OF ANOORAQ'S PROPERTIES

Each of the Platreef Project, the Ga-Phasha Project and the
Thusong Project are located in the Bushveld Complex in South Africa.



Figure 1. Location of Platreef, Ga-Phasha and Thusong
Properties, South Africa

Regional Geology

The Bushveld Complex consists of four main compartments or
limbs, namely the Northern (Potgietersrus) Limb and the Far Western, Western and
Eastern Limbs. It was formed when a large body of mafic magma was emplaced in
the earth's crust. The magmas supplied to these compartments had common origins
and were subject to similar processes on cooling.

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- 32 -

Using a generally accepted simplistic model for the formation
of the Bushveld, it is envisaged that as the mafic magma slowly cooled,
silicate, sulphide, oxide and other minerals crystallized and sank to the bottom
of the magma chamber, to form texturally and mineralogically distinctive layers.
The removal of the more refractory minerals in this way depleted the magma in
the crystallising components and enriched the residual magma in the less
refractory elements. The magma therefore continuously changed in composition
until it solidified. In the Bushveld Complex this process has resulted in a
layered sequence of rocks up to eight kilometres thick. More importantly, during
this process PGM, nickel and copper (usually occurring with, or as, sulphide
minerals) became sufficiently enriched to form mineralized horizons at
predictable levels within the intrusion. As a result, the Bushveld Complex plays
host to layered PGM deposits, usually with significant nickel and copper
contents.

In the Western and Eastern Bushveld Complex, PGM mineralization
is currently extracted from two main PGM bearing horizons within the layered
sequence of intrusive rocks. These comprise the Merensky Reef (named after its
discoverer) and the UG2 chromitite (a layer consisting largely of the mineral
chromite). The UG2 layer lies below and essentially parallel to the Merensky
Reef but the two units are separated by 50 to 400 metres of intervening layered
rocks, with the greatest separation occurring in the eastern limb of the
Bushveld Complex. The Merensky Reef is platinum rich relative to the UG2, where
platinum and palladium occur in more or less equal proportions. The UG2
typically contains significantly more rhodium than the Merensky Reef (i.e 10% or
more of total PGM in places).

The Platreef is the third PGM bearing horizon in the Bushveld
Complex, occurring on the northern limb of the Complex. It lies at a similar
stratigraphic level to the Merensky Reef but is much thicker, typically 100-250
metres in thickness. Mineralogically, the Platreef is similar to the Merensky
Reef but platinum palladium ratios, at ~1:1, are more similar to those of the
UG2.

A characteristic of the Bushveld Complex is that many of the
layers, including the economically important horizons, are continuous over tens
of kilometres. The uniformity of both the Merensky and UG2 horizons is disrupted
in places by small circular depressions known as potholes.

The Platreef Project

The Platreef Project has no mining, plant or equipment located
thereon although the project has field accommodation and miscellaneous
exploration equipment on site. The following disclosure was derived from Company
files and March 2005 technical report. Information on the resource estimate was
derived from a December 2004 technical report by G.J. van der Heever,
Pr.Sci.Nat. Information on the preliminary assessment (comparable to a scoping
study) was derived from a March 2005 technical report by T. Tulp, MAusIMM, D.
Stone, P.Eng., D. Reeves, MAusIMM, and G.J. van der Heever, Pr.Sci.Nat.

Location and Property Description

The mineral tenures comprising the Platreef Project are centred
approximately at latitude 24 degrees south and longitude 29 degrees east in the
Limpopo Province of South Africa. The Project is located 275 kilometres north
northeast of Johannesburg.

As of December 2005, the Platreef Project consists of
prospecting rights, tabulated below, covering 37,492 hectares. For project
management purposes, the properties have been subdivided into five areas: Kwanda
Joint Venture North and South, Central Block, Boikgantsho Joint Venture
(Drenthe/Witrivier and the north part of Overysel), and Rietfontein Block. These
are shown in Figure 2.

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- 33 -

Mineral HoldingsOwner
    Year Acquired
    Farm Name
    Portion
    Area(hectares)
    BlockDME1999
    Dorstland 768 LR
    Ptn 3 (a Ptn of Ptn 1)
    42.83
    Central1999
      Dorstland 768 LR
      Ptn 2 (a Ptn of Ptn 1)
      472.91
      Central1999
    Dorstland 768 LR
    Re of 1
    430.09
    Central1999
      Dorstland 768 LR
      Mineral Area 1
      514.87
      Central1999
    Witrivier 777 LR
    1
    767.42
    Boikgantsho1999
      Witrivier 777 LR
      Re
      788.97
      Boikgantsho2002
    Noord Holland 775 LR
    All
    1,228.82
    CentralTotal Area:
      
      
      
      4,245.91LMT(now held
      1999
      Drenthe 778 LR
      All
      1,538.30
      Boikgantshoby the State)
    2001
    Malokongskop 780 LR
    All
    1,440.92
    Central1999
      Rietfontein 2 KS
      All
      2,878.03
      RietfonteinTotal Area:
    
    
    
    5,857.25PRIVATE2001
    Elandsfontein 766 LR
    2
    747.61
    Central2001
      Elandsfontein 766 LR
      1
      428.27
      Central2001
    Hamburg 737 LR
    All
    2,126.40
    Central2002
      Chlun 735 LR
      All
      1,215.06
      Kwanda North2002
    Cyferkuil 321 KR
    All
    2,061.78
    Kwanda South2002
      Elberfield 731 LR
      All
      2,544.74
      Kwanda North2002
    Gibeon 730 LR
    All
    1,848.89
    Kwanda North2002
      Gilead 729 LR
      All
      2,085.08
      Kwanda North2002
    Haakdoornkuil 323 KR
    All
    2,818.50
    Kwanda South2002
      Ham 699 LR
      All
      1,852.71
      Kwanda North2002
    Naboomfontein 320 KR
    All
    2,664.73
    Kwanda South2003
      Overysel 815 LR
      % of All
      637.57
      Boikgantsho2002
    Rondeboschje 295 KR
    All
    1,525.03
    Kwanda South2002
      Swerwerskraal 736 LR
      All
      2,404.10
      Kwanda North2002
    Vaalkop 325 KR
    All
    2,428.45
    Kwanda SouthTotal Area:
      
      
      
      27,388.92Total
      Land Holdings (hectares):
    
    37,492.08


The mineral rights to the farms Rietfontein, Drenthe and
Malokongskop were administered by the Lebowa Minerals Trust (LMT), but are now
administered by the DME. Farms Witrivier, Dorstland and Noord Holland are
administered by the DME. The mineral rights for Elandsfontein, Hamburg, Chlun,
Cyferkuil, Elberfield, Gibeon, Gilead, Haakdoornkuil, Ham, Naboomfontein,
Rondeboschje, Swerwerskraal and Vaalkop are held privately. Prior to commencing
exploration on the farms, Plateau was required to obtain Prospecting Permits for
each of the farms from the DME. Plateau currently holds valid permits for each
of the farms. Plateau has also negotiated and obtained Prospecting Contracts for
each Farm; DME issued the Contracts for Witrivier, Dortsland and Noord Holland
and the LMT issued the Contracts for Rietfontein, Drenthe and Malokongskop.

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, which holds the Platreef PGM properties located on the
Northern Limb of the Bushveld Complex in South Africa. The properties include:
Rietfontein 2KS, Drenthe 778LR, Witrivier 777LR and Dortsland 768LR. The Company
acquired its rights under an October 1999 agreement with Pinnacle as a
consequence of reaching a settlement agreement with Gladiator Minerals Inc.
(subsequently renamed Hinterland Metals Inc. ("Hinterland")), pursuant to which
Anooraq would issue shares in stages to Hinterland, to a maximum of 875,000
shares, as Anooraq

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- 34 -

proceeded with investments in Plateau. Under this agreement,
378,500 shares were issued to Hinterland. On November 13, 2003, the Company
issued an additional 400,000 common shares to Hinterland as full and final
settlement under this agreement.

On August 28, 2001, the Company completed an agreement to
purchase from Pinnacle the remaining outstanding common shares of Plateau that
it did not own in consideration for the issuance of 7.5 million of the Companys
common shares at an aggregate cost of $4.2 million. In connection with this
acquisition, the original loan facility and share purchase agreement between
Anooraq and Pinnacle was purchased for consideration of 4,500,000 Anooraq
warrants exercisable at $0.70 until August 28, 2003. These warrants were
exercised in their entirety in July 2003.



Figure 2. Property Holdings, Platreef Project


Central Block

The Central Block farms are comprised of the portions of
Elandsfontein, Dorstland, Hamburg and Noord Holland, and are held by
Plateau.

On May 23, 2000, the Company acquired through Plateau the
option to purchase a 100% interest in a portion of the Elandsfontein 766 LR Farm
located contiguous to the pre existing Platreef properties, pursuant to an
agreement with MSA Projects (Proprietary) Limited (the "Heads of Agreement).
The

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- 35 -

option requires staged issuances of 500,000 common shares of
the Company (412,500 shares issued to June 30, 2006 and no further share
issuances are expected) and aggregate cash payments of US$350,000 (of which
US$69,250 and Cdn$15,000 have been paid).

In July 2001, Plateau acquired the right to purchase a 100%
interest in farms Hamburg 737 LR (2,126 hectares) and Elandsfontein 766 LR
Portion 1 (428 hectares) from Randex. Consideration for the exploration rights
to these farms, which are in effect for a five year term, consists of payments
of US$2.00 per hectare in year one escalating in stages to US$4.50 per hectare
in year five. To purchase the farms outright, a payment of US$325 per hectare is
required if the option is exercised in year one, US$390 per hectare in year two,
US$455 per hectare in year three, US$520 per hectare in year four and US$600 per
hectare in year five.

Plateau was granted the right to conduct exploration for five
years on the farms Drenthe and Rietfontein in October 2001, on the farm
Malokongskop in November 2001, with an option to extend the Prospecting
Contracts for an additional two years (years 5-7). In addition, the terms have
been negotiated to convert the Prospecting Contracts to Mining Leases, which may
be done at any time during the seven year period. The Mining Leases would be
subject to a royalty payable to the State of 1% on 80% of future production. The
farms are not currently subject to any royalties with the mineral rights holder.

In January 2002, Plateau entered into a notarial prospecting
contract with the Republic of South Africa on the Farm Noord Holland 775 (1,229
hectares). The exploration rights to this Farm are initially in effect for a
five year term consisting of payments of ZAR3 per hectare in year one escalating
in stages to ZAR7 in year five. Additionally, an application for extension of
the exploration rights for three more years is possible and consists of payments
of ZAR14 in year six and escalating to ZAR18 in year eight of the prospecting
period.

In April 2002, Plateau acquired the Noord Holland 775 LR Farm
(1,229 hectares) from the South African Department of Mines and Energy, bringing
the aggregate land package of its Platreef Property to approximately 13,400
hectares. Plateau was granted the right to conduct exploration and on the farm
Noord Holland in August 2002 for five years, with an option to extend the
Prospecting Contracts for an additional three years (years 6-8).

On November 30, 2002, Plateau amended its prospecting agreement
with C. de Vos Tabakplanters on Farm Elandsfontein 766 Ptn 2 (747 hectares) for
a three year term. Consideration for these exploration rights are ZAR18 per
hectare for year one, ZAR20 per hectare in year two and ZAR22 per hectare in
year three.

Rietfontein Block

On October 10, 2001, Plateau entered into an agreement with
African Minerals Ltd., now Ivanhoe Nickel and Platinum Ltd. ("Ivanplats"), a
private affiliate of Ivanhoe Capital Corporation, whereby Ivanplats had the
right to earn a 50% joint venture interest in the Company's 2,900 hectare
Rietfontein 2KS Farm. Under the terms of this agreement, Ivanplats was to 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 continues to
be disagreement over whether Ivanplats ever presented an "exploration program"
as contemplated by the parties and their agreement. Further disagreement exists
with respect to the expenditures budgets, compilation and analysis of the
exploration results, and the overall adequacy and completeness of Ivanplats'
exploration activities, which affects whether Ivanplats completed its earn in
requirements. Plateau and Ivanplats are currently in an

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- 36 -

arbitration process, pursuant to the terms of the earn-in
agreement. The outcome of the arbitration is not currently determinable.

Kwanda Joint Venture (North and
South Blocks)

On May 16, 2002, Plateau completed an agreement with
Rustenburg, a subsidiary of Anglo Platinum (together "Anglo Platinum"), for the
right to acquire up to an 80% interest in twelve new PGM farms located on the
Northern Limb of the Bushveld Complex. Under the agreement 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 ZAR25 million within five years. The Company is required to spend
ZAR2.5 million in year one (which has been completed), ZAR5 million in each of
years two, three, and four, and ZAR7.5 million in year five. These farms are now
known as the Kwanda Joint Venture. The Company has not yet fulfilled its
expenditure requirements in respect of year three, but is in negotiations with
Rustenburg to amend the exploration expenditure schedule.

When 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 agreement also
includes 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 HDP
partner will be provided out of the Company's interest.

Boikgantsho Joint Venture
(Drenthe/Witrivier and Overysel)

On November 26, 2003, Plateau entered into the Boikgantsho
Platinum Mine Joint Venture Agreement ("Boikgantsho JV") with Potgietersrust
Platinums Ltd ("PPRust"), a wholly owned subsidiary of Anglo Platinum. The
Boikgantsho JV was formed to explore and develop PGM, 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 of the Boikgantsho JV is to explore and develop a
large scale, open pit deposit, utilizing nearby milling, smelting and refining
facilities that could provide substantial cost advantages to a new mining
project. The Company is contributing its rights to the Drenthe 778LR Farm on
which a large PGM nickel resource has been outlined in the Drenthe deposit, and
the Witrivier 777LR Farm if the deposit extends north on to Witrivier. PPRust is
contributing its rights to the northern portion of the Overysel 815LR Farm,
lying south of and contiguous to the Drenthe 778LR Farm.

Pursuant to the terms of the Boikgantsho JV Agreement, Anooraq
and Anglo Platinum will form an initial 50/50 joint venture 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 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").

Once the 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
contained in each contributed property as reflected in the BFS.

Should Anooraq choose not to proceed, then Anglo Platinum shall
have the option to acquire Plateau's interest at the aggregate of (i) the net
present value of exploiting Plateau's mineral rights as a stand alone

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mining operation, by applying an agreed discount rate, as
determined in the BFS, and (ii) all Exploration Expenditures incurred by Plateau
up to the completion of the BFS. Should Anglo Platinum decide not to contribute
to exploitation, it will remain entitled to be dilute to a minimum 12.5% non
contributory interest, adjusted depending on the final PGM royalty established
under the Royalty Bill, to a maximum of 15%.

Anglo Platinum has undertaken 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. Anglo Platinum has recently completed
construction of a new PGM smelter at Polokwane, located approximately 80
kilometres east of the property.

Accessibility, Climate, Local Resources, Infrastructure
and Physiography

Access from Johannesburg to the central portion of the Platreef
Project area is via highway N1 to the city of Mokopane, then 35 kilometres to
the north northwest via well maintained secondary roads. There are nearby
highways, railways, and high capacity electrical transmission lines.

The climate is semi-arid with moderate winter temperatures in
the 20 degrees C range, typically increasing to 35 degrees C in summer.

Water from existing community wells and a well sunk by Anooraq
is available for drilling on the property. Groundwater studies will be required
to identify adequate supplies of process water for any mining operation.

The terrain is relatively flat, with a mean elevation of 1,100
m, and there do not appear to be any prohibitive physical obstacles to inhibit
exploration of the Platreef Project. Vegetation is generally sparse and consists
mostly of various thorn bushes.

History

Central Block and Boikgantsho
JV

Dr. Hans Merensky first discovered PGM in the Northern Limb of
the Bushveld Complex in 1924 and the region saw limited PGM production until
1930. Thereafter interest waned, particularly with the discovery and development
of the more platinum-rich Merensky Reef in the Western Limb. In the 1960s,
exploration attention was again focused on the Platreef of the Northern Limb. In
1993, after nearly 30 years of sporadic exploration on the Northern Limb, the
Sandsloot open pit mine was brought into production. In 2003 a new open pit mine
(Zwartfontein South) was developed on the farm immediately north of Sandsloot.
Annual production from these two mines approximates 350,000 oz of PGM. These
deposits comprise only two of six Anglo Platinum PGM deposits on the Platreef.
1

1In this report PGM refers to the sum of the
contained concentrations of Platinum + Palladium + Gold unless otherwise
defined. 3PGM refers to Platinum + Palladium + Gold, whereas 4PGM refers to
Platinum + Palladium + Rhodium + Gold.

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- 38 -

Exploration on the properties comprising the Platreef project
has also been sporadic in spite of the success of numerous historic drill holes
in identifying extensive PGM mineralization on the Farm Drenthe 778LR. In July
1998, Plateau drilled eight diamond drill holes on the southern half of Farm
Drenthe to target the PGM mineralization intersected by hole DRN 2. The DRN 2
intersection assayed 5.61 g/t PGM, 0.17% Cu and 0.27% Ni over a width of 3.78
metres, within a broader zone grading 4.15 g/t PGM over 9.7 metres.

Between January and July 2000, Anooraq, through Plateau,
completed an exploration program consisting of diamond drilling and geochemical
soil sampling. Thirty-five holes (holes PR-01 to PR-35), totalling 6,762 metres,
were completed on the farms Drenthe and Witrivier. Twenty holes were drilled on
a 50 x 100 metres grid to follow-up on Plateaus 1998 holes, and to establish
the continuity of the mineralization in an area that extends north from the
boundary with the Anglo Platinum ground. Fifteen angled holes were drilled at
200 metres spacing along strike to the north to the north, testing an additional
3.6 kilometre strike length. All but one of the 35 holes drilled in 2000
successfully intersected platinum-palladium-rhodium plus gold (4PGM) horizons
with associated copper-nickel mineralization. A further three holes (PR-36 to
PR-38), were drilled in 2002, one on each of the farms Drenthe, Noord Holland
and Dorstland. The Drenthe hole (PR-36) confirmed the down-dip continuity of the
PGM mineralization intersected in one of the angled holes (PR-20). The
northernmost holes, i.e. PR-37 (Noord Holland) and PR-38 (Dorstland) intersected
rock sequences stratigraphically equivalent to the Platreef but with only
scattered low-grade PGM mineralization.

All 44 diamond drill holes completed on the farms Drenthe 778LR
and Witrivier 777LR from 1998-2002 intersected Pt, Pd and Au mineralization
along the 4.5 kilometres of strike tested and commonly several stacked zones of
significant mineralization were identified.

Anooraq geological staff completed geological modeling of the
mineralization within the Platreef horizon based on results compiled prior to
the 2003 program, and a preliminary estimate of the resource was made. In 2003,
a preliminary assessment of the Drenthe deposit based the results of preliminary
pit design and mine production scheduling studies were done, indicating that the
Drenthe Project would be an economically robust open pit mine. This study was
updated in 2005, based on drilling and a new resource estimate in 2004. A
preliminary assessment is preliminary in nature and it includes inferred mineral
resources that are considered too speculative geologically to have the economic
considerations applied to them that would enable them to be categorized as
mineral reserves, and there is no certainty that the preliminary assessment will
be realized.

Rietfontein Block

In 2000, Anooraq conducted a 1,337 sample soil geochemical
survey on the northwestern portion of Farm Rietfontein that defined three
multi-element PGM-base metal anomalies. As part of its earn-in agreement on
Rietfontein, Ivanplats diamond drill tested the two strongest anomalies with six
holes, totalling 2,038 metres, in 2001-2002. Geochemically anomalous but very
low-grade PGM mineralization is dispersed throughout much of each hole.

Ivanplats began to test the Platreef in a multi-rig program on
Turfspruit in early 2002. Drilling by Ivanplats to test the Platreef target on
Rietfontein began in July and continued until November 2002. Thirty-six vertical
core holes were drilled on Rietfontein along a southeast trend. Drill holes are
typically spaced at 100 to 200 metre intervals along the strike length and 50 to
150 metres across the width of the Platreef pyroxenite.

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In 2003, African Minerals continued exploration of the up-dip
extension of the Platreef horizon on Rietfontein by drilling a further 31
diamond drill holes, totalling 6,374 metres. This drilling has outlined a zone
of PGM mineralization in the Platreef over a strike length of 1,600 metres on
Farm Rietfontein, adjacent to the Turfspruit boundary.

No work was done on the Rietfontein Block in 2004 or 2005.

Kwanda - South Block

The South Block comprises five farms (claims), totalling 10,330
hectares, which are part of the Anooraq/RPM properties. The bulk of the South
Block is underlain by Bushveld Complex rocks. Of particular importance, is the
Lower Zone succession that outcrops on Vaalkop and along the southern boundaries
of Cyferkuil and Rondeboschje. Apart from minor pyroxenitic intrusions within
the footwall of the Northern Limb, this area is the only location on the
Northern Limb where rocks of the Lower Zone (pyroxenite and dunite-harzburgite)
are known to occur.

In 2002, Plateau carried out an integrated exploration program
of airborne geophysics, grid geochemistry and geological mapping in the area.
The geological, soil geochemical and magnetic surveys traced the pyroxenite unit
that hosts Pan Palladiums Northern PGM deposit for six kilometres across the
South Block farms. In 2003, an aggressive diamond drilling program, comprising
15 holes, totalling 2,465 metres, was conducted to assess this target for
similar deposits but did not encounter any significant PGM mineralization.

No work was done on the South Block in 2004 or 2005.

Boikgantsho Joint Venture

The 2004 program under the Boikgantsho JV was designed to
advance the Drenthe Project to the pre-feasibility stage. Two phases of drilling
were completed to outline the resource and to provide samples for metallurgical
testing. From January to mid September 2004, 28,570 metres were drilled, 46
holes (19,570 metres) on the Drenthe Farm, 27 holes (5,261 metres) on the
Witrivier Farm and 64 holes (12,739 metres) on the northern part of the Overysel
Farm.

Drilling comprised step-out and infill holes on the Drenthe and
Witrivier farms and step-out holes on the northern portion of the Overysel Farm,
which lies immediately to the south of the Drenthe Farm. In general, drill holes
are spaced at 100 metre intervals along lines 100 metres apart on all three
farms, with large areas on the Drenthe farm drilled at 50 metre spacing along
lines 100 metres apart. The drilling programs expanded the Drenthe deposit and
outlined a new deposit called the Overysel North. As shown in Figure 3, the
Overysel North deposit is cut into two segments by a northeasterly trending
fault. A resource estimate was done based on drilling to mid September 2004 (see
Mineral Resource estimates, below).

Metallurgical studies of core samples from the Drenthe and
Overysel were initiated in 2004. These are being carried out by Mintek, a
specialist mineral and metallurgical technology company, under the supervision
of Dowding Reynard & Associates, an engineering company that specializes in
management and process plant design. Both companies are based in South Africa.
Mineralogical investigations show the PGM grains to be quite coarse (45 microns
average) with 80 percent of the PGM grains occurring as discrete grains separate
from the base metal sulphides, and less than 10 percent associated with gangue.
Initial rougher flotation tests show high recoveries (Pd - 89%, Pt - 84%, Ni -
83%) at a relatively

---

- 40 -

coarse grind of 60 percent finer than 75 microns. On-going
metallurgical test work will assess grind versus recovery and enhancements to
the concentrate grades.



Figure 3. Boikgantsho JV Property, Location of Drenthe and
Overysel North Deposits

Geological Setting and Mineralization

The PGM-bearing rock package, known as the Platreef, forms the
base of the Bushveld Complex along much of the north-south trend of the Northern
Limb. Regional mapping, geophysical data and drilling at various spacings
suggest that the Platreef extends for some 12 kilometres on ground in which
Anooraq has an interest. PGM mineralization within this 70-250 metres thick
succession is commonly associated with pyrrhotite (iron sulphide), chalcopyrite
(copper sulphide) and pentlandite (nickel sulphide).

Drilling programs prior to 2004 had established a mineralized
corridor extending from the southern boundary of Farm Drenthe northward for
approximately 2,100 metres, within which several 10-20 metre thick zones of
mineralization with PGM concentrations in the range 0.5 -2.5 g/t 4PGM. These
define the Drenthe deposit. Drilling in 2004 on the Drenthe and Witrivier farms
and the northern portion of the Overysel Farm expanded the Drenthe deposit to
the north and south and identified a new deposit called Overysel North.
Mineralization remains open to the north and down-dip towards the west.

All of the Platreef rock package is mineralized to some
extent, containing anything from 100 ppb up to approximately 10,000 ppb PGM in
places. The configuration of a mineralized zone is therefore a function of
chosen cut-off grade, and typically, at cut-offs in the range 0.5 g/t to 1.0
g/t, PGM mineralized zones are not confined to individual rock units.
Nevertheless, these chemically defined zones typically form layer-like bodies
(referred to as reefs in South African terminology) which lie sub-parallel to
the general igneous strike and dip of the Platreef rock package.

Sulphide-related PGM mineralization is widespread, although
higher concentrations tend to be more prevalent in the upper half of the (~100
metres) thick sequence. The main sulphides in the Platreef are pyrrhotite and
chalcopyrite, (usually in approximately a 3:1 ratio) along with minor
pentlandite and pyrite.

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- 41 -

The variability in the composition of the Platreef can result
in different weathering profiles even in adjacent holes. The depth of the
weathering profile is generally shallower in the norites (15 to 25 metres)
compared to within the pyroxenites, calc silicates and serpentinized rocks
(typically 20 to 30 metres).

The weathering profile is variable and can extend as deep as 66
metres. Generally, less than 50% of drill holes (94 out of 241) exhibited any
degree of strong weathering, to a mean depth of 14.2 metres. Out of 241 drill
holes, portions of 178 drill holes recorded varying depths of moderate
weathering, to a mean depth is 16.3 metres. Weak (or patchy) weathering, with
some oxidation of sulphide minerals, occurs in portions of 146 holes to a mean
depth of 25.3 metres.

Sampling and Analysis

The following outline summarizes the sampling procedures
applied by Anooraq during the Platreef exploration drilling programs. It should
be noted that the original Anooraq sampling and analytical protocols are set out
in a core-logging manual and minor modifications were made to the original
guidelines as the program progressed. The flow chart in Figure 4 illustrates the
sampling and analytical protocol for the PR series of cored drill holes.

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- 42 -



Figure 4. Analytical flow sheet

The boxed core was picked up at the drill rig and transported
to a secure core logging facility near Mokopane for geotechnical logging,
geological logging, sample selection, quality control designation and sampling
by Anooraq personnel.

For further information on sampling methods, see Anooraqs 2004
Annual Report on Form 20F.

Anooraq monitored the sampling and analytical procedures of the
project with a detailed quality assurance/quality control (QAQC) program.
Typically, the additional analytical work involved in the QAQC program was
greater than 10% of the basic analytical requirement for a project. The QAQC
program was separate from the internal procedures used by the analytical
laboratories.

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- 43 -

Security of Samples

Half core is retained at the secure Anooraq warehouse near
Mokopane. Master pulps are also retained at the warehouse. Pulps remaining after
analyses at Acme Analytical Laboratory in Vancouver, BC, have been shipped for
long term storage at Anooraqs secured warehouse at Port Kells, B.C.

Mineral Resource Estimates

Resource estimates were completed for the Drenthe and Overysel
North deposits as outlined by drilling to mid-September 2004. Indicated and
inferred resources for the deposits are tabulated below:

Cautionary Note to U.S. Investors
      concerning estimates of Indicated ResourcesThis section uses the term indicated resources. The
      Company advises investors that while this term is recognized and required
      by Canadian regulations, the U.S. Securities and Exchange Commission does
      not recognize it. U.S.Investors are cautioned not to assume
      that any part or all of mineral deposits in this category will ever beconverted into reserves.


BOIKGANTSHO JVINDICATED MINERAL
      RESOURCES Nov 2004 at a US$20 GMV/t cut-offDEPOSIT
    TONNES
    3PGM(g/t)
    Pt (g/t)
    Pd (g/t)
    (i)**Au (g/t)**
    (ii)Ni (%)
    Cu (%)
    % ContainedOunces PGMDrenthe
    132,239,500
    1.25
    0.53
    0.62
    0.09
    0.14
    0.09
    5,309,000Overysel North
    44,421,500
    1.64
    0.67
    0.87
    0.10
    0.10
    0.06
    2,340,000Total
    176,661,000
    1.35
    0.57
    0.69
    0.09
    0.13
    0.08
    7,649,000


Cautionary Note to U.S. Investors
      concerning estimates of Inferred ResourcesThe following section uses the term inferred resources.
      The Company advises investors that while this term is recognized and
      required by Canadian regulations, the U.S. Securities and Exchange
      Commission does not recognize it. Inferred resources have a great amount
      of uncertainty as to their existence, and great uncertainty as to their
      economic and legal feasibility. It cannot be assumed that all or any part
      of an inferred mineral resource will ever be upgraded to a higher
      category. Under Canadian rules, estimates of Inferred Mineral Resources
      may not form the basis of economic studies, except in rare cases. U.S.
      Investors are cautioned not to assume that any part or allof an
      inferred resource exists, or is economically or legally mineable.


BOIKGANTSHO JV INFERRED MINERAL
      RESOURCES Nov 2004 at a US$20 GMV/t cut-offDEPOSIT
    Tonnes
    3PGM(g/t)
    Pt (g/t)
    Pd (g/t)
    (iii)**Au (g/t)**
    (iv)Ni (%)
    Cu (%)
    % ContainedOunces PGMDrenthe
    88,640,000
    1.16
    0.49
    0.58
    0.09
    0.15
    0.09
    3,315,000Overysel North
    15,713,500
    1.63
    0.65
    0.88
    0.10
    0.11
    0.06
    809,000Total
    104,084,000
    1.23
    0.52
    0.63
    0.09
    0.14
    0.09
    4,124,000


Notes to tables: Mineral resources that are not mineral
reserves do not have demonstrated economic viability. Gross Metal Value per
tonne (GMV/t) is sum of Pt, Pd, Au, Cu and Ni grades multiplied by the following
metal prices: Pt  US$650/oz; Pd  US$250/oz; Au  US$375/oz; Ni  US$4/lb; Cu 
US$1/lb.

Since November 2004, some of the drill hole samples used have
been re-analyzed for nickel since the resource estimate was done, but the
results do not indicate a significant change in grade. G.J. van der Heever,
Pr.Sci.Nat., of GeoLogix, an independent qualified person, is responsible for
the resource estimate. A technical report (December 2004) describing the
resource estimate is filed at www.sedar.com.

A qualified person as defined under Canadian National
Instrument 43-101, Standards of Discoldure of Mineral Projects is an individual
who:

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- 44 -

|(a) | is an engineer or geoscientist with at least five years
      of experience in mineral exploration, mine development or operation or
      mineral project assessment, or any combination of these;
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                    
|(b) | has experience relevant to the subject matter of the
      mineral project and the technical report; and                                                                                           
|    |                                                                                                                                                                                                    
|(c) | is a member in good standing of a professional
      association.                                                                                                                                  

Exploration and Development - Boikgantsho JV

Preliminary Assessment

In March 2005, an updated preliminary assessment, as defined
under Canadian National Instrument 43-101, Standards of Disclosure for Mineral
Projects, of the potential economics of open pit mining the Drenthe and Overysel
North deposits was completed. The preliminary assessment is based on a
conventional open pit mining and milling operation with a 32 year mine life.
Currencies used are US dollars (US$) and South African Rand (ZAR), with a
ZAR:US$ exchange ratio of 7:1. At expected long term metal prices of US$650/oz
for platinum, US$250/oz for palladium, US$375/oz for gold, US$4.00/lb for nickel
and US$1.00/lb for copper used for the base case, the pre-tax and pre-royalty
economic model forecasts the net present value ("NPV") of the project at a 5%
discount rate is US$300.5 million and at 10% discount is US$138.8 million with
an internal rate of return ("IRR") of 25%. The estimated capital cost is
US$152.8 million with a payback of 3 1⁄4 years. The total operating cost is
US$9.52 per tonne milled.

At the then current metal prices of US$850/oz for Pt, US$180/oz
for Pd, US$400/oz for Au, US$6.60/lb for Ni and US$1.40 for Cu, and an exchange
rate of 6:1, the economics for the project are even more robust. The NPV at a 5%
discount rate is US$576.7 million and at 10% discount is US$293.3 million with
an IRR of 35%.

The preliminary assessment is based on indicated and inferred
mineral resources outlined to mid September 2004 in the Drenthe and Overysel
North deposits. Mineral resources for these deposits were announced in November
at a US$20GMV/t cut-off (see above); however, the preliminary assessment
indicates favourable financial results using a cut-off grade of approximately
US$10.50/t. The preliminary assessment is preliminary in nature and it includes
inferred mineral resources that are considered too speculative geologically to
have the economic considerations applied to them that would enable them to be
categorized as mineral reserves, and there is no certainty that the preliminary
assessment will be realized.

Total in-pit resources of 256 million tonnes grading 1.03 g/t
3PGM (0.43 g/t Pt, 0.52 g/t Pd, 0.08 g/t Au), 0.11% Ni and 0.07% Cu were
estimated in two main pit areas at a US$10.50/t cut-off. For the study, the
in-pit resource was capped for a mine life of 32 years or 160 million tonnes
grading 1.05 g/t 3PGM (0.44 g/t Pt, 0.53 g/t Pd, 0.08 g/t Au), 0.12% Ni and
0.08% Cu.

The mill feed rate for the preliminary assessment is 5 million
tonnes per year. The average head grade ranges from 1.1 to 1.4 g/t 3PGM in the
first five years of mining and 0.8 to 1.0 g/t in the last five years.
Metallurgical studies on core samples show promising results for a conventional
mill circuit, comprising crushing, grinding and two-stage flotation. From this
work, the following head grade driven concentrator recoveries were used in the
study: platinum 75%, palladium 75%, gold 75%, copper 80% and nickel 75%.

Mining costs for the study are based on budget estimates
provided by South African mining contractors and processing costs are derived
from studies by Dowding Reynard & Associates, the Companys

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- 45 -

metallurgical consultants in South Africa. Administrative and
environmental costs are based on estimates from contract submissions.

Pre-feasibility Study

Pre-feasibility studies were initiated in 2005. The potential
for milling and mining optimization using higher throughputs, which would
further enhance the project economics, is considered to be quite promising. The
mineral resource is open to the north, and down dip with potential for
additional resources to be outlined. Current metallurgical testwork suggests
that the recoveries used in this study may be conservative and could increase.
Other improvements, such as acid leaching of oxide mineralization within the
deposit to enhance recovery of base metals, optimizing cut-off grades to produce
a higher grade mill feed, and geotechnical studies aimed at supporting steeper
pit wall angles during mining are being assessed in pre-feasibility programs
that are currently underway.

The deposits can be weathered to a depth of 40 metres. Under
the model used, all of the in-pit material was mined but only the fresh sulphide
(unweathered) material was processed. Testing is underway on core samples to
determine metallurgical characteristics of the weathered material so that it can
be integrated into the mine processing plan.

The area of the Boikgantsho project is semi-arid and the South
Africa Department of Water Resources has a plan to provide additional water to
the region over the next two to five years. Planning to access these water
resources is being further considered in the pre-feasibility study.

Also as part of pre-feasibility studies, the geological models
and mineral resource estimates are currently being updated with information from
drilling to December 2005.

Infill drilling program

Drilling in 2005 focused on the Drenthe deposit. The program
tested the entire area within the provisional open pit design for the Drenthe
deposit that was used for the March 2005 preliminary assessment. One hundred and
thirty six vertical holes, totaling 24,418.23 meters, were drilled at 50-meter
intervals along 50-meter spaced lines. The program confirmed the continuity of
the PGM mineralization within the Drenthe deposit. A plan of the drill holes is
shown below:

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- 46 -



Figure 5. Plan of Drill Holes

Resource modeling began in early August 2005. Independent
verification samples have also been collected.

Plan of Operation  2006

The new resource model is expected to be complete in the third
quarter of 2006. Preliminary results indicate that the resources estimated in
November 2004 have been upgraded in category type and, once the resource model
has been finalized, these will be utilized for the preliminary feasibility
study.

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- 47 -

The Ga-Phasha Project

Pursuant to the Pelawan transaction, the Company acquired
Pelawans rights to its 50% participation interest in the Ga-Phasha Project (see
Item 1, History and Development  Summary Corporate History and Intercorporate
Relationships above).

Property Description and Location

The Ga-Phasha Project is located on the Eastern Limb of the
Bushveld Igneous Complex in South Africa, approximately 45 kilometres
north-northwest of the Limpopo Province town of Steelpoort and 250 kilometres
northeast of Johannesburg.

The project area consists of four farms: Paschaskraal,
Klipfontein, De Kamp, and Avoca, which cover an area of approximately 9,700
hectares. Mineral rights for the PGM within the UG2 and Merensky Reefs on the
farms Klipfontein 465KS and a portion of Paschaskraal 466KS are held by
Micawber. Micawber is 50% owned by Plateau and 50% owned by Rustenberg Platinum
Mines, a wholly owned subsidiary of Anglo Platinum. In addition, Micawber has a
lease over the PGM mineral rights for the remainder of Paschaskraal 466KS, which
are held by South Africa as tabulated below and illustrated in Figure 6. There
are nominal annual fees to maintain the farms.

|MINERAL RIGHTS    
|------------------
|PROPERTY          
|Klipfontein 465KS 
|Paschaskraal 466KS
|Paschaskraal 466KS
|De Kamp 507KS     
|Avoca 472KS       

SURFACE RIGHTSPROPERTY
    PORTION
    EXTENT (hectares)
    SURFACE OWNER
    TITLEKlipfontein 465KS
    Farm
    2841.8803
    State
    T44863/1989Paschaskraal 466KS
    Portion 1
    2156.8861
    State
    T15169/1959Paschaskraal 466KS
    RE
    745.6399
    State
    T13098/1964De Kamp 507KS
    Farm
    1830.6887
    State
    T44486/1986Avoca 472KS
    Farm
    1093.3571
    State
    T44482/1989


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- 48 -



Figure 6. Ga-Phasha Project Property Holdings, Eastern Limb
of the Bushveld Complex

Accessibility, Climate, Local Resources, Infrastructure
and Physiography

The Ga-Phasha site is located in a region of sparse development
with little infrastructure. Access to the site is gained via gravel roads from
Steelpoort or Burgersfort to the southeast, and from Polokwane approximately 80
kilometres to the northwest.

Recent development at the neighbouring Twickenham-Hackney farms
by Anglo Platinum has improved the local infrastructure considerably, although
Anglo Platinum has temporarily suspended further development work. The Anglo
Platinum development includes paved roads, power lines, and provisions for
water.

The climatic conditions of the Ga-Phasha area are typical of
the Limpopo Province. Summer day temperatures are warm to hot, averaging 26 to
30 degrees C, and the winter months are moderate to cool. The area is considered
semi-arid, with annual rainfall of 529 mm, which is below the average for the
rest of South Africa. The rainy season extends over the summer months of October
through April.

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- 49 -

The general topography of the area is defined by a relatively
flat valley, flanked by pronounced northwest to south-east trending mountain
ranges that are located on the north-eastern and south-western sections of the
property. Extensive settlements have been developed at the foot of both these
mountain ranges. The area between the villages where the land is flatter has
been broken up into small farming units or plots for cultivating crops.

History

Platinum was first discovered in the Eastern Limb of the
Bushveld Complex in 1924 and traced to the now famous dunite pipes (tube or pipe
shaped igneous rock comprised largely of the mineral olivine) at Maandagshoek.
This led to the discovery of the platiniferous horizon, subsequently named the
Merensky Reef, on the Farm Maandagshoek 254KT, approximately 20 kilometres
south-east of the Paschaskraal Farm. From 1925 to 1927, Northern Platinum
Limited undertook an extensive exploration program on both the platiniferous
dunite pipes and the Merensky Reef in the Dwars and Olifants River areas; some
700,000 tonnes of platinum-bearing ore were mined during early operations in
these areas.

During 1969, the ATOK Platinum Mine was developed and
commissioned by Anglo Transvaal Consolidated Mines Limited ("Anglovaal") and
sold to Rustenburg Platinum Mines ("RPM", a subsidiary of Anglo Platinum) in
1977. Although commercial mining activities by RPM over the past 25 years were
limited to the ATOK mine, RPM managed to secure the mineral rights over a large
number of farms in the Eastern Bushveld Complex area. Throughout this later
period, various exploration and metallurgical test programs were completed that
focused mainly on determining the extent and general characteristics of the
mineralization. Renewed interest in this area was sparked by the increased
demand for PGM in 1999-2000, and by Anglo Platinums strategy to increase
platinum output to 3.5 million refined ounces by 2006. To meet this additional
demand, a number of new mining projects are currently under investigation or in
different stages of development and construction.

There has been a considerable amount of exploration on the
Klipfontein and Paschaskraal farms by past operators such as JCI, Anglovaal, and
Anglo Platinum. A total of 327 drill holes have been completed to date, of which
108 intersected the Merensky Reef, and 176 intersected the UG2 Reef.

Initial metallurgical testwork by Anglo Platinum indicates a
promising flotation response with negligible effects from dilution and with
platinum group element recoveries ranging from 92.7% to 96.5% . The good
flotation response was attributed to the predominant association of PGM with
base metal sulphides, which are coarser than those present in UG2 in the western
Bushveld. Nickel, copper and sulphur recoveries for UG2 type ore were
encouraging, namely: 14-24% nickel, 77-86% copper and 83-90% sulphur.

Anglo Platinum prepared a detailed pre-feasibility study on the
Paschaskraal Project, as it was formerly known, in late 2002. This study
envisioned an underground mine very similar to that being developed on the
neighbouring Twickenham Farm, using down dip semi-mechanized reef mining and
access by twin shaft declines. Each decline shaft comprises three barrels: a
decline ramp for equipment, a conveyor decline, and a chairlift decline for
moving personnel. Ore was to be treated at the Twickenham concentrator. Based on
twin declines producing 100,000 tonnes per month from the UG2 Reef only, Anglo
Platinum concluded the project was an attractive investment.

In October 2003, Khulani GeoEnvironmental Consultants (Pty)
Ltd. of Randburg, South Africa completed a resource estimate for the Ga-Phasha
Project, outlining measured, indicated and inferred resources in the UG2 and
Merensky Reefs.

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- 50 -

Geological Setting and Mineralization

The Ga-Phasha Project area is situated on the Eastern Limb of
the Bushveld Igneous Complex and is underlain by rocks of the Upper Critical and
Main Zones. The Main Zone is comprised of gabbros and ferro gabbros (iron and
magnesium rich igneous rocks), which occupy most of the central and
south-eastern parts of the Lulu mountain range.

The two platinum-bearing horizons at Ga-Phasha are the UG2
chromitite and the Merensky Reef, both of which occur within the Upper Critical
Zone. These rocks form the range of hills along the north-eastern boundary of
the project area, through which the undulating outcrop of the UG2 Reef can be
traced. The Merensky Reef sub-crops beneath a thick layer of overburden in the
center of the project area.

The sequence strikes northwest-southeast and dips in a westerly
direction towards the center of the Bushveld Complex. The dip decreases on a
regional scale from north to south, ranging from approximately 30 degrees near
the Olifants River in the north, to approximately 10 degrees near the Steelpoort
Fault to the south. The project area is located some 45 kilometres north of the
Steelpoort Fault and 25 kilometres south of the Olifant River Fault. The
Schwerin Fault lies approximately 10 kilometres to the east but does not appear
to have had any influence on the local Bushveld Complex stratigraphy.

The two most important stratigraphic successions within the
Upper Critical Zone are the Upper Group chromitite successions and the Merensky
Reef. In general, the Merensky Reef is separated from the UG2 chromitite horizon
(also called the UG2 Reef) by a package of norites and anorthosites, averaging
some 390 metres in thickness.

Locally, the UG2 chromitite layer averages 61 centimetres in
width. The UG2 is overlain by medium grained feldspathic pyroxenite.
Chromitite-stringers of variable thickness occur in the immediate hangingwall of
the reef horizon and are commonly referred to as the Leader seams of the
UG2.

Sampling and Analysis, and Security of
Samples

The following is a summary of the core logging and sampling
procedures used by Anglo Platinum. Core logging is undertaken by qualified
geologists on site at the Driekop Exploration Base, where all boreholes and
their deflections are accurately logged in terms of lithology, mineralization,
alteration and structure. Logging details are entered directly into laptop
computers, making use of the proprietary Sable software package designed for
this purpose. Specialized geotechnical and structural logging is also carried
out by rock engineering and structural geologists.

During the logging process the sampling interval through the
reef succession is determined, and individual samples measured off, marked and
numbered according to standard. Sampling is continuous through the sample
section. The marked core is then submitted to the technical staff, who cut the
core in half longitudinally through the complete sampling interval. One half of
this core is then cleanly broken with a sharp chisel at individual sample
boundary markings, and each, in turn, is immediately labelled, bagged and sealed
(diamond saw cutting is not used to split individual samples because of the loss
of material associated with it). Precautions are taken to avoid any cross
contamination between samples. The remaining half of the core remains in the
core trays with the flat cut side facing upwards. The sample intervals and
numbers are replicated onto this surface for reference, and future re-sampling
if necessary. The sampling process is fully documented on site, and records of
all sampling maintained.

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- 51 -

After the bagging of pre-2000 drilling samples on site at the
Driekop core yard, the samples were transported to Anglo Platinum Research
Centre ("ARC") in Germiston, near Johannesburg, by 3 ton Dyna or pickup truck.
ARC processed the samples from pre-2000 drilling.

Post-2000 samples are processed by Anglo American Research
Laboratory ("AARL"). When transported to AARL, the samples are delivered by ARC
staff and vehicles.

Generally the recovered borehole core (reef intersections of
Merensky Reef and UG2) is assayed for Pt, Pd, Rh and Au as well as Cu and Ni
contents. Individual Pt, Pd, Rh and Au contents of each sample were
determined.

ARC Procedures

All samples are duplicated and run on an A and B stream at
different times. Internal Quality control occurs with every batch. ARC does not
use blanks, and integrates an internal Quality Control sampling once a week.
Comparative results from A and B streams are available.

All samples are pulverized to 80% +/-5% <75 microns. For
Fire Assay  4 elements (Pb collector), there is loss of PGM and these results
then often require a correction factor to be applied. In the borehole database,
samples assayed using Pb collector fire assay methods have not been corrected.
The precious metal concentration is reported as the sum of Pt, Pd, Rh, and
Au.

For Fire Assay-ICP at ARC, silver is used to collect Pd, Pt,
and Au, and Pd is used to collect Rh. Using the Ag/Pd collectors reduces random
losses of the PGM and a more precise analysis is achieved as well as a lower
detection limit.

AARL Procedures

Samples are crushed in a jaw crusher to 2 millimetres. The
entire sample is then milled to 85 per cent 75 microns or finer. An 8-minute
milling time is required. For Atomic Absorption, pulped samples are digested
with a triple acid attack with perchloric, nitric and hydrofluoric acids. The
acid attack is performed three times after which the solutions are transferred
to 100 ml flasks and read on the Atomic Absorption Spectrometry for Cu and Ni.
Four per cent of the samples are replicated. Two blanks and three reference
standards are included in every batch.

Prior to X-ray fluorescence analyses, pulped samples are mixed
with a styrene  wax binder (SASMU) and milled to mix in the binder and further
reduce particle sizes. The samples are pressed into briquettes. The briquettes
are read on the AARL PW 1404 X-Ray Fluorescope for Cu and Ni. Mineralogical
effects are evident in the briquettes  hence separate type calibrations are
critical for UG2 and Merensky type samples. Approximately 5 per cent on the
samples are replicated. Two reference materials are analyzed with every batch
(maximum 100 samples).

For Fire Assay and inductively coupled plasma ("ICP"), all
assays are done in duplicate and the average of acceptable replicate pairs is
reported. Samples are weighed out and mixed with an appropriate flux for the
material type. Silver is used as a co collector. The samples are fire assayed
and the prills (material remaining from this process) are dissolved in aqua
regia and read on the ICP spectrometer for Pt, Pd and Au. One blank and two
reference materials are analyzed with every worksheet (maximum 35 samples).

For Rhodium, all assays are done in duplicate and the average
of acceptable replicate pairs is reported. Samples are weighed out and mixed
with an appropriate flux for the material type. Palladium is used as a

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- 52 -

co-collector. The samples are fire assayed and the prills
(material remaining from this process) dissolved in aqua regia and read on the
ICP for Rh. One blank and two reference materials are analyzed with every
worksheet (max 35).

Data Verification and Quality
Control

AARL has a comprehensive assay quality control system that
includes blanks, certified reference materials, in-house reference materials,
and twin streaming / replicate analyses. AARL is an ISO 17025 registered company
and operates according to international quality standards.

Care is taken during the handling of samples to avoid potential
cross-contamination or misplacement of samples. High and low grade materials are
processed in completely separate areas throughout the laboratory, using
dedicated and clearly labelled equipment. Samples are weighed and checked upon
receipt at the AARL. Quarry quartz is crushed and milled between individual
batches to avoid any possible carry-over. This quartz is analyzed with the batch
and these data reported to the ARC during progress meetings.

For each tray (worksheet) of Pt, Pd and Au and Rh analysis,
reagent blanks, standard reference material and duplicate samples are included
for control purposes. Internationally certified standards as well as internal
standards of matched matrices are used. Fire assay pots are used only once to
avoid the possibility of cross-contamination of samples. A full calibration of
the ICP and AAS is performed prior to sample analysis, and a synthetic check
solution is included after every 15 samples. Where the check solution data falls
outside the acceptable control limits, the instrument is re-calibrated.
Worksheets will be accepted or rejected based on the quality control data of the
standards replicates and blanks. A complete audit trail is maintained in the
laboratory to ensure trace-ability, transparency and ISO compliance.

Quartz blanks are designed to monitor the entire process from
sample preparation to instrumentation. Reagent blanks are introduced during
secondary preparation. These are essentially reagents without the sample
introduced. For example in fire assay the reagents would be assayed. Reagent
blanks reflect contamination introduced during the analysis phase but not the
primary preparation phase. Specific density and XRF data do not have reagent
blanks, but do have quartz blanks.

With each method certified (CRM) and in-house (IHRM) reference
materials are run. For each method samples are replicated, if not twin streamed.
The Pt, Pd and Au and Rh are twin streamed, i.e. a 100% replication. For XRF and
Specific density analyses, 10% replicates are run. Replicates are essentially
used for measuring the precision of the analyses, and appropriate action is
taken if such results are not considered satisfactory. A comprehensive quality
control system ensures that the data reported is within the quality control
criteria and all ISO standards are met.

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- 53 -

Mineral Resource Estimates

A total of 327 diamond drill holes had been drilled on the
farms Paschaskraal and Klipfontein to the date of the January 2004 resource
estimate: 108 drill holes intersected the Merensky Reef; 176 drill holes
intersected the UG2 Layer; and 83 drill holes were drilled for geotechnical
purposes mainly in connection with the originally planned shaft in the southern
portion of the Paschaskraal Farm.

All drill holes used for the resource estimation are vertical
and most boreholes are drilled BQ core size (36.4 millimetres diameter), as well
as deflections if drilled. In some instances, where ground conditions were poor
or core recoveries in the reef zones were not representative, a NQ core size
(47.6 millimetres diameter) hole was drilled nearby. The average vertical
thickness of the UG2 reef is 0.74 metre and of the Merensky Reef is 1.17
metres.

The January 2004 resource estimate for the Ga-Phasha Project
utilized drill hole information made available by Anglo Platinum from 299 drill
holes drilled between 1966 and 2002. Of these 299 drill holes, 41 and 42 holes
were used to classify measured and indicated resources respectively within the
UG2 horizon. Of the 299 holes, 40 and 21 holes were used to classify measured
and indicated resources respectively within the Merensky horizon.

In-situ resource figures for the farms Paschaskraal and
Klipfontein for the UG2 and Merensky Reefs are summarized in the table below.
The resource estimation excludes the first 40 metres below surface, which is
considered as an oxidized zone. The Specific Gravity for the Merensky Reef is
3.1 and for the UG2 Reef is 4.25. A 40% geological loss factor was applied,
which includes 10% for faulting, 15% for potholes, 10% for intrusions and 5% for
iron replacement bodies. Even though dykes swarms effect the area more than on
the adjoining properties, the resource figures are regarded as conservative,
since the industry average due to these features is around 20 - 30%.

Cautionary Note to U.S. Investors
      concerning estimates of Measured and Indicated ResourcesThis section use the terms measured resources and
      indicated resources. The Company advises investors that while these
      terms are recognized and required by Canadian regulations, the U.S.
      Securities and Exchange Commission does not recognize them. U.S.
      Investors are cautioned not to assume that any part or all ofmineral deposits in this category will ever be converted into
      reserves.


GA-PHASHA MEASURED & INDICATED MINERAL
      RESOURCESDeposit and Cut-off
    Tonnes(million)
    4PGM(g/t)
    Pt(g/t)
    Pd(g/t)
    Au(g/t)
    Rh(g/t)
    ContainedOuncesUG2 REEF @ 4 g/t cut-off,Paschaskraal and Klipfontein farms
    65.7
    6.97
    3.07
    3.28
    0.18
    0.44
    14,729,000MERENSKY REEF @ 2 g/t cut-off,Paschaskraal and Klipfontein farms
    43.3
    4.39
    1.93
    2.06
    0.11
    0.28
    6,105,000Qualified person E. Siepker, Pr.Sci.Nat., August
      2004


Cautionary Note to U.S. Investors
      concerning estimates of Inferred ResourcesThe following section uses the term inferred resources.
      The Company advises investors that while this term is recognized and
      required by Canadian regulations, the U.S. Securities and Exchange
      Commission does not recognize them. Inferred resources have a great
      amount of uncertainty as to their existence, and great uncertainty as to
      their economic and legal feasibility. It cannot be assumed that all or any
      part of a mineral resource will ever be upgraded to a higher category.
      Under Canadian rules, estimates of Inferred Mineral Resources may not form
      the basis of economic studies, except in rare cases. U.S. Investors are
      cautioned not to assume that any part or all of aninferred
      resource exists, or is economically or legally mineable.


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GA-PHASHA INFERRED MINERAL
      RESOURCESDeposit and Cut-off
    Tonnes (million)
    4PGM g/t
    Pt g/t
    Pd g/t
    Au g/t
    Rh g/t
    Contained OuncesUG2 REEF @ 4 g/t cut-off,
      Paschaskraal and Klipfontein farms
    33.9
    7.20
    3.17
    3.38
    0.19
    0.45
    7,839,000MERENSKY REEF @ 2 g/t cut-off,
      Paschaskraal and Klipfontein farms
    39.8
    4.28
    1.88
    2.01
    0.11
    0.27
    5,478,000UG2 REEF @ 4 g/t cut-off, Avoca
      and De Kamp farms
    77.6
    7.05
    
    
    
    
    17,590,000UG2 REEF @ 4 g/t cut-off, Avoca
      and De Kamp farms
    97.6
    4.34
    
    
    
    
    13,620,000Qualified person E. Siepker, Pr.Sci.Nat., August
      2004


The Avoca and De Kamp farms adjoin Paschaskraal and Klipfontein
on the down dip side of the UG2 and Merensky Reefs. No boreholes were drilled on
these farms, but it could be assumed that the reefs developed on
Paschaskraal/Klipfontein farms would be developed on Avoca and DeKamp.

Exploration and Development

Anooraq technical staff carried out a due diligence assessment
of the Ga-Phasha Project with the assistance of South African consultants,
including Global Geo Services and GeoLogix.

Anglo Platinum has continued drilling at Ga-Phasha in
conjunction with its work on its adjoining Twickenham Hackney property. The
resource database established by Global GeoServices has been updated as
information is received from Anglo Platinum.

In mid December 2005, Anooraq and Anglo Platinum announced a
new plan for the Ga-Phasha Project. The original plan for Ga-Phasha, developed
in 2001 and 2002, envisaged the UG2 Reef as the principle target reef horizon
with mineralization being processed through a joint concentrator situated at
Twickenham. Following changed economic circumstances, Anglo Platinum and Anooraq
are of the view that the value of Ga-Phasha could be further optimised by
exploiting both the Merensky and UG2 Reef horizons, and have embarked on a
program to lead to a bankable feasibility study.

The program included extensive additional drilling of the
Merensky Reef horizon, will enable Anooraq and Anglo Platinum to determine how
to optimally mine the mineralized horizons and utilize, on a cost sharing basis,
some of the regional infrastructure already established by Anglo Platinum.

Plan of Operation - 2006

Anooraq and Anglo Platinum completed the program in the third
quarter of 2006. Results from the program are currently being reviewed with the
objective of determining the necessary studies and timetable to complete a
bankable feasibility study. The review and planning stage is expected to be
completed by the end of the second quarter of 2006, at which time a budget will
be established.

The Thusong Project

Property Description and Acquisition, and
Location

The Thusong Joint Venture property is located about 74
kilometres north of Rustenburg, South Africa. The property consists of the
Wachteenbietjieslaagte 4 JQ, Vogelstruiskraal 400 KQ and Cyferkuil 1 JQ
farms.

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- 55 -

In May 2004, Anooraq and its wholly owned South African
subsidiary Plateau entered into the Thusong Platinum Mine Joint Venture
Agreement with RPM, a wholly owned subsidiary of Anglo Platinum, to explore and
develop PGM, gold and nickel mineralization on the property.

Pursuant to the terms of the Joint Venture Agreement, Anooraq
and RPM will form an initial 50/50 Joint Venture (the "JV") to explore the three
farms for a period of up to five years. During the period, Anooraq will operate
exploration programs, and spend up to ZAR11.9 million (about C$2.3 million) on
behalf of the JV. Anooraq will have the option to proceed to take the project to
a Bankable Feasibility Study ("BFS"). Once the BFS has been completed, the
parties, by agreement, may jointly or separately proceed to exploitation. If
both partners decide to proceed, then a joint management committee will be
established to oversee development and operations. Should RPM decide not to
contribute to exploitation, it remains entitled to dilute to a minimum 17.5%
non-contributory interest, adjusted depending on the final PGM royalty
established under the Royalty Bill to a maximum of 20%. Should Anooraq decide
not to proceed, RPM has the right to buy out Anooraqs interest.

Geological Setting

The properties are located on the Western Limb of the Bushveld
Complex, adjacent to the Anglo Platinums Union operations.

Exploration and Development

Anooraq carried out preliminary geological investigations in
July 2005 to follow up earlier aeromagnetic geophysical survey results and
select drill sites. Both the UG2 and Merensky reef horizons are known to exist
on adjacent properties south of the Thusong properties. Keith Roberts, M.Sc.,
Ph.D., P.Geo., is Anooraq's qualified person for the exploration programs.

The drilling program took place in September and October 2005.
Four vertical drill holes were completed on the farm Cyferkuil: hole TH001 was
349.52 meters; hole TH002 was 61.45 meters; hole TH003 was 51.16 meters and hole
TH004 was 237.87 meters.

Significant intersections are tabulated below:

Drill Hole Number
      
      From **(metres)**
      To **(metres)**
      Intercept**(metres)**
      **4PGM1** g/t
      Pt g/t
      Pd g/t
      Rh g/t
      Au g/tTH-002
    
    32.00
    32.56
    0.56
    4.440
    2.960
    1.085
    0.390
    0.005TH-002
    
    38.32
    39.00
    0.68
    4.175
    2.600
    1.148
    0.423
    0.005TH-002
    
    44.61
    45.00
    0.39
    1.343
    1.006
    0.155
    0.176
    0.005TH-002
    
    46.41
    47.31
    0.90
    4.298
    3.058
    0.828
    0.407
    0.005TH-003
    
    32.50
    33.00
    0.50
    2.170
    1.515
    0.435
    0.215
    0.005TH-003
    
    39.60
    43.00
    3.40
    3.922
    2.558
    1.051
    0.304
    0.009TH-003
    Incl.
    41.80
    42.25
    0.45
    7.613
    4.602
    2.488
    0.518
    0.005TH-003
    
    47.27
    47.47
    0.20
    7.350
    5.440
    1.345
    0.550
    0.015TH-004
    
    216.39
    217.22
    0.83
    1.108
    0.681
    0.282
    0.140
    0.005


1 4PGM = Platinum +
Palladium + Rhodium + Gold

Both the Merensky and UG2 reefs were intersected. For example
in drill hole TH002, weathered Merensky reef was intersected at 23.3 -24.2
meters, and chromitite bands bounded the upper and lower

---

- 56 -

contacts. A relatively flat-lying (25 degrees eastward dip)
interval of the UG2 chromitite horizon was also encountered in the hole at a
depth of 46.4 -47.3 meters. In addition, most intersections are near-surface,
indicating the potential for open pit mining. Further work is being planned to
take place in mid-2006.

Plan of Operation  2006

Plans for 2006 include a detailed airborne magnetic survey. The
purpose of the survey is to delineate fault and dyke structural elements prior
to completing a preliminary drill program to test for the location of the
Merensky and UG2 stratigraphic horizons which were encountered in the 2005 drill
program.

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- 57 -

|ITEM 4A     UNRESOLVED STAFF COMMENTS
|-------------------------------------

Not applicable

---

- 58 -

|ITEM 5      OPERATING AND FINANCIAL
      REVIEW AND PROSPECTS
|--------------------------------------------------------------

Overview

The Companys financial statements have been prepared in
accordance with Canadian generally accepted accounting principles (Canadian
GAAP). Note 12 to the financial statements provides descriptions of the
material measurement differences between Canadian GAAP and US GAAP as they
relate to the Company and a reconciliation to US GAAP of the Companys financial
statements.

Anooraqs business strategy is to acquire, explore and conduct
detailed engineering and economic analysis of mineral deposits that have large
tonnage and multi-year operation potential in order to enhance the value of the
project. None of Anooraqs currently held or to be acquired mineral deposits
currently is known to host a mineral reserve which has been subject to
sufficient development work to determine that it is economic at current metals
prices.

Anooraqs results of operations are economically evaluated on
an "event driven" basis in that exploration expenditures yield information on
the nature, extent and statistical confidence (primarily from diamond drill
exploration programs) in a mineralized deposits size and continuity,
information that is not in the financial statements. Thus, it is difficult to
evaluate the success of operations in a fiscal period by reference to the
financial statements given that results are more appropriately measured by an
evaluation of the minerals discovered and/or confirmed. Anooraqs operating
activities do not occur on a regular or periodic basis and are subject to the
economic realities of metals prices and equity financing conditions for natural
resource exploration issuers. Accordingly, it may not be meaningful to seek
observable trends in financial operating statistics although liquidity
statistics will be important. Although Anooraq calculates an annual loss per
share (which has varied over a range of $0.08 to $0.18 over the last three
fiscal periods), Anooraq is of the view that its share price does not vary in
accordance with the loss per share statistic but rather Anooraq share prices
vary with the price of the underlying market for platinum group metals, the
outlook for these metals and the Companys projects.

Anooraqs financial statements are prepared on the basis that
it will continue as a going concern. Given that Anooraq has no source of
significant revenue, this assumption is always subject to the further assumption
that there will continue to be investment interest in funding exploration to
seek large tonnage metal deposits even where economic certainty is unknown.
Anooraq can give no assurance that it will continue to be able to raise
sufficient funds and should it be unable to continue to do so, may be unable to
realize on the carrying value of its resource project and the net realizable
value could be materially less than Anooraqs liabilities with a potential for
total loss to Anooraq shareholders.

During fiscal 2004, the Company changed its year end from
October 31 to December 31, 2004. Accordingly, the fiscal period ended December
31, 2005 is for the twelve month period ended December 31, 2005. Reference to
fiscal periods 2004 and 2003 relate to the fourteen month period ending December
31, 2004 and the twelve month period ending October 31, 2003, respectively.

For additional details respecting the five year historical
exchange rates, see Item 3  "Key Information". Anooraq has not been
significantly affected by government economic, fiscal, monetary or political
policies, and the outlook for Anooraq's assets primarily relate to the outlook
for platinum group metals. For information relating to the historical prices for
platinum group metals, see Item 5D  "Trend Information" below.

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- 59 -

A.      Operating Results

Fiscal 2005 Compared to Fiscal 2004

As stated above, the Companys fiscal year 2005 is the
12-month period ended December 31, 2005, while the Company fiscal year 2004 is
the 14-month period ended December 31, 2004.

Revenue from interest decreased from $485,452 in fiscal 2004 to
$119,779 in fiscal 2005. Total loss for the 2004 fiscal year was $13.0 million
as compared to $12.3 million in fiscal 2005.

Current assets decreased from the previous year by $10,628,095
and similarly, working capital decreased from the previous year by $9,593,858 as
a result of decreased cash balances on hand, primarily because of expenditures
on exploration and administration incurred in South Africa. Current liabilities
decreased from the previous year by $1,034,237.

The loss for the year ended December 31, 2005 was $12,303,801
compared to a loss of $13,027,264 for the fourteen months ended December 31,
2004. This decrease primarily resulted from lower exploration expenses incurred
in the year ended December 31, 2005 compared to the fourteen months ended
December 31, 2004. These decreases were however offset by the increased expense
of maintaining an office in South Africa, as well as stock-based compensation
expense related to stock option grants in May 2005 and September 2005. The
Company recorded a loss of $0.08 per share for the year ended December 31, 2005,
compared to a loss of $0.18 per share for the fourteen months ended December 31,
2004.

Exploration expenses for the year ended December 31, 2005
amounted to $5,240,321 in comparison to $7,860,266 spent for the fourteen months
ended December 31, 2004. The exploration expenses for the year ended December
31, 2005 were mainly incurred on the Boikgantsho project, planning and
development of a technical report on the Ga-Phasha project, and the Kwanda and
Thusong exploration programs. The Boikgantsho drilling program that began in
January 2004 continued into 2005, resulting in significant increases in
drilling, engineering, and geological and consulting expenses. Drilling costs
amounted to $2,205,330 spent for the year ended December 31, 2005 compared to
$2,972,042 spent for the fourteen months ended December 31, 2004. Assays and
analysis expenditures amounted to $1,133,408 spent for the year ended December
31, 2005 in comparison to $1,550,516 expended for the fourteen months ended
December 31, 2004. Geological and consulting costs for the year ended 2005 were
$759,335 compared to $1,022,430 spent for the fourteen months ended December 31,
2004. Engineering costs decreased to $538,169 from $881,777 incurred for the
fourteen months ended December 31, 2004. The cost of site activities was
$277,199 compared to $484,920 spent for the fourteen months ended December 31,
2004. Site activity costs are principally associated with maintaining the field
office in South Africa, but also include activities associated with the drilling
program.

Legal, accounting and audit expenses for the year ended
December 31, 2005 amounted to $474,422 in comparison to $479,731 for the
fourteen months ended December 31, 2004. Office and administration for the year
ended December 31, 2005 amounted to $551,278 in comparison to $457,571 spent for
the fourteen months ended December 31, 2004; this increase is largely due to the
establishment of an office in South Africa. Conference and travel costs of
$646,992 were incurred during the year ended December 31, 2005 in comparison to
the $486,481 incurred during for the fourteen months ended December 31, 2004 and
is primarily related to the increased travel activity related to Anooraq board
meetings and work rotation of the project engineers. Consulting costs increased
to $965,720 in comparison to $536,216 spent for the fourteen months ended
December 31, 2005 largely due to increased corporate, financial and advisory
services. Salaries and benefits increased to $1,659,465 from $834,223 spent for
the fourteen months ended December 31, 2004, largely due to integration of
senior management personnel from

---

- 60 -

Pelawan and Anooraq. Trust and filing expenses for the year
ended December 31, 2005 amounted to $85,254 in comparison to the $159,633
incurred for the fourteen months ended December 31, 2004.

HDI of Vancouver, British Columbia, is a private company with
certain directors in common with Anooraq. HDI provides geological, corporate
development, administrative and management services to, and incurs third party
costs on behalf of, the Company on a full cost recovery basis, pursuant to an
agreement dated December 31, 1996. In fiscal 2005, Anooraq incurred costs of
$1,297,159 from HDI, compared to $1,512,441 in the fiscal 2004. Pelawan is a
private South African Black Economic Empowerment company which is a significant
shareholder of the Company and which has certain directors in common with the
Company. During the year ended December 31, 2005, the Company paid or accrued
$658,035 (fourteen months ended December 31, 2004  $745,438) for technical,
corporate development, administrative and management services provided to, and
repayment of costs paid on behalf of, the Company.

Fiscal 2004 Compared to Fiscal 2003

As stated above, the Companys fiscal year 2004 is the
14-month period ended December 31, 2004, while the Companys fiscal year 2003 is
the 12-month period ended October 31, 2003.

Revenue from interest increased from $46,060 in fiscal 2003 to
$485,452 in fiscal 2004. Total loss for the 2003 fiscal year was $3.8 million as
compared to $13.0 million in fiscal 2004.

Current assets increased from the previous year by $10,112,924
and similarly, working capital increased from the previous year by $9,067,468 as
a result of increased cash balances on hand, primarily because of the Company's
$20 million equity financing in December 2003. The $1,045,456 increase in
current liabilities is primarily related to the invoices and payments owed due
to the closing of the transaction with Pelawan (see Item 4A2  "Summary
Corporate History and Intercorporate Relationships").

The loss for the fourteen months ended December 31, 2004 was
$13,027,264 compared to a loss of $3,829,414 in the twelve month period ended
October 31, 2003. This is an increase of $9,197,850, primarily as a result of
costs incurred in increased exploration activities, the establishment of an
office in South Africa and costs incurred in closing the Pelawan transaction
(discussed above), and an increase in stock-based compensation expense. The
Company recorded a loss of $0.18 per share for the fourteen month period ended
December 31, 2004, compared to a loss of $0.11 per share for the twelve month
period ended October 31, 2003.

Exploration expense, excluding stock-based compensation,
increased by $5,896,482, in comparison to the twelve month period ended October
31, 2003 as a result of increased activity on the Ga-Phasha and the Boikgantsho
projects. The Boikgantsho drilling program that began in January 2004 continued
into the fourth quarter, resulted in significant increases in engineering, and
geological and consulting expenses for the year compared to the previous year.
Drilling costs increased to $2,972,042 as compared to $308,552 for the prior
year. Assays and analysis expenditures increased to $1,550,516 from the $207,939
expended in 2003. Geological and consulting costs of $1,022,430 increased from
the $603,000 spent in the previous year. Engineering costs increased from
$111,177 to $881,777. The cost of site activities was $484,920 in comparison to
$218,116 spent in the previous year. Site activity costs were principally
associated with maintaining the field office in South Africa, but also include
activities associated with the drilling program. Drilling costs were associated
with a total of 36,890 metres which were drilled in 182 holes at Boikgantsho in
2004 to mid December 2004. Of these, approximately 13,872 metres were drilled
during the period August 2004 to December 2004.

---

- 61 -

Legal, accounting and audit expense increased by $447,074 for
the 2004 fiscal year primarily as a result of routine South African and Canadian
ongoing legal work as a result of the Pelawan transaction. Office and
administration expense increased by $326,355 largely due to the establishment of
an office in South Africa, and conference and travel costs increased by $305,868
in comparison to the previous year as a result of the Pelawan transaction.
Consulting costs increased by $435,242 from the previous year. Trust and filing
costs increased by $142,094 in comparison to the previous year.

HDI of Vancouver, British Columbia, is a private company with
certain directors in common with Anooraq. HDI provides geological, corporate
development, administrative and management services to, and incurs third party
costs on behalf of, the Company on a full cost recovery basis, pursuant to an
agreement dated December 31, 1996. In fiscal 2004, Anooraq incurred costs of
$1,512,441 from HDI, compared to $1,281,758 in the fiscal 2003. Pelawan is a
private South African Black Economic Empowerment company which is a significant
shareholder of the Company and which has certain directors in common with the
Company. During the period from Pelawan becoming a significant shareholder of
the Company (September 29, 2004) to December 31, 2004, the Company paid $745,438
(2003  $nil) for technical, corporate development, administrative and
management services provided to, and repayment of costs paid on behalf of, the
Company.

B.      Liquidity and Capital
Resources

Overview and Recent Events

Historically Anooraq's sole source of funding has been the sale
of equity securities for cash, primarily through private placements to
sophisticated investors and institutions. Current for fiscal 2005, Anooraq also
issued common share capital in each of the last few years pursuant to private
placement financings. Anooraq has no assurance of continued access to
significant equity funding.

Fiscal 2005 Compared with Fiscal 2004

At December 31, 2005, the Company had working capital of
approximately $4.8 million as compared to $14.4 million at the end of the 2004
fiscal year, and the estimated cash position at June 30, 2006 was $2.7
million.

Anooraq's sources of capital are primarily equity and debt
investors. The Company's access to capital sources is dependant upon general
financial market conditions, especially those that pertain to venture capital
situations such as mineral exploration and development. There can be no
assurance that Anooraq's future capital requirements can be met in the long
term, or that adequate financing will be obtained on a timely basis or at all.
Failure to obtain adequate financing could result in significant delays of
exploration programs and a substantial curtailment of operations. The Company's
cash resources at June 30, 2006 are not sufficient for its present needs,
specifically to continue administrative and exploration operations at current
levels through the end of the year 2006. However, future programs may be
deferred and operations curtailed if additional funding is not secured, and the
Company anticipates being able to raise the necessary financing through equity
or debt financing or a combination thereof. Any issuance of additional shares of
the Company may have a depressing effect on the market for the Companys shares.
See Item 3D  Risk Factors  Significent Potential Equity Dilution.

The Company had 148,220,407 common shares outstanding at
December 31, 2005. As the Company chooses to proceed on its exploration programs
in the Bushveld, it will need to raise additional funds for such expenditures
from time to time.

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- 62 -

The Company has no capital lease obligations, operating leases
or any other long term debt.

Fiscal 2004 Compared with Fiscal 2003

At December 31, 2004, the Company had working capital of
approximately $14.4 million as compared to $5.1 million at the end of the 2003
fiscal year. The Company had 148,020,407 common shares outstanding at December
31, 2004 as compared to 40,164,172 common shares outstanding as of October 31,
2003.

On December 24, 2003, the Company completed a private placement
financing for gross proceeds of $20 million. Proceeds are being used for general
working capital purposes and to facilitate the advancement of Anooraq's
PGM-nickel projects in South Africa.

In May 2003, Anooraq completed a private placement consisting
of 1.4 million common shares of the Company at a price of $0.52 per share for
net proceeds of $728,000. In late July 2003, Anooraq received gross proceeds of
$3.15 million from the exercise of 4.5 million share purchase warrants.

Financial Instruments

Anooraq keeps its financial instruments denominated in Canadian
dollars and does not engage in any hedging operations with respect to currency
or in-situ minerals. Funds in excess of Anooraq's immediate needs are invested
in short term near-cash investments pending the need for the funds.

Material Commitments for Capital Expenditures

At December 31, 2005 and June 30, 2006, the Company had no
material commitments for capital expenditures.

C.      Research and Development,
Patents and Licenses, etc.

Anooraq is a resource-expenditure based corporation and,
accordingly, does not have a program of intellectual property development or
patenting or licensing issues.

D.      Trend Information

As a natural resource exploration company, Anooraq's activities
reflect the more cyclical nature of metals prices.

Average prices for most base and precious metals increased in
2005 from the previous year, and have continued to increase in 2006. The average
price for platinum in 2004 was US$846/oz, compared to US$693/oz in 2003. Prices
have averaged US$866/oz in 2005. Palladium prices averaged US$231/oz in 2004,
compared to US$202/oz in 2003, and have declined in 2005 to average
approximately US$192/oz. The average price of gold in 2004 was US$410/oz,
compared to US$364/oz in 2003. The price of gold has averaged approximately
US$428/oz over the first half of 2005.

Nickel prices averaged US$6.29/lb in 2004, compared to
US$4.38/lb in 2003. Nickel prices have continued to be strong in 2005, averaging
US$7.25/lb over the first half of the year. Copper prices averaged US$1.30/lb in
2004, compared to US$0.81/lb in 2003, and have averaged US$1.50/lb to the end of
June 2005.

---

- 63 -

E.      Off-Balance Sheet
Arrangements

The Company does not have any off-balance sheet arrangements
that have or are reasonably likely to have a current or future effect on its
financial condition, changes in financial condition, revenues or expenses,
results of operations, liquidity, capital expenditures or capital resources that
is material to investors.

F.      Tabular Disclosure Of
Contractual Obligations

As at fiscal year end December 31, 2005, the Company had the
following contractual obligations:

Payment due by periodType of Contractual Obligation
    Total
    Less than 1 Year
    1 - 3 Years
    3 - 5 Years
    More than 5
      YearsLong-Term Debt Obligations
    Nil
    Nil
    Nil
    Nil
    NilCapital (Finance) Lease Obligations
    Nil
    Nil
    Nil
    Nil
    NilOperating Lease Obligations (Office Lease)
    Nil
    Nil
    Nil
    Nil
    NilPurchase Obligations
    Nil
    Nil
    Nil
    Nil
    NilOther Long-Term Liabilities Reflected on the
      Company's Balance Sheet under the GAAP of the primary financial
      statements
    Nil
    Nil
    Nil
    Nil
    NilTotal
    Nil
    Nil
    Nil
    Nil
    Nil


G.      Safe Harbor

The safe harbor provided in Section 27A of the Securities Act
and Section 21E of the Exchange Act applies to forward-looking information
provided pursuant to Item 5.E and F above.

---

- 64 -

|ITEM 6 **DIRECTORS,
      SENIOR MANAGEMENT AND EMPLOYEES**
|-----------------------------------------------------------

A.      Directors and Senior
Management

Name and Occupation

The following table states the name, province or state, and
country of residence of each of the directors and executive officers of the
Company, the positions and offices presently held by them and the period or
periods of time during which each has served as a directors of the Company.

|Name, position in the Company and province
      or state, and country | Period(s) a director of the
|---------------------------------------------------------------------- | ---------------------------
|of residence                                                           | Company(1)                 
|Scott D. COUSENS                                                       | Since September 1996       
|Director and Vice President, Capital Finance
      of Anooraq          |                            
|British Columbia, Canada                                               |                            
|                                                                       |                            
|Robert A. DICKINSON                                                    | From November 1990 to      
|Director and Co-Chairman of Anooraq                                    | September 2004, and        
|British Columbia, Canada                                               | since October 2004         
|                                                                       |                            
|David M.S. ELLIOTT                                                     | Since April 2005           
|Director of Anooraq                                                    |                            
|British Columbia, Canada                                               |                            
|                                                                       |                            
|H. Wayne KIRK                                                          | Since July 2005            
|Director of Anooraq                                                    |                            
|California, United States                                              |                            
|                                                                       |                            
|Phumzile LANGENI                                                       | Since December 2004        
|Director and Executive Director, Investor
      Relations of Anooraq   |                            
|Gauteng, South Africa                                                  |                            
|                                                                       |                            
|Jeffrey R. MASON                                                       | n/a                        
|Chief Financial Officer and Secretary of
      Anooraq                 |                            
|British Columbia, Canada                                               |                            
|                                                                       |                            
|Popo S. MOLEFE                                                         | Since September 2004       
|Director and Co-Chairman of Anooraq                                    |                            
|North West Province, South Africa                                      |                            
|                                                                       |                            
|A.H.C. Harold MOTAUNG                                                  | Since September 2004       
|Director and Chief Operating Officer of
      Anooraq                  |                            
|Gauteng, South Africa                                                  |                            
|                                                                       |                            
|Tumelo M. MOTSISI                                                      | Since September 2004       
|Deputy Chief Executive Officer, and Managing
      Director of Anooraq |                            
|Gauteng, South Africa                                                  |                            
|                                                                       |                            
|Sipho NKOSI                                                            | Since September 2004       
|Director of Anooraq                                                    |                            
|Gauteng, South Africa                                                  |                            

---

- 65 -

|Name, position in the Company and province
      or state, and country | Period(s) a director of the
|---------------------------------------------------------------------- | ---------------------------
|of residence                                                           | Company(1)                 
|                                                                       |                            
|Rizelle M. SAMPSON                                                     | Since September 2004       
|Director of Anooraq                                                    |                            
|Gauteng, South Africa                                                  |                            
|                                                                       |                            
|Ronald W. THIESSEN                                                     | Since April 1996           
|Director, President, and Chief Executive
      Officer of Anooraq      |                            
|British Columbia, Canada                                               |                            

Notes:

|(1) | For the respective principal occupations of these
      directors during the five preceding years, see their biographies
    below.                                                                                             
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(2) | All directors have a term of office expiring at the next
      annual general meeting of Anooraq. All executive officers have a term of
      office lasting until their removal or replacement by the Board of
      Directors.

Additional details including the principal occupation for the
past five years of the above directors are as follows:

SCOTT COUSENS  Director

Scott Cousens provides management, technical and financial
services to a number of publicly traded companies. Mr. Cousens focus since 1991
has been the development of relationships within the international investment
community. Substantial financings and subsequent corporate success has
established strong ties with North American, European and Asian investors. In
addition to financing initiatives he also oversees the corporate communications
programs for the public companies to which Hunter Dickinson Inc. provides
services. See "Management Contracts" below for information about Hunter
Dickinson Inc.

Mr. Cousens is, or was within the past five years, an officer
and/or director of the following public companies:

Company
    Positions Held
    From
    ToAnooraq Resources Corporation
    Director
    September 1996
    PresentAmarc Resources Ltd.
    Director
    September 1995
    PresentContinental Minerals Corporation
    Director
    June 1994
    PresentFarallon Resources Ltd.
    Director
    December 1995
    PresentGreat Basin Gold Ltd.
    Director
    March 1993
    PresentNorthern Dynasty Minerals Ltd.
    Director
    June 1996
    PresentRockwell Ventures Inc.
    Director
    November 2000
    PresentTaseko Mines Limited
    Director
    October 1992
    Present


ROBERT DICKINSON, B.Sc., M.Sc.  Co-Chairman of the Board
and Director

Robert Dickinson is an economic geologist who serves as a
member of management of several mineral exploration companies, primarily those
for whom Hunter Dickinson Inc. provides services. He holds a

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- 66 -

Bachelor of Science degree (Hons. Geology) and a Master of
Science degree (Business Administration -Finance) from the University of British
Columbia. Mr. Dickinson has also been active in mineral exploration over 40
years. He is a director of Hunter Dickinson Inc. He is also President and
Director of United Mineral Services Ltd., a private investment company.

Mr. Dickinson is, or was within the past five years, an officer
and/or director of the following public companies:

Company
    Positions Held
    From
    ToAnooraq Resources Corporation
    Chairman
    November 1990
    September 2004Director
    October 2004
    PresentCo-Chairman
    October 2004
    PresentAmarc Resources Ltd.
    Director
    April 1993
    PresentCo-Chairman
    September 2000
    April 2004Chairman
    April 2004
    PresentContinental Minerals Corporation
    Director
    June 2004
    PresentChairman
    June 2004
    January 2006Co-Chairman
    January 2006
    PresentFarallon Resources Ltd.
    Director
    July 1991
    PresentChairman
    April 2004
    September 2004Co-Chairman
    September 2004
    December 2005Great Basin Gold Ltd.
    Director
    May 1986
    PresentCo-Chairman
    September 2000
    April 2004Chairman
    April 2004
    December 2005Co-Chairman
    December 2005
    PresentNorthern Dynasty Minerals Ltd.
    Director
    June 1994
    PresentCo-Chairman
    November 2001
    April 2004Chairman
    April 2004
    PresentRockwell Ventures Inc.
    Director
    November 2000
    PresentChairman
    November 2000
    PresentTaseko Mines Limited
    Director
    January 1991
    PresentChairman
    April 2004
    July 2005Co-Chairman
    July 2005
    May 2006


DAVID ELLIOTT, B.Comm., CA

David Elliott graduated from the University of British Columbia
with a Bachelor of Commerce degree and then acquired a Chartered Accountant
designation with KPMG LLP. Mr. Elliott joined BC Sugar Company in 1976, working
in a number of senior positions before becoming President and Chief Operating
Officer of the operating subsidiary, Rogers Sugar. In 1997, he joined Lantic
Sugar in Toronto as Executive Vice President. He also served as Chairman of the
Canadian Sugar Institute. He became President and Chief Operating Officer of the
International Group based in St Louis, Missouri in 1999, a

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- 67 -

company involved with food distribution as well as
manufacturing and distribution of pet and animal feed. For several years, he
worked with companies developing e-mail and data management services. Mr.
Elliott also serves on the boards of the BC Cancer Foundation and the University
of BC Alumni Association.

Mr. Elliott is, or was within the past five years, an officer
and/or director of the following public companies:

Company
    Positions Held
    From
    ToAnooraq Resources Corporation
    Director
    April 2005
    PresentGreat Basin Gold Ltd.
    Director
    July 2004
    PresentNorthern Dynasty Minerals Ltd.
    Director
    July 2004
    PresentTaseko Mines Limited
    Director
    July 2004
    PresentStorageFlow Systems Corp.
    Director
    May 2002
    June 2003President
    May 2002
    June 2004


WAYNE KIRK, LLB  Director

Wayne Kirk is a retired California State Attorney and
Professional Consultant. With over 35 years professional experience Mr. Kirk
also has over 9 years senior executive experience in the mining industry.

Mr. Kirk is a citizen of the United States and is a resident of
California. A Harvard University graduate, Mr. Kirk received his law degree in
1968. From 1992 to 2001 Mr. Kirk was the Vice President, General Counsel and
Corporate Secretary of Homestake Mining Company. Prior to his retirement in June
2004 he spent two years as Special Counsel for the law firm, Thelen Reid &
Priest, in San Francisco.

Mr. Kirk is, or was within the past five years, an officer
and/or director of the following public companies:

Company
    Positions Held
    From
    ToAnooraq Resources Corporation
    Director
    July 2005
    PresentGreat Basin Gold Ltd.
    Director
    July 2004
    PresentNorthern Dynasty Minerals Ltd.
    Director
    July 2004
    PresentTaseko Mines Limited
    Director
    July 2004
    PresentHomestake Mining Company
    Vice President, General Counsel, and
      Corporate Secretary
    September 1992
    December 2001


PHUMZILE LANGENI  Director

Phumzile Langeni is currently a director of Anooraq and is
responsible for investor relations and communication.

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- 68 -

Prior to joining Anooraq, she was an executive director of BJM
Securities; a subsidiary of SA listed BJM Holdings. BJM Securities is South
Africa's largest independent stock broking firm with a presence in the major
financial hubs of the world -London, New York and Edinburgh.

Prior to a transaction concluded between BJM Holdings and
Mazwai Securities, she was one of the founding members and executive director of
Mazwai Securities. She started her career at Real Africa Durolink (RAD)
Securities as a trainee dealer in money market instruments, bonds and equities
before making her home in equities. She later practiced as an equity sales
trader for both local and foreign institutions, and went on to serve as a
director on the board. After a stint as a businesswoman, she joined Standard
Equities as an equity sales trader servicing domestic institutions.

She was schooled at Durban Girls' College, and received her
B.Comm. (Accounting) degree at the University of Natal, Durban. She completed
the JSE Stock broking course at Wits University, where she attained top marks in
1996. She is a fellow of the South African Institute of Stockbrokers and a
member of the Association of Black Security and Investment Professionals
(ABSIP).

Miss Langeni is JSE Securities representative on the Securities
Regulation Panel (SRP), where she serves as a member. She is a non-executive
director of two Top 40 listed companies, transport giant Imperial Holdings and
retail group Massmart Holdings.

She is a columnist for South Africa's largest Sunday newspaper
the City Press, and her opinion as an expert in the field of investments can be
heard on both the radio and television. Miss Langeni has presented to local and
international audiences, and has had articles on Black Economic Empowerment
published. Passionate about 'demystifying' the stock exchange, she was
instrumental in the formation of the People's Bank/Sowetan Investor Education
and Savings Program.

During the past five years, Ms. Langeni is, or has been, a
director of the following public companies.

Company
    Positions Held
    From
    ToAnooraq Resources Corporation
    Director
    September 2004
    Present


JEFFREY MASON, B.Comm., CA  Director, Chief Financial
Officer and Secretary

Jeffrey Mason holds a Bachelor of Commerce degree from the
University of British Columbia and obtained his Chartered Accountant designation
while specializing in the mining, forestry and transportation sectors at the
international accounting firm of Deloitte & Touche. Following
comptrollership positions at an international commodity mercantilist and
Homestake Mining Group of companies including responsibility for North American
Metals Corp. and the Eskay Creek Project, Mr. Mason has spent the last several
years as a corporate officer and director to a number of publicly-traded mineral
exploration companies. Mr. Mason is also employed as Chief Financial Officer of
Hunter Dickinson Inc. and his principal occupation is the financial
administration of the public companies to which Hunter Dickinson Inc. provides
services.

Mr. Mason is, or was within the past five years, an officer and
or director of the following public companies:

Company
    Positions Held
    From
    ToAmarc Resources Ltd.
    Director
    September 1995
    Present


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- 69 -

Company
      Positions Held
      From
      ToSecretary
      September 1995
      PresentChief Financial Officer
      September 1998
      PresentAnooraq Resources Corporation
      Director
      April 1996
      September 2004Secretary
      September 1996
      PresentChief Financial Officer
      February 1999
      PresentContinental Minerals Corporation
      Director
      June 1995
      PresentSecretary
      November 1995
      PresentChief Financial Officer
      June 1998
      PresentFarallon Resources Ltd.
      Director
      August 1994
      PresentSecretary
      December 1995
      PresentChief Financial Officer
      December 1997
      PresentGreat Basin Gold Ltd.
      Director
      February 1994
      PresentSecretary
      February 1994
      PresentChief Financial Officer
      June 1998
      PresentNorthern Dynasty Minerals Ltd.
      Director
      June 1996
      PresentSecretary
      June 1996
      PresentChief Financial Officer
      June 1998
      PresentQuartz Mountain Resources Ltd.
      Principal Accounting Officer
      January 2005
      PresentRockwell Ventures Inc.
      Director
      November 2000
      PresentChief Financial Officer
      November 2000
      PresentTaseko Mines Limited
      Director
      February 1994
      PresentSecretary
      February 1994
      PresentChief Financial Officer
      November 1998
      Present


POPO MOLEFE, PhD.  Co-Chairman of the Board and
Director

Dr. Molefe is a South African citizen. In 2004 he completed his
second successful term as the Premier of the Northwest Province in April 2004.
He is a member of the National Executive Committee of the African National
Congress (ANC). He was awarded the Harvard University Certificate in Conflict
Resolution and has diplomas in leadership from the Wharton School of Business
and the Harvard JFK School of Governance. Over the last ten years Dr Molefe has
been instrumental in facilitating the development of businesses in the Northwest
Province, particularly in the mining and tourism sector. He, therefore, brings a
depth of leadership experience to Anooraq. Dr Molefe is the chairperson of
Xantium Technology Holdings, PetroSA and Armscor. He is also the chancellor of
the Northwest University. Dr. Molefes is not a director of any other public
companies.

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- 70 -

HAROLD MOTAUNG, BSc, MBA  Director and Chief Operating
Officer

Harold Motaung was previously employed at the Free State and
Vaal River operations of Anglo American Corporation of South Africa Limited for
six years as a mining engineer and as a production supervisor. Mr. Motaung then
moved to the South African Government's Department of Minerals and Energy (DME)
as a director within the Mine Inspectorate. As a Deputy Chief Inspector, he was
responsible for implementing the Mine, Health and Safety Act. Subsequently he
was appointed Chief Director within the Mine Inspectorate. His portfolio
included the gold, platinum and coal regions of South Africa.

In Mr. Motaungs capacity as a Chief Director of the Mine
Inspectorate, he was appointed on numerous boards of governmentassociated
institutions including the National Nuclear Reactor, the Deep Mining Board and
the Mining Qualifications Authority. Mr. Motaung also chaired the Mines Research
Board, which administered a mining safety fund. Mr. Motaung also represented the
South African government in a number of international and bi-national
engagements with foreign countries, and was a member of the DME executive team
responsible for the briefs and presentations at the Parliamentary Portfolio
Committee on the status of minerals and energy within the country, which
culminated in the enactment of the Minerals Development Act. Mr. Motaung left
the DME to establish a mining and geological consultancy, African Minerals
Professionals (Pty) Limited.

TUMELO MOTSISI, BA, LLM, MBA  Deputy CEO/ Managing
Director

Tumelo Motsisi is a prominent South African businessperson with
experience in the South African financial services, mining and energy sectors.
Between 1994 and 1998 he was employed first as a senior manager and then as a
director within the negotiated benefits division of the sizeable South African
financial services company, Alexander Forbes Limited.

In 1998 he established Kopano Ke Matla Investment
Company, the investment arm of South Africas largest trade union
federation, the Congress of South African Trade Unions ("Cosatu"). He was
subsequently appointed as the Chief Executive Officer of Kopano Ke Matla. Mr.
Motsisi recently resigned his position as Executive Chairperson of Prosperity
Holdings, a financial services company established between Kopano Ke Matla,
NBC Financial Services and Peregrine Holdings, in order to pursue his interests
in the mining and energy sectors. Mr. Motsisi is a member and director of
several South African companies.

SIPHO NKOSI, B.Comm, MBA  Director

Mr. Nkosi is South African and holds a Bachelor of Commerce degree
  from the University of South Africa and a Master of Business Administration
  from the University of Massachusetts in the eastern United States. He has an
  extensive background in the mining and power industries. He is a founder of
  and is currently Chief Executive Officer of Eyesizwe Coal (Pty) Ltd ("Eyesizwe),
  that is one of the country's largest coal producers. Prior to founding Eyesizwe
  in 2001, Mr. Nkosi spent three years with Asea Brown Boveri Sub Sahara Africa
  (Pty) Ltd and Alstom SA (Pty) Ltd, initially as Managing Director of ABB
  Power Generation (SA) , and then as Country Manager ofABB/Alstom Power
  until December 2000. From 1993 to 1997, he was Marketing Manager for Billiton
  Ltd., an international mining company.

Mr. Nkosi is an independent director of the following HDI
public companies:

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- 71 -

Company
    Positions Held
    From
    ToAnooraq Resources Corporation
    Director
    November 2004
    PresentGreat Basin Gold Ltd.
    Director
    August 2003
    Present


RIZELLE SAMPSON, H. Dip Education  Director

Ms. Sampson is a South African citizen and holds a Certificate
in Telecommunications Policy, Regulation and Management from the University of
Witwatersrand and a Higher Diploma in Education from the University of the
Western Cape. Following positions as a Portfolio Administrator (Institutional
Clients) at Investec Asset Managers, Chief of Staff at the Ministry of
Communications and Manager (Office of the CEO) at Sentech Ltd. She is a
co-founder and executive director of African Footprint Investment Holdings (Pty)
Ltd (hereafter referred to as AFIH (Pty) Ltd), an investment holding company
that is wholly black women owned and managed. Ms Sampson represents AFIH (Pty)
Ltd on the boards of Tellumat (Pty) Ltd, BD Sarens (Pty) Ltd and Lefatshe
Technologies (Pty) Ltd. She is also a member of the Sentech Educational Fund
Advisory Board and the board of the National Electronic Institute of South
Africa (Nemisa). Ms. Sampson is not a director of any other public
companies.

Company
    Positions Held
    From
    ToAnooraq Resources Corporation
    Director
    December 2004
    Present


RONALD THIESSEN, CA  Director

Ronald Thiessen is a Chartered Accountant with professional
experience in finance, taxation, mergers, acquisitions and re-organizations.
Since 1986, Mr. Thiessen has been involved in the acquisition and financing of
mining and mineral exploration companies. Mr. Thiessen is employed by Hunter
Dickinson Inc., a company providing management and administrative services to
several publicly-traded companies and focuses on directing corporate development
and financing activities. He is also a director of Hunter Dickinson Inc.

Mr. Thiessen is, or was within the past five years, an officer
and/or director of the following public companies:

Company
    Positions Held
    From
    ToAmarc Resources Ltd.
    Director
    September 1995
    PresentPresident and Chief Executive
      Officer
    September 2000
    PresentAnooraq Resources Corporation
    Director
    April 1996
    PresentPresident and Chief Executive
      Officer
    September 2000
    PresentCasamiro Resource Corp.
    Director and President
    February 1990
    August 2002Continental Minerals Corporation
    Director
    November 1995
    PresentPresident and Chief Executive
      Officer
    September 2000
    January 2006Co-Chairman
    January 2006
    Present


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- 72 -

Company
    Positions Held
    From
    ToFarallon Resources Ltd.
    Director
    August 1994
    PresentPresident and Chief Executive
      Officer
    September 2000
    September 2004Co-Chairman
    September 2004
    December 2005Chairman
    December 2005
    PresentGreat Basin Gold Ltd.
    Director
    October 1993
    PresentPresident and Chief Executive
      Officer
    September 2000
    December 2005Co-Chairman
    December 2005
    PresentNorthern Dynasty Minerals Ltd.
    Director
    November 1995
    PresentPresident and Chief Executive
      Officer
    November 2001
    PresentRockwell Ventures Inc.
    Director
    November 2000
    PresentPresident and Chief Executive
      Officer
    November 2000
    PresentTaseko Mines Limited
    Director
    October 1993
    PresentPresident and Chief Executive
      Officer
    September 2000
    July 2005Co-Chairman
    July 2005
    May 2006Chairman
    May 2006
    PresentTri-Gold Resources Corp.
    Director
    July 1992
    Present


Conflicts of Interest

During the fiscal quarter ended June 30, 2005, all employees of
Pelawan were transferred to the Company. Between the completion of the Pelawan
transaction (see Item 4A2  "Summary Corporate History and Intercorporate
Relationships") and July 1, 2005 there was an interim resource sharing
arrangement between the Company and Pelawan in relation to the South African
office and activities of the Company, which could have represented a potential
conflict of interest for two of the directors of the Company, namely Messrs.
Motsisi and Motaung, who are related to Pelawan. Under this resource sharing
arrangement, the Company reimbursed Pelawan in respect of its overhead
expenditures, subject to fixed budget arrangements.

**B.****Compensation**

As used in this Annual Report, "Named Executive Officers" or
"NEOs" means (i) each individual who served as chief executive officer or chief
financial officer of the Company or acted in a similar capacity during the most
recently completed financial year of the Company, and (ii) each of the Company's
three (3) most highly compensated executive officers, other than the chief
executive officer and chief financial officer, who were serving as executive
officers at the end of the most recently completed financial year and whose
total salary and bonus for the year exceeded $150,000. Also included are any
other individuals whose total salary and bonus during the most recently
completed financial year exceeded $150,000

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- 73 -

whether or not they were an officer of the Company at the end
of the most recently completed financial year.

Anooraq's Named Executive Officers do not serve Anooraq on a
full time basis given that the nature of Anooraq's resource property exploration
and development business is such that most of its requirements for management
services are satisfied by Anooraq engaging third-party mineral exploration and
development contractors.

During Anooraqs financial year ended December 31, 2005, the
aggregate cash compensation paid or payable by Anooraq or its consolidated
subsidiaries to its directors and senior officers, was $1,162,298.

The following table provides a summary of compensation earned
by Named Executive Officers during each of the last three financial years:

Summary Compensation Table

NEO
      Name and Principal Position
    Year
      (1)
    Annual
      Compensation
      Long-Term Compensation
    All Other
      Compen- sation ($)Awards
    PayoutsSalary
      ($)
    Bonus
      ($)
    Other Annual
      Compensat ion ($)
    Securities
      Under Options / SARs Granted
      (#)
    Shares or Units
      Subject to Resale Restrictions
      ($)
    LTIP Payouts
      ($)Ronald Thiessen President and Chief
      Executive Officer
    2005 2004 2003
    98,473 62,095 62,336
    Nil Nil Nil
    Nil 5,400 Nil
    120,000 Nil 216,000
    Nil Nil Nil
    Nil Nil Nil
    Nil Nil NilTumelo Motsisi Deputy CEO and
      Managing Director
    2005 2004 2003
    235,000 81,520 Nil
    80,000 10,486 Nil
    Nil 1,200 Nil
    525,000 Nil Nil
    Nil Nil Nil
    Nil Nil Nil
    Nil Nil NilJeffrey Mason Secretary and Chief
      Financial Officer
    2005 2004 2003
    61,840 46,848 51,258
    Nil Nil Nil
    Nil 2,800 Nil
    120,000 Nil 216,000
    Nil Nil Nil
    Nil Nil Nil
    Nil Nil NilHarold Motaung Chief Operating Officer
    2005 2004 2003
    235,000 81,520 Nil
    80,000 10,486 Nil
    Nil 1,200 Nil
    525,000 Nil Nil
    Nil Nil Nil
    Nil Nil Nil
    Nil Nil NilPhumzile Langeni VP Investor Relations
    2005 2004 2003
    195,000 17,245 Nil
    25,000 Nil Nil
    Nil 1,200 Nil
    250,000 Nil Nil
    Nil Nil Nil
    Nil Nil Nil
    Nil Nil NilJoel Kesler VP Legal
    2005 2004 2003
    205,000 Nil Nil
    25,000 Nil Nil
    Nil Nil Nil
    525,000 Nil Nil
    Nil Nil Nil
    Nil Nil Nil
    Nil Nil Nil


Notes:

(1) ****The
fiscal years presented are as follows: 12 months ended December 31, 2005, 14
months ended December 31, 2004, and 12 months ended October 31, 2003.

Each director of the Company who is an independent director
(namely Messrs. Kirk, Elliott, Molefe and Nkosi) is paid an annual directors
fee of $35,000 plus an additional fee of $5,000 for the Audit Committee
Chairperson and $3,000 for other Committee Chairperson. Executive officers do
not receive additional compensation for serving as directors. Dr. Molefe
received additional consulting fees amounting to $10,225 in January 2005.

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- 74 -

Long-Term Incentive Plans Awards

A long term incentive plan ("LTIP") is "a plan providing
compensation intended to motivate performance over a period greater than one
financial year" and does not include option or stock appreciation rights
("SARs") plans or plans for compensation through shares or units that are
subject to restrictions on resale. The Company did not award any LTIPs to any
Named Executive Officer (NEO), or any other officer or director of the
Company, during the most recently completed financial year.

Stock Options and SARs

As used in this Annual Report, "options" includes all options,
share purchase warrants and rights granted by the Company or its subsidiaries as
compensation for employment services or office. An extension of an option or
replacement grant is a grant of a new option. Also, options include any grants
made to a NEO, or any other officer or director of the Company, by a third party
or a non-subsidiary affiliate of the Company in respect of services to the
Company or a subsidiary of the Company. The Company's Stock Option Plan provides
that options may be granted to certain persons providing services to the
Company, including directors, officers and employees. For additional details
concerning the Company's Stock Option Plan see Item 6E  "Share Ownership",
below.

A stock appreciation right ("SAR") is a right to receive a
payment of cash or an issue or transfer of shares based wholly or in part on
changes in the trading price of the Companys Common Shares.

The share options exercised by the NEOs, or any other officer
or director of the Company, during the financial year ended December 31, 2005
and the values of such options at the end of such year were as follows:

Aggregate Option/SAR Exercises During the Most Recently
Completed Financial Year and Financial Year-End Option/SAR Values

NAMED EXECUTIVE
      OFFICERS
    Securities
      Acquired on Exercise (#)
    Aggregate Value
      Realized ($)
    Unexercised Options/SARs at
      FY-End (#) Exercisable/
      Unexercisable
    Value of Unexercised
      in-the- Money Options/SARs at FY-End
      ($) Exercisable/ UnexercisableRonald Thiessen
    Nil
    Nil
    120,000 / 0
    0 / 0Tumelo Motsisi
    Nil
    Nil
    525,000 / 0
    0 / 0Harold Motaung
    Nil
    Nil
    525,000 / 0
    0 / 0Jeffrey Mason
    Nil
    Nil
    120,000 / 0
    0 / 0Phumzile Langeni
    Nil
    Nil
    250,000 / 0
    0 / 0Joel Kesler
    Nil
    Nil
    525,000 / 0
    0 / 0


No share options were repriced on behalf of the NEOs, or any
other officer or director of the Company, during the financial year ended
December 31, 2005.

On May 2, 2005, an aggregate of 2,180,000 incentive options to
purchase shares were granted to the directors at an exercise price of $1.40 per
share. The options expire on December 17, 2010. The shares traded at a high of
$1.33 per share and a low of $1.03 per share during the 30 day period preceding
the date of grant of the options. The options were issued pursuant to the
Company's Stock Option Plan.

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- 75 -

Pension Plans

There is no defined benefit or actuarial plan in place.

Termination of Employment, Change in Responsibilities and
Employment Contracts

There are no compensatory plans or arrangements with respect to
any of the NEOs, or any other officer or director of the Company, resulting from
the resignation, retirement or any other termination of employment of the
officer's employment or from a change of the NEOs, or any other officer or
director of the Company, responsibilities following a change in control.

Other

Other than the foregoing, the aggregate value of other
compensation (including benefits) paid by the Company and its subsidiaries to
directors and officers of the Company did not exceed the lesser of $10,000 times
the number of directors and officers and 10% of the cash compensation paid to
executive officers during the financial period ended December 31, 2005.

C.     ****
Board Practices

All directors except Wayne Kirk (who was appointed to the Board
of Directors in July 2005) were reelected at the June 17, 2005 annual general
meeting and all directors have a term of office expiring at the next annual
general meeting of Anooraq, to be held in June 2006. All officers have a term of
office lasting until their removal or replacement by the Board of Directors. For
details of the period during which such directors and officers of the Company
have served as such, see Item 6A  "Directors and Senior Management", above.

There are no arrangements under which directors were
compensated by Anooraq and its subsidiaries during the financial year ended
December 31, 2005 for their services in their capacity as directors and
consultants except as herein disclosed. For the fiscal period ended December 31,
2005, Anooraq compensated its directors directly and indirectly for services by
paying them an aggregate of $1,162,298, excluding the amount paid to Mr. David
Copeland (a former director)'s private companies, CEC Engineering Ltd. Anooraq
paid $166,662 to the private engineering company owned by David J. Copeland for
engineering and geological services provided during the year.

On May 2, 2005, an aggregate of 2,180,000 incentive options to
purchase shares were granted to the directors at an exercise price of $1.40 per
share. (see Item 6B  "Compensation", above)

The Audit Committee is currently comprised of Messrs. Elliott,
Molefe, and Kirk, all of whom are independent and unrelated directors. Messrs.
Elliott and Kirk were appointed to the audit committee on July 15, 2005
replacing Messrs. Cousens and Nkosi. The audit committee is elected annually by
the directors of Anooraq at the first meeting of the board held after Anooraq's
annual general meeting. Its primary function is to review the financial
statements of the Company before they are submitted to the board for approval.
The audit committee is also available to assist the board if required with
matters relating to the appointment of the Company's auditor and the overall
scope and results of the audit, internal financial controls, and financial
information for publication for various purposes.

The Compensation Committee is currently comprised of Messrs.
Elliott and Kirk, both of whom are independent and unrelated directors). At the
time of this report a third independent and unrelated South African director has
not been appointed. The Compensation Committee is elected annually by the

---

- 76 -

directors of Anooraq at the first meeting of the board held
after Anooraq's annual general meeting. Its primary function is to assist the
Board in monitoring, reviewing and approving the Company's compensation
practices and administering the Company's share compensation plans. The
Compensation Committee is also responsible for recommending to the Board
candidates for senior executive positions.

D.      ****Employees

During the fiscal quarter ended June 30, 2005, all employees of
Pelawan were transferred from Pelawan, as their work was essentially solely
related to the affairs of Anooraq. Previously, Anooraq had no employees, and
contracted staff on an as-need basis. Anooraqs functions are primarily
administered through Hunter Dickinson Inc. (see Item 7). Hunter Dickinson Inc.
currently employees approx. 100 employees.

E.      ****Share
Ownership

*a)******Shares*

As at June 30, 2006 the directors and officers of Anooraq and
their affiliate, as a group, beneficially own directly or indirectly, or
exercise control or direction over an aggregate of [including 83.3m held in
trust] 103,936,062 common shares (approximately 70% of all outstanding shares)
and held options and warrants to acquire an additional 2,740,000 common shares.
To the knowledge of the directors and officers of Anooraq, as at such date,
there were no persons exclusive of directors and officers holding more than 10%
of the issued common shares.

*b)******Options*

In order to provide incentive to directors, officers,
employees, management and others who provide services to the Company to act in
the best interests of the Company, the Company has adopted a Share Incentive
Plan (the "Stock Option Plan"). The Stock Option Plan was originally approved by
shareholders at the Company's annual general meeting held on April 21, 1998. A
resolution increasing the number of shares available for issuance under the Plan
was approved by shareholders on April 23, 2003 and further resolutions
authorizing the number of shares available for issuance under the Plan were
approved by the Shareholders on May 21, 2004 and June 17, 2005. Under the Stock
Option Plan, which is dated for reference May 21, 2004, a total of 18,300,000
common shares are reserved for share incentive options to be granted at the
discretion of Anooraq's Board of Directors to eligible optionees (the
"Optionees"). As of June 30, 2006, an aggregate of 18,300,000 share incentive
options are available under the Plan of which 4,568,200 options were
outstanding, 4,846,800 options had been exercised, and 8,885,000 share incentive
options remain available for issuance to future Optionees.

Material Terms of the Stock Option Plan

Eligible Optionees

Under TSXV policy, to be eligible for the issuance of a stock
option under the Stock Option Plan an Optionee must either be an employee,
director, officer, consultant or an employee of a company providing management
or other services to the Company or its subsidiary at the time the option is
granted.

Options may be granted only to an individual or to a company
that is wholly owned by individuals eligible for an option grant. If the option
is granted to a company, the company must provide TSXV with

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- 77 -

an undertaking that it will not permit any transfer of its
shares, nor issue further shares, to any other individual or entity as long as
the incentive stock option remains in effect without the consent of TSXV.

Material Terms of the Plan

The following is a summary of the material terms of the Stock
Option Plan:

|A) | all options granted under the Stock Option Plan are
      non-assignable and non-transferable and are for up to a period of up to 10
      years;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|-- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|B) | for stock options granted to employees or service
      providers (inclusive of management company employees), the Company is
      required to represent that the proposed Optionee is a bona fide employee
      or service provider (inclusive of a management company employee), as the
      case may be, of the Company or of any of its subsidiaries;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|C) | the Company has a share purchase option approval plan
      approved by the shareholders that allows it to grant options, subject to
      regulatory terms and approval, to its employees, officers, directors and
      non-employees. The exercise price of each option can be set equal to or
      greater than the closing price of the common shares on the TSXV on the day
      prior to the date of the grant of the option less the applicable discount
      according to TSXV policy. An option has a maximum term of up to ten years
      and terminates 30 days following the termination of the optionee's
      employment, except in the case of retirement or death. In the case of
      retirement, it terminates 30 to 90 days, at management's discretion,
      following retirement. In the case of death, it terminates at the earlier
      of one year after the event or the expiry of the option. Vesting of
      options is done at the discretion of the Board at the time the options are
      granted; and
|D) | the minimum exercise price of an option granted under the
      Stock Option Plan must not be less than the closing price for shares of
      the Company as traded on the TSXV on the last trading day before the date
      that the option is granted less allowable discounts as permitted by
      TSXV                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   | (depending on the price at the time of
  grant).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               

Disinterested Shareholder Approval ("DSA")

As used in this Annual Report, "disinterested shareholder
approval" means the approval by a majority of the votes cast by all shareholders
of Anooraq at the shareholders' meeting excluding votes attached to listed
shares beneficially owned by "Insiders" of Anooraq (generally officers and
directors) to whom the DSA Options have been granted under the Stock Option Plan
and Associates of those Insiders.

Anooraq has obtained disinterested shareholder approval of the
Stock Option Plan and therefore under TSX Venture policy:

- the number of options granted to Insiders of Anooraq may exceed 10% of
  Anooraq's outstanding listed shares;
- the aggregate number of options granted to Insiders of Anooraq within a
  one year period may exceed 10% of Anooraq's outstanding listed shares; and
- the number of options granted to any one Insider and such Insider's
  associates within a one year period may exceed 5% of Anooraq's outstanding
  listed shares,

but always subject to the aggregate limit of 18,300,000
shares.

As at June 30, 2006, an aggregate of 4,568,200 common shares of
the Company have been reserved for issuance pursuant to the following employee,
director, executive officer and service provider stock options:

---

- 78 -

Incentive options

Optionholder Status
    
    Date
      of Grant
    
    Expiry
      Date
    
    Date
    
    of
      SharesDirectors and Officers of the
    
    May 2, 2005
    
    December 17, 2010
    
    $1.40
    
    2,180,000Company and itsSubsidiaries2,180,000Employees and Consultants
    
    May 26, 2004
    
    October 26, 2006
    
    $1.95
    
    335,000June 10, 2004
    
    October 26, 2006
    
    $2.00
    
    35,000July 27, 2004
    
    October 26, 2006
    
    $1.64
    
    200,000May 2, 2005
    
    December 14, 2007
    
    $1.40
    
    408,200May 2, 2005
    
    December 17, 2010
    
    $1.40
    
    885,000September 22, 2005
    
    September 28, 2007
    
    $1.40
    
    425,000September 22, 2005
    
    July 01, 2007
    
    $0.95
    
    100,0002,388,200


In the 12 month financial year ended December 31, 2005, 200,000
options were exercised with proceeds of $157,500 at an average price of $0.79
per share.

---

- 79 -

|ITEM
      7 **MAJOR SHAREHOLDERS AND
      RELATED PARTY TRANSACTIONS**
|------------------------------------------------------------------------

A.      ****Major
Shareholders

Anooraq's securities are recorded on the books of its transfer
agent in registered form, however, the majority of such shares are registered in
the name of intermediaries such as brokerage houses and clearing houses on
behalf of their respective brokerage clients, and Anooraq does not have
knowledge or access to information about of the beneficial owners thereof. To
the best of its knowledge, Anooraq is not directly or indirectly owned or
controlled by a foreign government. On May 21, 2004, shareholders of the Company
approved an increase in the authorized share capital from 200,000,000 common
shares without par value to an unlimited number of common shares without par
value.

Under the British Columbia Securities Actinsiders
(generally officers, directors, holders of 10% or more of Anooraq's shares) are
required to file insider reports of changes in their ownership within ten days
of a trade in Anooraq's securities. Copies of such reports are available for
public inspection at the offices of the British Columbia Securities Commission,
9th Floor, 701 West Georgia Street, Vancouver, British Columbia V7Y 1L2 (phone
(604) 899-6500) or at Canadian Securities Administrators website for Insiders'
Disclosure, www.sedi.ca.

As at June 30, 2006, to the knowledge of the directors and
executive officers of Anooraq, the only persons who beneficially own, directly
or indirectly, or control or direct, five percent (5%) or more of the issued and
outstanding Anooraq Shares are as follows:

Shareholder Nameand
      Address
    Number ofShares Held
    Percentage ofIssuedCommonSharesThe Pelawan Trust, as Trustee (1)Pelawan Investments (Proprietary) Limited, as Beneficiary 82
      Maude Street Sandton, South Africa
    83,300,000
    56.2%Mr Tumelo M. Motsisi (2)138
      West Street, 4thFloor Sandton, South Africa
    9,996,000 (Part of the 83,300,000
      shown above, see note 2 below)
    6.7%The Canadian Depository for Securities
      Limited ("CDS") (3)25 The Esplanade PO Box 1038 Stn A
      Toronto, ON M5W 1G5
    59,408,205
    40%


|(1) | These shares are registered in the name of Pelawan Trust,
      which holds such shares in trust for Pelawan pursuant to escrow
      arrangements described in "The Acquisition  Description of Lockup
      Arrangements for Consideration Shares" in the August 2004 Circular
      (available at the British Columbia Securities Commission or at the website
      www.sedi.caas described
above.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                        
|(2) | Indirect holdings being 120 of the 1,000 ordinary shares
      in the issued and outstanding share capital of Pelawan, multiplied by the
      number of common shares of Anooraq (83,300,000) held by the Pelawan
      Trust.                                                                                                                                                                        
|    |                                                                                                                                                                                                                                                                                                                                                                                                        
|(3) | CDS is a clearing house for brokerage firms whose clients
      beneficially own the shares. Management of the Company is unaware of the
      beneficial ownership of the shares registered in the name of CDS although
      these figures may include shares of management held in brokerage
      houses.                                                                                          

---

- 80 -

As noted in the table above, the Company is indirectly
controlled by Pelawan as a result of the Pelawan transaction (see Item 4A2 
"Summary Corporate History and Intercorporate Relationships", above).

The information in the table above was supplied by
Computershare Trust Company of Canada, the Company's registrar and transfer
agent, and by the individuals themselves.

As of June 30, 2006, the number of registered shareholders of
record (and the number and percentage of shares held by such shareholders) is as
follows:

Number of registeredshareholders of
    Number of
    Percentage ofLocation
    record
    shares
    total
      sharesCanada
    41
    144,316,302
    97.4%United States
    30
    3,887,005
    2.62%Other
    2
    17,100
    0.01%73
    148,220,407


Shares registered in intermediaries were assumed to be held by
residents of the same country in which the clearing house was located.

B.      ****Related
Party Transactions

To the knowledge of management of Anooraq, no insider or
nominee for election as a director of Anooraq had any interest in any material
transaction during the twelve months ended December 31, 2005 or has any interest
in any material transaction in the current year except as herein disclosed.

| |                                                 |  |      |  |   |             |  |   | Fourteen     |  |   |             | 
| | ----------------------------------------------- |  | ---- |  | - | ----------- |  | - | ------------ |  | - | ----------- | 
| |                                                 |  |      |  |   | Year ended  |  |   | months ended |  |   | Year ended  | 
| |                                                 |  | Note |  |   | December 31 |  |   | December 31  |  |   | December 31 | 
| | Services rendered by                            |  | ref  |  |   | 2005        |  |   | 2004         |  |   | 2003        | 
| | Hunter Dickinson Inc.                           |  | (a)  |  | $ | 1,297,159   |  | $ | 1,512,441    |  | $ | 1,281,758   | 
| | Hunter Dickinson Group Inc.                     |  | (b)  |  |   | 9,600       |  |   | 17,360       |  |   | 28,722      | 
| | Pelawan Investments
      (Proprietary) Limited |  | (c)  |  |   | 658,035     |  |   | 745,438      |  |   |            | 
| | CEC Engineering Ltd.                            |  | (d)  |  |   | 166,662     |  |   | 135,104      |  |   | 166,969     | 

As at
    
    
    As atDecember 31
    
    
    December 31Related party balances receivable (payable)
    
    
    
    
    2005
    
    
    2004Hunter Dickinson
      Inc.
    
    (a)
    
    $
    233,205
    
    $
    24,195CEC Engineering Ltd.
    
    (d)
    
    
    (48,506
    )
    
    24,118Pelawan
      Investments (Proprietary) Limited
    
    (c)
    
    
    
    
    
    44,080Tecnicos HD de Mexico SA de CV
    
    (a)
    
    
    
    
    
    (58,933
    )Servicios HD de Mexico SA de CV
    
    (a)
    
    
    
    
    
    97,649


|(a) | Hunter Dickinson Inc. ("HDI") is a private company owned
      equally by nine public companies, one of which is Anooraq. HDI and its
      wholly owned subsidiaries, including Tecnicos HD de Mexico SA de CV and
      Servicios HD de Mexico SA de CV have certain directors in common with the
      Company, and provide geological, corporate development, administrative and
      management services to, and incur third party costs on behalf of, the
      Company on a full cost
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

---

- 81 -

|    | recovery basis pursuant to an agreement dated December
      31, 1996. The balances receivable from (payable to) HDI and its
      subsidiaries have resulted from advances against future work, services, or
      cost reimbursements, or from HDI providing periodic short-term working
      capital advances to the Company.                                                                                                                                                                                                                      
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|(b) | Hunter Dickinson Group Inc. ("HDGI") is a private company
      with certain directors in common with the Company that provides 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. Pelawan became a majority shareholder on
      September 29, 2004. During the year ended December 31, 2005, the Company
      paid or accrued $658,035 (fourteen months ended December 31, 2004 
      $745,438) for technical, corporate development, administrative and
      management services provided to, and repayment of costs paid on behalf of,
      the Company.
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|(d) | During the year ended December 31, 2005, the Company paid
      or accrued $166,662 (fourteen months ended December 31, 2004  $135,104 to
      CEC Engineering Ltd ("CEC"), a private company owned by a former director,
      for engineering and project management services at market rates.                                                                                                                                                                                                                                                     
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|(e) | 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.                                                                                                                                                                                                                                                                                                               

Directors and officers of Anooraq may from time to time serve
as directors of and have an interest, either directly or indirectly, in other
companies involved in natural resource exploration and development. As a result,
a director of Anooraq may be presented, from time to time, with situations which
give rise to an apparent conflict of interest. On any conflict situation, a
director may abstain from voting on resolutions of the Board of Directors that
evoke such conflict in order to have the matter resolved by an independent
Board, or the situation may be presented to the shareholders of Anooraq for
ratification. In any event, the directors of Anooraq must, in accordance with
the laws of British Columbia, act honestly and in good faith and in the best
interests of Anooraq, and must exercise the care, diligence and skill of a
reasonably prudent person in dealing with the affairs of Anooraq.

Ga-Phasha Project

Pursuant to the Pelawan transaction, the Company acquired
Pelawan's rights to its 50% participation interest in the Ga-Phasha Project (see
Item 4A2  "Summary of Corporate History and Intercorporate Relationships",
above).

Harold Motaung, a director of the Company, has a 7% aggregated
indirect interest in Pelawan's shareholding in the Company. Tumelo Motsisi, also
a director of the Company, has an aggregated 12% indirect interest in Pelawan's
shareholding in the Company.

Management Contracts

The Company has approximately ten employees, the majority of
whom work in Johannesburg. The Company receives many of its management services
from HDI.

---

- 82 -

HDI provides management services to Anooraq, pursuant to a
geological and administrative services agreement dated for reference December
31, 1996. HDI is a private company owned equally by nine publicly traded
exploration and mining companies (one of which is the Company) and is managed by
persons who include directors of the Company.

HDI is one of the largest independent mining exploration groups
in North America and as of June 30, 2006, employed or retained on a
substantially full-time basis, 23 geoscientists, including seven with advanced
degrees (two PhDs and five M.Scs), eight professional geologists (PGeo), and
four professional engineers (PEng); six engineers, including four mining
engineers and one civil engineer, all with professional engineer designations;
one professional agrologist, one biologist (MSc); 11 accountants (including six
Chartered Accountants, one CMA and two CGAs) and 28 administrative and support
personnel.

HDI has supervised mineral exploration projects in Canada
(British Columbia, Manitoba, Ontario, Québec, Yukon and Northwest Territories)
and internationally in Brazil, Nevada, Mexico and South Africa. HDI allocates
the cost of staff input into projects, such as the Company's projects, based on
the time records of involved personnel. Costs of such personnel and third party
contractors are billed to the participating public companies on a full cost
recovery basis (inclusive of HDI staff costs and overhead) for amounts which are
considered by the Company management to be at a cost that is competitive with
arms-length suppliers.

The shares of HDI are owned by each of the participating public
corporations (including the Company) for as long as HDIs services are being
retained by such participating company. However, a participant surrenders its
single share of HDI at the time of termination of the standard form of services
agreement. The agreement can be cancelled on 30 days notice. HDI is managed by
the directors of the Company, who are generally the controlling directors of the
other corporate participants in the arrangements with HDI.

C.      ****Interests
of Experts and Counsel

Not applicable.

---

- 83 -

|ITEM 8     ****FINANCIAL INFORMATION
|------------------------------------

A.      ****Consolidated
Statements and Other Financial Information

See Item 17  "Financial Statements".

Legal Proceedings

The Company is not involved in any outstanding litigation or
legal proceedings and to the knowledge of the management of the Company, no
material legal proceedings involving the Company or its subsidiaries are
contemplated.

Dividend Policy

The Company has not paid any dividends on its outstanding
common shares since its incorporation and does not anticipate that it will do so
in the foreseeable future. All funds of Anooraq are being retained for
exploration of its projects.

B.      ****Significant
Changes

There have been no significant changes to the business of
Anooraq since December 31, 2005.

---

- 84 -

|ITEM 9 **THE
      OFFER AND LISTING**
|--------------------------------------

A.      ****Offer
and Listing Details

High and Low Market Prices

TSXV Exchange
    
    OTCBB: ARQQRFARQ
    
    and AMEX: ANOHigh
      Low
    
    High
    LowC$
      C$
    
    US$
    US$Annual2006 (to June
      30, 2006)
    1.46
    0.81
    
    1.29
    0.722005
    1.57
    0.74
    
    1.35
    0.642004
    4.18
    1.25
    
    3.18
    1.012003
    2.20
    0.40
    
    1.65
    0.282002
    1.01
    0.41
    
    1.01
    0.282001
    0.82
    0.42
    
    0.53
    0.32By QuarterCalendar 2003First Quarter
    0.66
    0.43
    
    0.43
    0.17Second Quarter
    0.75
    0.53
    
    0.50
    0.35Third Quarter
    0.74
    0.40
    
    0.53
    0.29Fourth Quarter
    2.20
    0.66
    
    1.65
    0.62Calendar 2004First Quarter
    4.18
    1.60
    
    3.18
    1.23Second Quarter
    3.50
    1.63
    
    2.68
    1.19Third Quarter
    2.70
    1.55
    
    2.00
    1.11Fourth Quarter
    2.04
    1.55
    
    1.68
    1.19Calendar 2005First Quarter
    1.57
    1.21
    
    1.35
    1.00Second Quarter
    1.33
    0.84
    
    1.09
    0.75Third Quarter
    1.20
    0.85
    
    0.99
    0.71Fourth Quarter
    0.97
    0.74
    
    0.83
    0.64Calendar 2006First Quarter
    1.25
    0.83
    
    1.08
    0.72Second Quarter
    1.46
    0.81
    
    1.29
    0.73MonthlyJanuary 2006
    1.21
    0.83
    
    1.08
    0.72February 2006
    1.20
    0.89
    
    1.05
    0.78March 2006
    1.46
    1.05
    
    1.27
    0.93April 2006
    1.46
    1.17
    
    1.29
    1.03May 2006
    1.34
    0.96
    
    1.24
    0.85June 2006
    1.01
    0.81
    
    0.92
    0.73


---

- 85 -

B.      ****Plan
of Distribution

Not applicable.

C.      ****Markets

Anooraq's common shares are listed and posted for trading in
Canada on the TSXV under the symbol-ARQ. Anooraq's common shares have traded on
the TSXV (and its predecessors, the Canadian Venture Exchange and the Vancouver
Stock Exchange) since September 24, 1987. Until March 12, 2004, Anooraq's common
shares traded in the United States on the Over-The-Counter Bulletin Board
("OTCBB") under the symbol ARQRF. Commencing March 15, 2004, Anooraq's common
shares have traded in the United States on AMEX under the symbol ANO.

D.      ****Selling
Shareholders

Not applicable.

E.      ****Dilution

Not applicable.

F.      ****Expenses
of the Issue

Not applicable.

---

- 86 -

|ITEM
      10 **ADDITIONAL INFORMATION**
|----------------------------------------

A.      ****Share
Capital

Not applicable for an Annual Report.

B.      ****Memorandum
and Articles of Association

Anooraq's Articles and Memorandum are filed with the British
Columbia Registrar of Companies under Certificate of Incorporation No. 262963. A
copy of the Articles was filed with Anooraq's initial registration on Form 20-F
filed in March 2000.

The Company was transitioned under the Business Corporations
Act(British Columbia) (the "BCA") on June 11, 2004, on which date the
Company altered its Notice of Articles (which replace the Memorandum) to change
its authorized share structure from 200,000,000 common shares without par value
to an unlimited number of common shares without par value.

Objects and Purposes

Anooraq's Articles do not specify objects or purposes. Under
British Columbia law, a British Columbia company has all the legal powers of a
natural person. British Columbia companies may not undertake certain limited
business activities (for example, operating as a trust company or railroad)
without alterations to its form of articles and specific government consent.

Directors  Powers and Limitations

Anooraq's Articles do not specify a maximum number of directors
but do specify that the Company shall have a minimum of three directors while
the Company is a public company. The number of directors is determined annually
by the shareholders at the annual general meeting of shareholders and all
directors are elected at that time; there are no staggered directorships. Under
the Articles the directors are entitled between successive annual general
meetings to appoint one or more additional directors but not more than one-third
of the number of directors fixed pursuant to the Articles and in effect at the
last general meeting at which directors were elected. Directors automatically
retire at each annual general meeting and such directors may be re-elected by
the shareholders entitled to vote thereat.

Under the Articles, a director who is, in any way, directly or
indirectly interested in a proposed contract or transaction with Anooraq or who
holds any office or possesses any property whereby, directly or indirectly, a
duty or interest might be created which would conflict with his duty or interest
as a director shall declare the nature and extent of his interest in such
contract or transaction. A director shall not vote in respect of any such
contract or transaction with the Company in which he is interested and if he
should vote his vote shall not be counted but he shall be counted in the quorum
present at the meeting. Similarly, under the BCA directors are obligated to
abstain from voting to approve a contract or transaction in which they have a
disclosable interest (generally contracts or transactions in which they have a
material interest) after fully disclosing such interest, otherwise they are
liable to account to the company for any profits that accrue to the directors as
a result of such contract or transaction. Therefore, directors must abstain in
such circumstances both under the Articles and under the BCA. Directors'
compensation is not a matter on which they must abstain.

---

- 87 -

Directors must be of the age of majority (18), and meet
eligibility criteria, including not being mentally infirm, not being an
undischarged bankrupt, and not having fraud related convictions in the previous
five years. There is no mandatory retirement age either under Anooraq's articles
or under the BCA. Directors need not own any shares of Anooraq in order to
qualify as directors.

Directors' borrowing powers are not restricted but the
directors may not authorize Anooraq to make a payment to purchase or redeem its
share if doing so would render it insolvent.

Rights of Common Shareholders

Dividends may be declared by the Board out of available assets
and are paid rateably to holders of common shares. No dividend may be paid if
Anooraq is, or would thereby become, insolvent.

Each Anooraq share is entitled to one vote on matters to which
common shares ordinarily vote including the election of directors, appointment
of auditors and approval of corporate changes and other matters requiring
shareholder approval.

Anooraq has no redeemable securities authorized or issued.

There are no pre-emptive rights applicable to Anooraq which
provide a right to any person to participate in offerings of Anooraq's
securities.

All common shares of Anooraq participate rateably in any
available assets in the event of a winding up or other liquidation.

Changes to Rights of Common Shareholders

Certain changes to the Articles and Notice of Articles of
Anooraq require a "special resolution", being a resolution passed by not less
than 75% of the shares voted in person or by proxy at a duly convened
shareholders meeting. Certain corporate changes, including amalgamation with
another company, sale of substantially all of Anooraq's assets, and redomiciling
out of the jurisdiction of British Columbia, not only require such 75% approval
but generally also give rise to a dissent right, which is the right to be paid
an agreed amount for a shareholder's shares if the required special resolution
is actually passed and Anooraq elects to proceed with the matter notwithstanding
receipt of dissent notices. A notice of a shareholders meeting at which such an
action is intended to be effected must include a statement advising of the
dissent right. Dissent provisions are governed by the BCA and not by the
Articles of the Company.

Shareholders Meetings

Shareholders meetings are only peripherally governed by the
Articles of the Company, with most shareholder protections contained in the
Securities Act (British Columbia) and the BCA. The Articles provide that
Anooraq will hold an annual general meeting once in every calendar year and not
more than 13 months since the last meeting and provide for certain procedural
matters and rules of order with respect to conduct of the meeting. The
Securities Act (British Columbia) and the BCA superimpose requirements
that generally provide that shareholders meetings require advance notification
within prescribed times and which govern the content and timing of mailing to
shareholders of information circulars and proxies, as well as other matters
typically governed by securities legislation. This legislation specifies the
disclosure requirements for various corporate actions, background information on
the nominees for election of directors, executive compensation paid in the
previous year and full details of

---

- 88 -

any unusual meeting matters. Generally, registered shareholders
of Anooraq as of the record date set in respect of a shareholders meeting are
entitled to vote at the meeting and any adjournment thereof.

No Limitation on Foreign Ownership

There are no limitations under Anooraq's Articles or in the BCA
on the right of persons who are not citizens of Canada to hold or vote common
shares. (See also Item 10D  "Exchange Controls", below.)

Change in Control

Anooraq has not implemented any shareholders' rights or other
"poison pill" protection against possible take-overs. Anooraq does not have any
agreements which are triggered by a take-over or other change of control. There
are no provisions in its Articles triggered by or affected by a change in
outstanding shares which gives rise to a change in control.

Share Ownership Reporting

The Articles of Anooraq do not require disclosure of share
ownership. Share ownership of director nominees must be reported annually in
proxy materials sent to Anooraq's shareholders. There are no requirements under
British Columbia corporate law to report ownership of shares of Anooraq but the
Securities Act (British Columbia) requires disclosure of trading by
insiders (including holders of 10% of voting shares) within 10 days of the
trade. Controlling shareholders (generally those in excess of 20% of outstanding
shares) must provide seven days advance notice of share sales.

C.      ****Material
Contracts

Except for contracts entered into in the ordinary course of
business, the only material contracts entered into by Anooraq in the two fiscal
years immediately preceding this Annual Report are the following:

|(a) | Joint Venture Agreement between PPL and Plateau dated
      November 25, 2003 (filed with Annual Report on Form 20-F dated May
      2004);                                                                                                       
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                   
|(b) | the Pelawan RTO Share Exchange Agreement, as described
      under the heading "The Acquisition  Description of the Share Exchange
      Agreement" in the August 2004 Circular (filed with Annual Report on Form
      20-F dated May 2004); and
|    |                                                                                                                                                                                                                                                   
|(c) | the Pelawan RTO Shareholders Agreement, as described
      under the heading "The Acquisition  Description of the Share Exchange
      Agreement" in the August 2004 Circular.                                                                   

D.      ****Exchange
Controls

Anooraq is a corporation registered in Province of British
Columbia, Canada. There is no law or governmental decree or regulation in Canada
that restricts the export or import of capital, or affects the remittance of
dividends, interest or other payments to a non-resident holder of Common Shares,
other than withholding tax requirements. Any such remittances to United States
residents are generally subject to withholding tax. (See Item 10E  "Taxation",
below).

There is no limitation imposed by the laws of Canada or by the
charter or other constituent documents of Anooraq on the right of a non-resident
to hold or vote the Common Shares, other than as provided in the Investment
Canada Act (Canada) (the "Investment Act"). The following discussion
summarizes the material features of the Investment Act for a non-resident
who proposes to acquire a controlling number of

---

- 89 -

Common Shares. It is general only, it is not a substitute for
independent advice from an investor's own advisor, and it does not anticipate
statutory or regulatory amendments. Anooraq does not believe the Investment
Act will have any effect on it or on its non-Canadian shareholders due to a
number of factors, including the nature of its operations and Anooraq's
relatively small capitalization.

The Investment Act generally prohibits implementation of
a reviewable investment by an individual, government or agency thereof,
corporation, partnership, trust or joint venture (each an "entity") that is not
a "Canadian" as defined in the Investment Act (a "non-Canadian"), unless
after review the Director of Investments appointed by the minister responsible
for the Investment Act is satisfied that the investment is likely to be
of net benefit to Canada. The size and nature of a proposed transaction may give
rise to an obligation to notify the Director to seek an advance ruling. An
investment in the Common Shares by a non-Canadian other than a "WTO Investor"
(as that term is defined in the Investment Act and which term includes
entities which are nationals of or are controlled by nationals of member states
of the World Trade Organization) when Anooraq was not controlled by a WTO
Investor, would be reviewable under the Investment Act if it was an
investment to acquire control of Anooraq and the value of the assets of Anooraq,
as determined in accordance with the regulations promulgated under the
Investment Act, was $5 million or more, or if an order for review was made by
the federal cabinet on the grounds that the investment related to Canada's
cultural heritage or national identity, regardless of the value of the assets of
Anooraq. An investment in the Common Shares by a WTO Investor, or by a
non-Canadian when Anooraq was controlled by a WTO Investor, would be reviewable
under the Investment Act if it was an investment to acquire control of
Anooraq and the value of the assets of Anooraq, as determined in accordance with
the regulations promulgated under the Investment Act, was not less than a
specified amount, which for 2005 is approximately Cdn$250 million. A
non-Canadian would acquire control of Anooraq for the purposes of the
Investment Act if the non-Canadian acquired a majority of the Common
Shares. The acquisition of less than a majority but one-third or more of the
Common Shares would be presumed to be an acquisition of control of Anooraq
unless it could be established that, on the acquisition, Anooraq was not
controlled in fact by the acquirer through the ownership of the Common
Shares.

The foregoing assumes Anooraq will not engage in the production
of uranium or own an interest in a producing uranium property in Canada, provide
any financial service or transportation service or engage in a "cultural
business", as the rules governing these businesses are different.

Certain transactions relating to the Common Shares would be
exempt from the Investment Act, including

|(a) | an acquisition of the Common Shares by a person in the
      ordinary course of that person's business as a trader or dealer in
      securities,                                                                                                                                 
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(b) | an acquisition of control of Anooraq in connection with
      the realization of security granted for a loan or other financial
      assistance and not for a purpose related to the provisions of the
      Investment Act, and                                                 
|(c) | an acquisition of control of Anooraq by reason of an
      amalgamation, merger, consolidation or corporate reorganization following
      which the ultimate direct or indirect control in fact of Anooraq, through
      the ownership of the Common Shares, remained
unchanged.

E.     ****
Taxation

Material Canadian Federal Income Tax Consequences for United
States Residents

The following, in management's understanding, summarizes the
principal Canadian federal income tax consequences generally applicable to the
holding and disposition of Common Shares by a holder (in this summary, a "U.S.
Holder") who, at all relevant times, (a) for the purposes of the Income Tax
Act (Canada)

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(the "Tax Act"), is not resident in Canada, deals at arm's
length with Anooraq, holds the Common Shares as capital property and does not
use or hold the Common Shares in the course of carrying on, or otherwise in
connection with, a business in Canada, and (b) for the purposes of the
Canada-United States Income Tax Convention, 1980 (the "Treaty"), is a resident
solely of the United States, has never been a resident of Canada, and has not
held or used (and does not hold or use) Common Shares in connection with a
permanent establishment or fixed base in Canada. This summary does not apply to
traders or dealers in securities, persons who acquired their common shares in a
transaction considered for purposes of the Tax Act to be an adventure or concern
in the nature of trade, limited liability companies, tax-exempt entities,
insurers, financial institutions (including those to which the mark-to-market
provisions of the Tax Act apply), or any other U.S. Holder to which special
considerations apply.

This summary is based on the current provisions of the Tax Act
including all regulations thereunder, the Treaty, all proposed amendments to the
Tax Act, the regulations and the Treaty publicly announced by or on behalf of
the Minister of Finance to the date hereof, and the current published
administrative practices of the Canada Customs and Revenue Agency. It has been
assumed that all currently proposed amendments will be enacted as proposed and
that there will be no other relevant change in any governing law or
administrative practice, although no assurances can be given in these respects.
This summary does not take into account provincial, U.S., state or other foreign
income tax law or practice. The tax consequences to any particular U.S. Holder
will vary according to the status of that holder as an individual, trust,
corporation or other entity, the jurisdictions in which that holder is subject
to taxation, and generally according to that holder's particular circumstances.
Accordingly, this summary is not, and is not to be construed as, Canadian tax
advice to any particular U.S. Holder. U.S. Holders should consult with their own
tax advisors for advice with respect to their own particular circumstances.

Dividends

Dividends paid or credited or deemed to be paid or credited to
a U.S. Holder by Anooraq will normally be subject to Canadian withholding tax.
Under the Treaty, the rate of withholding tax on dividends paid to a U.S. Holder
that beneficially owns such dividends is generally limited to 15% of the gross
amount of the dividend (or 5% if the U.S. Holder is a corporation and
beneficially owns at least 10% of Anooraq's voting shares). Anooraq will be
required to withhold the applicable withholding tax from any such dividend and
remit it to the Canadian government for the U.S. Holder's account.

Disposition

A U.S. Holder is not subject to tax under the Tax Act in
respect of a capital gain realized on the disposition of a Common Share provided
that the share is not "taxable Canadian property" to the holder thereof. If the
Common Shares are listed on a prescribed stock exchange, which currently
includes the American Stock Exchange, a Common Share generally will not be
taxable Canadian property to a U.S. Holder if, at any time during the 60 months
preceding the disposition, the U.S. Holder or persons with whom the U.S. Holder
did not deal at arm's length alone or together owned, or had an interest or
option in respect of, 25% or more of Anooraq's issued shares of any class or
series.

A U.S. Holder whose Common Shares do constitute taxable
Canadian property, and who might therefore be liable for Canadian income tax
under the Tax Act on a disposition or deemed disposition of such shares, will
generally be relieved from such liability under the Treaty unless the value of
the shares of the Company at the time of disposition is derived principally from
real property situated in Canada within the meaning of the Treaty. Management of
Anooraq believes that the value of Anooraq's Common Shares is not currently
derived principally from real property situated in Canada. U.S. Holders whose
Common

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Shares are taxable Canadian property should consult their own
advisors regarding filing and other Canadian federal tax considerations.

United States Tax Consequences

United States Federal Income Tax Consequences

Based on management's discussions with its professional
advisors, it believes the following is a discussion of material United States
federal income tax consequences, under current law, generally applicable to a
U.S. Holder (as hereinafter defined) of common shares of Anooraq. This
discussion does not address all potentially relevant federal income tax matters
and it does not address consequences peculiar to persons subject to special
provisions of federal income tax law, such as those described below as excluded
from the definition of a U.S. Holder. In addition, this discussion does not
cover any state, local or foreign tax consequences (see Item 10E  "Taxation 
Material Canadian Federal Income Tax Consequences for United States Residents"
above). Accordingly, holders and prospective holders of common shares of Anooraq
should consult their own tax advisors about the specific federal, state, local,
and foreign tax consequences to them of purchasing, owning and disposing of
common shares of Anooraq, based upon their individual circumstances.

The following discussion is based upon the sections of the
Internal Revenue Code of 1986, as amended (the "Code"), Treasury Regulations,
published Internal Revenue Service ("IRS") rulings, published administrative
positions of the IRS and court decisions that are currently applicable, any or
all of which could be materially and adversely changed, possibly on a
retroactive basis, at any time and which are subject to differing
interpretations. This discussion does not consider the potential effects, both
adverse and beneficial, of any proposed legislation which, if enacted, could be
applied, possibly on a retroactive basis, at any time.

U.S. Holders

As used herein, a "U.S. Holder" means a holder of common shares
of Anooraq who is a citizen or individual resident of the United States, a
corporation or partnership created or organized in or under the laws of the
United States or of any political subdivision thereof, an estate whose income is
taxable in the United States irrespective of source or a trust subject to the
primary supervision of a court within the United States and control of a United
States fiduciary as described Section 7701(a)(30) of the Code. This summary does
not address the tax consequences to, and U.S. Holder does not include, persons
subject to specific provisions of federal income tax law, such as tax-exempt
organizations, qualified retirement plans, individual retirement accounts and
other tax-deferred accounts, financial institutions, insurance companies, real
estate investment trusts, regulated investment companies, broker-dealers,
non-resident alien individuals, persons or entities that have a "functional
currency" other than the U.S. dollar, shareholders subject to the alternative
minimum tax, shareholders who hold common shares as part of a straddle, hedging
or conversion transaction, and shareholders who acquired their common shares
through the exercise of employee stock options or otherwise as compensation for
services. This summary is limited to U.S. Holders who own common shares as
capital assets and who own (directly and indirectly, pursuant to applicable
rules of constructive ownership) no more than 5% of the value of the total
outstanding stock of Anooraq. This summary does not address the consequences to
a person or entity holding an interest in a shareholder or the consequences to a
person of the ownership, exercise or disposition of any options, warrants or
other rights to acquire common shares. In addition, this summary does not
address special rules applicable to United States persons (as defined in Section
7701(a)(30) of the Code) holding common shares through a foreign partnership or
to foreign persons holding common shares through a domestic partnership.

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Distribution on Common Shares of Anooraq

In general, U.S. Holders receiving dividend distributions
(including constructive dividends) with respect to common shares of Anooraq are
required to include in gross income for United States federal income tax
purposes the gross amount of such distributions, equal to the U.S. dollar value
of such distributions on the date of receipt (based on the exchange rate on such
date), to the extent that Anooraq has current or accumulated earnings and
profits, without reduction for any Canadian income tax withheld from such
distributions. Such Canadian tax withheld may be credited, subject to certain
limitations, against the U.S. Holder's federal income tax liability or,
alternatively, may be deducted in computing the U.S. Holder's federal taxable
income by those who itemize deductions. (See more detailed discussion at
"Foreign Tax Credit" below). To the extent that distributions exceed current or
accumulated earnings and profits of Anooraq, they will be treated first as a
return of capital up to the U.S. Holder's adjusted basis in the common shares
and thereafter as gain from the sale or exchange of property. Preferential tax
rates for long-term capital gains are applicable to a U.S. Holder which is an
individual, estate or trust. There are currently no preferential tax rates for
long-term capital gains for a U.S. Holder which is a corporation.

In the case of foreign currency received as a dividend that is
not converted by the recipient into U.S. dollars on the date of receipt, a U.S.
Holder will have a tax basis in the foreign currency equal to its U.S. dollar
value on the date of receipt. Generally any gain or loss recognized upon a
subsequent sale or other disposition of the foreign currency, including the
exchange for U.S. dollars, will be ordinary income or loss. However, an
individual whose realized gain does not exceed $200 will not recognize that
gain, provided that there are no expenses associated with the transaction that
meet the requirements for deductibility as a trade or business expense (other
than travel expenses in connection with a business trip) or as an expense for
the production of income.

Dividends paid on the common shares of Anooraq generally will
not be eligible for the dividends received deduction provided to corporations
receiving dividends from certain United States corporations. A U.S. Holder which
is a corporation and which owns shares representing at least 10% of the voting
power and value of Anooraq may, under certain circumstances, be entitled to a
70% (or 80% if the U.S. Holder owns shares representing at least 20% of the
voting power and value of Anooraq) deduction of the United States source portion
of dividends received from Anooraq (unless Anooraq qualifies as a "passive
foreign investment company," as defined below). Anooraq does not anticipate that
it will earn any United States income, however, and therefore does not
anticipate that any U.S. Holder will be eligible for the dividends received
deduction.

Under current Treasury Regulations, dividends paid on Anooraq's
common shares, if any, generally will not be subject to information reporting
and generally will not be subject to U.S. backup withholding tax. However,
dividends and the proceeds from a sale of Anooraq's common shares paid in the
U.S. through a U.S. or U.S. related paying agent (including a broker) will be
subject to U.S. information reporting requirements and may also be subject to
the 28% U.S. backup withholding tax, unless the paying agent is furnished with a
duly completed and signed Form W-9. Any amounts withheld under the U.S. backup
withholding tax rules will be allowed as a refund or a credit against the U.S.
Holder's U.S. federal income tax liability, provided the required information is
furnished to the IRS.

Foreign Tax Credit

A U.S. Holder who pays (or has withheld from distributions)
Canadian income tax with respect to the ownership of common shares of Anooraq
may be entitled, at the option of the U.S. Holder, to either receive a deduction
or a tax credit for such foreign tax paid or withheld. Generally, it will be
more advantageous to claim a credit because a credit reduces United States
federal income taxes on a dollar-

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for-dollar basis, while a deduction merely reduces the
taxpayer's income subject to tax. This election is made on a year-by-year basis
and generally applies to all foreign taxes paid by (or withheld from) the U.S.
Holder during that year. There are significant and complex limitations which
apply to the credit, among which is the general limitation that the credit
cannot exceed the proportionate share of the U.S. Holder's United States income
tax liability that the U.S. Holder's foreign source income bears to his or its
worldwide taxable income. In the determination of the application of this
limitation, the various items of income and deduction must be classified into
foreign and domestic sources. Complex rules govern this classification process.
In addition, this limitation is calculated separately with respect to specific
classes of income such as "passive income," "high withholding tax interest,"
"financial services income," "shipping income," and certain other
classifications of income. Dividends distributed by Anooraq will generally
constitute "passive income" or, in the case of certain U.S. Holders, "financial
services income" for these purposes. The availability of the foreign tax credit
and the application of the limitations on the credit are fact specific, and U.S.
Holders of common shares of Anooraq should consult their own tax advisors
regarding their individual circumstances.

Disposition of Common Shares of Anooraq

In general, U.S. Holders will recognize gain or loss upon the
sale of common shares of Anooraq equal to the difference, if any, between (i)
the amount of cash plus the fair market value of any property received, and (ii)
the shareholder's tax basis in the common shares of Anooraq. Preferential tax
rates apply to long-term capital gains of U.S. Holders which are individuals,
estates or trusts. In general, gain or loss on the sale of common shares of
Anooraq will be long-term capital gain or loss if the common shares are a
capital asset in the hands of the U.S. Holder and are held for more than one
year. Deductions for net capital losses are subject to significant limitations.
For U.S. Holders which are not corporations, any unused portion of such net
capital loss may be carried over to be used in later tax years until such net
capital loss is thereby exhausted. For U.S. Holders that are corporations (other
than corporations subject to Subchapter S of the Code), an unused net capital
loss may be carried back three years and carried forward five years from the
loss year to be offset against capital gains until such net capital loss is
thereby exhausted.

Other Considerations

Set forth below are certain material exceptions to the
above-described general rules describing the United States federal income tax
consequences resulting from the holding and disposition of common shares:

Foreign Investment Company

If 50% or more of the combined voting power or total value of
Anooraq's outstanding shares is held, directly or indirectly, by citizens or
residents of the United States, United States domestic partnerships or
corporations, or estates or trusts other than foreign estates or trusts (as
defined by the Code Section 7701(a)(31)), and Anooraq is found to be engaged
primarily in the business of investing, reinvesting, or trading in securities,
commodities, or any interest therein, it is possible that Anooraq may be treated
as a "foreign investment company" as defined in Section 1246 of the Code,
causing all or part of any gain realized by a U.S. Holder selling or exchanging
common shares to be treated as ordinary income rather than capital gain. Anooraq
does not believe that it currently qualifies as a foreign investment company.
However, there can be no assurance that Anooraq will not be considered a foreign
investment company for the current or any future taxable year.

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Passive Foreign Investment Company

United States income tax law contains rules governing "passive
foreign investment companies" ("PFIC") which can have significant tax effects on
U.S. Holders of foreign corporations. These rules do not apply to non-U.S.
Holders. Section 1297 of the Code defines a PFIC as a corporation that is not
formed in the United States if, for any taxable year, either (i) 75% or more of
its gross income is "passive income," which includes interest, dividends and
certain rents and royalties or (ii) the average percentage, by fair market value
(or, if the corporation is not publicly traded and either is a controlled
foreign corporation or makes an election, by adjusted tax basis), of its assets
that produce or are held for the production of "passive income" is 50% or more.
Anooraq appears to have been a PFIC for the fiscal year ended December 31, 2005,
and at least certain prior fiscal years and may also qualify as a PFIC in future
fiscal years. Each U.S. Holder of Anooraq is urged to consult a tax advisor with
respect to how the PFIC rules affect such U.S. Holder's tax situation.

Each U.S. Holder who holds stock in a foreign corporation
during any year in which such corporation qualifies as a PFIC is subject to
United States federal income taxation under one of three alternative tax regimes
at the election of such U.S. Holder. The following is a discussion of such
alternative tax regimes applied to such U.S. Holders of Anooraq. In addition,
special rules apply if a foreign corporation qualifies as both a PFIC and a
"controlled foreign corporation" (as defined below) and a U.S. Holder owns,
actually or constructively, 10% or more of the total combined voting power of
all classes of stock entitled to vote of such foreign corporation (See more
detailed discussion at "Controlled Foreign Corporation" below).

A U.S. Holder who elects to treat Anooraq as a qualified
electing fund ("QEF") will be subject, under Section 1293 of the Code, to
current federal income tax for any taxable year to which the election applies in
which Anooraq qualifies as a PFIC on his pro rata share of Anooraq's (i) "net
capital gain" (the excess of net long-term capital gain over net short-term
capital loss), which will be taxed as long-term capital gain, and (ii) "ordinary
earnings" (the excess of earnings and profits over net capital gain), which will
be taxed as ordinary income, in each case, for the shareholder's taxable year in
which (or with which) Anooraq's taxable year ends, regardless of whether such
amounts are actually distributed. A U.S. Holder's tax basis in the common shares
will be increased by any such amount that is included in income but not
distributed.

The procedure a U.S. Holder must comply with in making an
effective QEF election, and the consequences of such election, will depend on
whether the year of the election is the first year in the U.S. Holder's holding
period in which Anooraq is a PFIC. If the U.S. Holder makes a QEF election in
such first year, i.e., a "timely" QEF election, then the U.S. Holder may make
the QEF election by simply filing the appropriate documents at the time the U.S.
Holder files his tax return for such first year. If, however, Anooraq qualified
as a PFIC in a prior year during the U.S. Holder's holding period, then, in
order to avoid the Section 1291 rules discussed below, in addition to filing
documents, the U.S. Holder must elect to recognize under the rules of Section
1291 of the Code (discussed herein), (i) any gain that he would otherwise
recognize if the U.S. Holder sold his stock on the qualification date or (ii) if
Anooraq is a controlled foreign corporation, the U.S. Holder's pro rata share of
Anooraq's post-1986 earnings and profits as of the qualification date. The
qualification date is the first day of Anooraq's first tax year in which Anooraq
qualified as a QEF with respect to such U.S. Holder. For purposes of this
discussion, a U.S. Holder who makes (i) a timely QEF election, or (ii) an
untimely QEF election and either of the above-described gain-recognition
elections under Section 1291 is referred to herein as an "Electing U.S. Holder."
A U.S. Holder who holds common shares at any time during a year of Anooraq in
which Anooraq is a PFIC and who is not an Electing U.S. Holder (including a U.S.
Holder who makes an untimely QEF election and makes neither of the
above-described gain-recognition elections) is referred to

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herein as a "Non-Electing U.S. Holder." An Electing U.S. Holder
(i) generally treats any gain realized on the disposition of his Company common
shares as capital gain; and (ii) may either avoid interest charges resulting
from PFIC status altogether, or make an annual election, subject to certain
limitations, to defer payment of current taxes on his share of Anooraq's annual
realized net capital gain and ordinary earnings subject, however, to an interest
charge. If the U.S. Holder is not a corporation, any interest charge imposed
under the PFIC regime would be treated as "personal interest" that is not
deductible.

In order for a U.S. Holder to make (or maintain) a valid QEF
election, Anooraq must provide certain information regarding its net capital
gains and ordinary earnings and permit its books and records to be examined to
verify such information. Anooraq intends to make the necessary information
available to U.S. Holders to permit them to make (and maintain) QEF elections
with respect to Anooraq. Anooraq urges each U.S. Holder to consult a tax advisor
regarding the availability of, and procedure for making, the QEF election.

A QEF election, once made with respect to Anooraq, applies to
the tax year for which it was made and to all subsequent tax years, unless the
election is invalidated or terminated, or the IRS consents to revocation of the
election. If a QEF election is made by a U.S. Holder and Anooraq ceases to
qualify as a PFIC in a subsequent tax year, the QEF election will remain in
effect, although not applicable, during those tax years in which Anooraq does
not qualify as a PFIC. Therefore, if Anooraq again qualifies as a PFIC in a
subsequent tax year, the QEF election will be effective and the U.S. Holder will
be subject to the rules described above for Electing U.S. Holders in such tax
year and any subsequent tax years in which Anooraq qualifies as a PFIC. In
addition, the QEF election remains in effect, although not applicable, with
respect to an Electing U.S. Holder even after such U.S. Holder disposes of all
of his or its direct and indirect interest in the shares of Anooraq. Therefore,
if such U.S. Holder reacquires an interest in Anooraq, that U.S. Holder will be
subject to the rules described above for Electing U.S. Holders for each tax year
in which Anooraq qualifies as a PFIC.

In the case of a Non-Electing U.S. Holder, special taxation
rules under Section 1291 of the Code will apply to (i) gains realized on the
disposition (or deemed to be realized by reasons of a pledge) of his Company
common shares and (ii) certain "excess distributions," as defined in Section
1291(b), by Anooraq.

A Non-Electing U.S. Holder generally would be required to pro
rate all gains realized on the disposition of his Company common shares and all
excess distributions on his Company common shares over the entire holding period
for the common shares. All gains or excess distributions allocated to prior
years of the U.S. Holder (excluding any portion of the holder's period prior to
the first day of the first year of Anooraq (i) which began after December 31,
1986, and (ii) for which Anooraq was a PFIC) would be taxed at the highest tax
rate for each such prior year applicable to ordinary income. The Non-Electing
U.S. Holder also would be liable for interest on the foregoing tax liability for
each such prior year calculated as if such liability had been due with respect
to each such prior year. A Non-Electing U.S. Holder that is not a corporation
must treat this interest charge as "personal interest" which, as discussed
above, is wholly non-deductible. The balance, if any, of the gain or the excess
distribution will be treated as ordinary income in the year of the disposition
or distribution, and no interest charge will be incurred with respect to such
balance. In certain circumstances, the sum of the tax and the PFIC interest
charge may exceed the amount of the excess distribution received, or the amount
of proceeds of disposition realized, by the U.S. Holder.

If Anooraq is a PFIC for any taxable year during which a
Non-Electing U.S. Holder holds Company common shares, then Anooraq will continue
to be treated as a PFIC with respect to such Company common shares, even if it
is no longer definitionally a PFIC. A Non-Electing U.S. Holder may terminate

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this deemed PFIC status by electing to recognize gain (which
will be taxed under the rules discussed above for Non-Electing U.S. Holders) as
if such Company common shares had been sold on the last day of the last taxable
year for which it was a PFIC.

Effective for tax years of U.S. Holders beginning after
December 31, 1997, U.S. Holders who hold (actually or constructively) marketable
stock of a foreign corporation that qualifies as a PFIC may elect to mark such
stock to the market annually (a "mark-to-market election"). If such an election
is made, such U.S. Holder will generally not be subject to the special taxation
rules of Section 1291 discussed above. However, if the mark-to-market election
is made by a Non-Electing U.S. Holder after the beginning of the holding period
for the PFIC stock, then the Section 1291 rules will apply to certain
dispositions of, distributions on and other amounts taxable with respect to
Anooraq common shares. A U.S. Holder who makes the mark-to market election will
include in income for each taxable year for which the election is in effect an
amount equal to the excess, if any, of the fair market value of the common
shares of Anooraq as of the close of such tax year over such U.S. Holder's
adjusted basis in such common shares. In addition, the U.S. Holder is allowed a
deduction for the lesser of (i) the excess, if any, of such U.S. Holder's
adjusted tax basis in the common shares over the fair market value of such
shares as of the close of the tax year, or (ii) the excess, if any, of (A) the
mark-to-market gains for the common shares in Anooraq included by such U.S.
Holder for prior tax years, including any amount which would have been treated
as a mark-to-market gain for any prior tax year but for the Section 1291 rules
discussed above with respect to Non-Electing U.S. Holders, over (B) the
mark-to-market losses for shares that were allowed as deductions for prior tax
years. A U.S. Holder's adjusted tax basis in the common shares of Anooraq will
be adjusted to reflect the amount included in or deducted from income as a
result of a mark-to-market election. A mark-to-market election applies to the
taxable year in which the election is made and to each subsequent taxable year,
unless Anooraq common shares cease to be marketable, as specifically defined, or
the IRS consents to revocation of the election. Because the IRS has not
established procedures for making a mark-to-market election, U.S. Holders should
consult their tax advisor regarding the manner of making such an election. No
view is expressed regarding whether common shares of Anooraq are marketable for
these purposes or whether the election will be available.

Under Section 1291(f) of the Code, the IRS has issued Proposed
Treasury Regulations that, subject to certain exceptions, would treat as taxable
certain transfers of PFIC stock by Non-Electing U.S. Holders that are generally
not otherwise taxed, such as gifts, exchanges pursuant to corporate
reorganizations, and transfers at death. Generally, in such cases the basis of
Anooraq common shares in the hands of the transferee and the basis of any
property received in the exchange for those common shares would be increased by
the amount of gain recognized. Under the Proposed Treasury Regulations, an
Electing U.S. Holder would not be taxed on certain transfers of PFIC stock, such
as gifts, exchanges pursuant to corporate reorganizations, and transfers at
death. The transferee's basis in this case will depend on the manner of the
transfer. In the case of a transfer by an Electing U.S. Holder upon death, for
example, the transferee's basis is generally equal to the fair market value of
the Electing U.S. Holder's common shares as of the date of death under Section
1014 of the Code. The specific tax effect to the U.S. Holder and the transferee
may vary based on the manner in which the common shares are transferred. Each
U.S. Holder of Anooraq is urged to consult a tax advisor with respect to how the
PFIC rules affect his or its tax situation.

Whether or not a U.S. Holder makes a timely QEF election with
respect to common shares of Anooraq, certain adverse rules may apply in the
event that both Anooraq and any foreign corporation in which Anooraq directly or
indirectly holds shares is a PFIC (a "lower-tier PFIC"). Pursuant to certain
Proposed Treasury Regulations, a U.S. Holder would be treated as owning his or
its proportionate amount of any lower-tier PFIC shares, and generally would be
subject to the PFIC rules with respect to such indirectly-held PFIC shares
unless such U.S. Holder makes a timely QEF election with respect thereto.
Anooraq

---

- 97 -

intends to make the necessary information available to U.S.
Holders to permit them to make (and maintain) QEF elections with respect to each
subsidiary of Anooraq that is a PFIC.

Under the Proposed Treasury Regulations, a U.S. Holder who does
not make a timely QEF election with respect to a lower-tier PFIC generally would
be subject to tax (and the PFIC interest charge) on (i) any excess distribution
deemed to have been received with respect to his or its lower-tier PFIC shares
and (ii) any gain deemed to arise from a so-called "indirect disposition" of
such shares. For this purpose, an indirect disposition of lower-tier PFIC shares
would generally include (i) a disposition by Anooraq (or an intermediate entity)
of lower-tier PFIC shares, and (ii) any other transaction resulting in a
diminution of the U.S. Holder's proportionate ownership of the lower-tier PFIC,
including an issuance of additional common shares by Anooraq (or an intermediate
entity). Accordingly, each prospective U.S. Holder should be aware that he or it
could be subject to tax even if such U.S. Holder receives no distributions from
Anooraq and does not dispose of its common shares. Anooraq strongly urges
each prospective U.S. Holder to consult a tax advisor with respect to the
adverse rules applicable, under the Proposed Treasury Regulations, to U.S.
Holders of lower-tier PFIC shares.

Certain special, generally adverse, rules will apply with
respect to Company common shares while Anooraq is a PFIC unless the U.S. Holder
makes a timely QEF election. For example under Section 1298(b)(6) of the Code, a
U.S. Holder who uses PFIC stock as security for a loan (including a margin loan)
will, except as may be provided in regulations, be treated as having made a
taxable disposition of such shares.

Controlled Foreign Corporation

If more than 50% of the total combined voting power of all
classes of shares entitled to vote or the total value of the shares of Anooraq
is owned, actually or constructively, by citizens or residents of the United
States, United States domestic partnerships or corporation, or estates or trusts
other than foreign estates or trusts (as defined by the Code Section
7701(a)(31)), each of which own, actually or constructively, 10% or more of the
total combined voting power of all classes of shares entitled to vote of Anooraq
("United States Shareholder"), Anooraq could be treated as a controlled foreign
corporation ("CFC") under Subpart F of the Code. This classification would
effect many complex results, one of which is the inclusion of certain income of
a CFC which is subject to current U.S. tax. The United States generally taxes
United States Shareholders of a CFC currently on their pro rata shares of the
Subpart F income of the CFC. Such United States Shareholders are generally
treated as having received a current distribution out of the CFC's Subpart F
income and are also subject to current U.S. tax on their pro rata shares of
increases in the CFC's earnings invested in U.S. property. The foreign tax
credit described above may reduce the U.S. tax on these amounts. In addition,
under Section 1248 of the Code, gain from the sale or exchange of shares by a
U.S. Holder of common shares of Anooraq which is or was a United States
Shareholder at any time during the five-year period ending on the date of the
sale or exchange is treated as ordinary income to the extent of earnings and
profits of Anooraq attributable to the shares sold or exchanged. If a foreign
corporation is both a PFIC and a CFC, the foreign corporation generally will not
be treated as a PFIC with respect to United States Shareholders of the CFC. This
rule generally will be effective for taxable years of United States Shareholders
beginning after 1997 and for taxable years of foreign corporations ending with
or within such taxable years of United States Shareholders. Special rules apply
to United States Shareholders who are subject to the special taxation rules
under Section 1291 discussed above with respect to a PFIC. Because of the
complexity of Subpart F, a more detailed review of these rules is outside of the
scope of this discussion. Anooraq does not believe that it currently qualifies
as a CFC. However, there can be no assurance that Anooraq will not be considered
a CFC for the current or any future taxable year.

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- 98 -

F.      ****Dividends
and Paying Agents

Not applicable.

G.      ****Statement
by Experts

Not applicable.

H.      ****Documents
on Display

Exhibits attached to this Form 20-F are also available for
viewing at the offices of Anooraq, Suite 1020 800 West Pender Street,
Vancouver, British Columbia V6C 2V6 or on request of Anooraq at 604-684-6365,
attention Shirley Main. Copies of Anooraq's financial statements and other
continuous disclosure documents required under the Securities Act
(British Columbia) are available for viewing on SEDAR at www.sedar.com.

I.      ****Subsidiary
Information

Anooraq has two subsidiary companies incorporated in the Cayman
Island and one incorporated in South Africa. The articles of these companies do
not have unusual provisions which would adversely affect Anooraq's ability to
exercise control over them as their parent company.

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- 99 -

|ITEM
      11 **QUANTITATIVE AND
      QUALITATIVE DISCLOSURES ABOUT MARKET RISK**
|----------------------------------------------------------------------------------

Anooraq's operations do not employ financial instruments or
derivatives which are market sensitive and therefore Anooraq is not subject to
the financial market risks associated with such instruments and derivatives.

(a)      ****Exchange
Rate Sensitivity

In the normal course of business, the Company enters into
transactions for the purchase of supplies and services denominated in South
African rand. In addition, the Company has cash and certain liabilities
denominated in South African rand. As a result, the Company is subject to
foreign exchange risk from fluctuations in foreign exchange rates. The Company
has not entered into any derivative or other financial instruments to mitigate
this foreign exchange risk.

(b)      ****Exchange
Controls

The Company operates in South Africa, and like other foreign
entities operating there, is subject to currency Exchange Controls administered
by the South African Reserve Bank, the country's central bank. A significant
portion of the Company's funding structure for its South African operations
consists of advancing loans to its South Africa incorporated subsidiaries and it
is possible the Company may not be able to acceptably repatriate such funds once
those subsidiaries are able to repay the loans or repatriate other funds such as
operating profits should any develop.

(c)      ****Interest
Rate Risk

Anooraq is equity financed and does not have any debt which is
subject to interest rate change risks.

(d)      ****Commodity
Price Risk

While the value of Anooraqs resource properties can always be
said to relate to the price of platinum group metals and the outlook for same,
Anooraq does not have any operating mines and hence does not have any hedging or
other commodity based risks respecting its operations.

---

- 100 -

|ITEM
      12 **DESCRIPTION OF
      SECURITIES OTHER THAN EQUITY SECURITIES**
|------------------------------------------------------------------------------

Not applicable.

---

- 101 -

PART II

---

- 102 -

|ITEM
      13 **DEFAULTS, DIVIDEND
      ARREARAGES AND DELINQUENCIES**
|-----------------------------------------------------------------------

None.

---

- 103 -

|ITEM
      14 **MATERIAL MODIFICATIONS
      TO THE RIGHTS OF SECURITY HOLDERS AND**USE OF PROCEEDS
|---------------------------------------------------------------------------------------------------

None.

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- 104 -

|ITEM
      15 **CONTROLS AND
      PROCEDURES**
|-----------------------------------------------

As required by Rule 13a-15 under the Securities Exchange Act of
1934 (the "Exchange Act"), the Company carried out an evaluation of the
effectiveness of the design and operation of its disclosure controls and
procedures as of December 31, 2005, being the date of the Company's most
recently completed fiscal year end. This evaluation was carried out under the
supervision and with the participation of the Company's Chief Executive Officer,
Ronald W. Thiessen, and the Company's Chief Financial Officer, Jeffrey R. Mason.
Based upon that evaluation, the Company's Chief Executive Officer and Chief
Financial Officer concluded that the Company's disclosure controls and
procedures are effective in timely alerting management to material information
relating to it required to be included in the Company's periodic SEC filings.
There have been no significant changes in the Company's internal controls or in
other factors that could significantly affect internal controls subsequent to
the date the Company carried out the evaluation.

Disclosure controls and procedures are designed to ensure that
information required to be disclosed the Company's reports filed or submitted
under the Exchange Act is recorded, processed, summarized and reported, within
the time periods specified in the Securities and Exchange Commission's rules and
forms. Disclosure controls and procedures include, without limitation, controls
and procedures designed to ensure that information required to be disclosed in
the Company's reports filed under the Exchange Act is accumulated and
communicated to management, including the Company's Chief Executive Officer and
Chief Financial Officer, to allow timely decisions regarding required
disclosure.

During the Company's most recently completed fiscal year ended
December 31, 2005, there were no changes in the Company's internal control over
financial reporting that have materially affected, or are reasonably likely to
affect, its internal control over financial reporting.

The term "internal control over financial reporting" is defined
as a process designed by, or under the supervision of, the registrant's
principal executive and principal financial officers, or persons performing
similar functions, and effected by the registrant's board of directors,
management and other personnel, to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements
for external purposes in accordance with generally accepted accounting
principles and includes those policies and procedures that:

|(a) | Pertain to the maintenance of records that in reasonable
      detail accurately and fairly reflect the transactions and dispositions of
      the assets of the registrant;                                                                                                                                                                                                   
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                
|(b) | Provide reasonable assurance that transactions are
      recorded as necessary to permit preparation of financial statements in
      accordance with generally accepted accounting principles, and that
      receipts and expenditures of the registrant are being made only in
      accordance with authorizations of management and directors of the
      registrant; and
|    |                                                                                                                                                                                                                                                                                                                                                                                
|(c) | Provide reasonable assurance regarding prevention or
      timely detection of unauthorized acquisition, use or disposition of the
      registrant's assets that could have a material effect on the financial
      statements.                                                                                                                                              

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- 105 -

|ITEM
      16 **RESERVED**
|--------------------------

Item
16A.      ****Audit Committee
Financial Expert

Composition of the Audit Committee

As at June 30, 2006, the members of the Audit Committee of the
Company are Popo S. Molefe, Wayne Kirk and David Elliott, all of whom are
financially literate and all of whom are "independent". To July 4, 2005, Scott
Cousens, who is not independent, had temporarily been appointed to the Audit
Committee pursuant to the exemption in section 3.5 of Canadian Multilateral
Instrument 52-110 Audit Committees, pending the appointment of a David
Elliott, an independent director, to the Audit Committee. The rationale for the
appointment of Scott Cousens to the Audit Committee on a temporary basis was the
resignation of Walter Segsworth (a former member of the Audit Committee) from
the board of directors, and the absence of another director who was both
independent and financially literate.

Anooraq's Board of Directors has determined that Anooraq has at
least one audit committee financial expert serving on its Audit Committee,
namely David Elliott, by virtue of his education and extensive work experience
as a Chartered Accountant and corporate executive.

Relevant Education and Experience

In addition to each member's general business experience, the
education and experience of each Audit Committee member that is relevant to the
performance of his responsibilities as an Audit Committee member is as
follows:

Dr. Molefe holds a Diploma in Governance from Harvard School of
Governance, a Diploma in Business Leadership from the Wharton School of Business
Leadership at the University of Pennsylvania and a Doctorate from North West
University, South Africa. Dr. Molefe serves as a member of the National
Executive Committee of the ANC. He also holds the position of Chair  ANC
Provincial Executive, North West Province, and Chancellor of the North West
University. For ten years, Dr. Molefe served as Premier of the North West
Province, South Africa.

Mr Kirk is a retired California State Attorney and Professional
Consultant. Mr Kirk has over 35 years professional experience and over 9 years
senior executive experience in the mining industry, serving as Vice President,
General Counsel and Corporate Secretary of Homestake Mining Company.

Mr. Elliott has a strong and diverse background as a public
accountant and corporate executive. He graduated from the University of British
Columbia with a Bachelor of Commerce degree and acquired a Chartered Accountant
designation in 1973 with KPMG LLP. Mr. Elliott joined BC Sugar Company in 1976,
working in a number of senior positions before becoming President and Chief
Operating Officer of the operating subsidiary in 1995.

Item
16B.     **** Code of Ethics

The Company has adopted a code of ethics that applies to the
Company's chief executive officer, the chief financial officer, and other
members of senior management. The Code of Ethics was filed as an exhibit to the
Annual Report on Form 20-F filed in May 2004.

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- 106 -

Item
16C.      ****Principal
Accountant Fees and Services

The following table presents the aggregate fees for
professional services and other services rendered by KPMG LLP to the Company in
2005. Fees incurred with KPMG for audit and non-audit services in the last two
fiscal years are outlined in the following table:

Nature of Services
    Fees paid to auditor in year
      ended December 31, 2005.
    Fees paid to auditor in 14-month
      fiscal year ended December 31, 2004.Audit Fees (1)
    $ 95,000
    $ 60,480Audit-Related Fees (2)
    $ 15,000
    NilTax Fees (3)
    $ 4,500
    $ 16,000All Other Fees (4)
    Nil
    NilTotal
    $ 114,500
    $ 76,480


Notes:

| | 1. | "Audit Fees" include fees necessary to perform the annual
      audit and quarterly reviews of the Companys consolidated financial
      statements. Audit Fees include fees for review of tax provisions and for
      accounting consultations on matters reflected in the financial statements.
      Audit Fees also include audit or other attest services required by
      legislation or regulation, such as comfort letters, consents, reviews of
      securities filings and statutory audits.
| | -- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| | 2. | "Audit-Related Fees" include services that are
      traditionally performed by the auditor. These audit-related services
      include employee benefit audits, due diligence assistance, accounting
      consultations on proposed transactions, internal control reviews and audit
      or attest services not required by legislation or regulation.                                                                                                                                                
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| | 3. | "Tax Fees" include fees for all tax services other than
      those included in "Audit Fees" and "Audit-Related Fees". This category
      includes fees for tax compliance, tax planning and tax advice. Tax
      planning and tax advice includes assistance with tax audits and appeals,
      tax advice related to mergers and acquisitions, and requests for rulings
      or technical advice from tax authorities.                                                                               
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| | 4. | "All Other Fees" include all other non-audit
    services.                                                                                                                                                                                                                                                                                                                                                                                                                                                

From time to time, management of the Company recommends to and
requests approval from the audit committee for non-audit services to be provided
by the Company's auditors. The audit committee routinely considers such requests
at committee meetings, and if acceptable to a majority of the audit committee
members, pre-approves such non-audit services by a resolution authorizing
management to engage the Company's auditors for such non-audit services, with
set maximum dollar amounts for each itemized service. During such deliberations,
the audit committee assesses, among other factors, whether the services
requested would be considered "prohibited services" as contemplated by the US
Securities and Exchange Commission, and whether the services requested and the
fees related to such services could impair the independence of the auditors.

Item
16D.      ****Exemptions from
Listing Standards for Audit Committees

Not applicable.

---

- 107 -

Item
16E.      ****Purchases Of
Equity Securities by the Issuer and Affiliated Purchasers

None.

---

- 108 -

PART III

---

- 109 -

|ITEM 17     ****FINANCIAL STATEMENTS
|------------------------------------

The following attached financial statements are incorporated
herein:

| | 1. | Report of the Independent Registered Public Accounting
      Firm (KPMG LLP) on the consolidated balance sheets as at December 31, 2005
      and 2004 and the consolidated statements of operations, deficit, and cash
      flows for the year ended December 31, 2005 and fourteen month period ended
      December 31, 2004.
| | -- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                                                                                                                                                                                                  
| | 2. | Report of the Independent Registered Public Accounting
      Firm (De Visser Gray, Chartered Accountants) on the consolidated balance
      sheets as at October 31, 2003 and 2002 and the consolidated statements of
      operations and deficit, and cash flows for the years ended October 31,
      2003 and 2002.          
| |    |                                                                                                                                                                                                                                                                                                                                  
| | 3. | Consolidated balance sheets as at December 31, 2005, and
      2004;                                                                                                                                                                                                                                                             
| |    |                                                                                                                                                                                                                                                                                                                                  
| | 4. | Consolidated statements of operations and deficit for the
      year ended December 31, 2005, the fourteen months ended December 31, 2004
      and year ended October 31, 2003;                                                                                                                                                 
| |    |                                                                                                                                                                                                                                                                                                                                  
| | 5. | Consolidated statements of cash flows for the periods
      referred to in (4) above;                                                                                                                                                                                                                                            
| |    |                                                                                                                                                                                                                                                                                                                                  
| | 6. | Notes to the consolidated financial
  statements;                                                                                                                                                                                                                                                                                

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- 110 -

|ITEM 18     ****FINANCIAL STATEMENTS
|------------------------------------

Not Applicable. See Item 17.

---

- 111 -

|ITEM 19     ****EXHIBITS
|------------------------

The following exhibits which are incorporated by reference
herein have been filed with previously-filed Form 20-F Annual Report:

|1  | Articles of the Company. Incorporated by reference to
      Anooraqs Annual Report on Form 20-F for the year ended October 31, 2000.                                                         
|-- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                               
|4A | Joint Venture Agreement between PPL and Plateau dated
      November 25, 2003.Incorporated by reference to Anooraqs Annual Report
      on Form 20-F for the year ended October 31, 2003     
|   |                                                                                                                                                                                               
|4A | Share Exchange Agreement between Pelawan and Anooraq
      dated January 21, 2004. Incorporated by reference to Anooraqs Annual
      Report on Form 20-F for the year ended October 31, 2003
|   |                                                                                                                                                                                               
|11 | Code of Ethics.Incorporated by reference to Anooraqs
      Annual Report on Form 20-F for the year ended October 31, 2003                                                                    

The following exhibits are filed with this Form 20-F Annual
Report:

|4A.1 | Shareholders
        Agreement between Pelawan, Anooraq and the Pelawan Trust made as of September
        19, 2004                                                                                                                                                                                                                                               
|---- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|     |                                                                                                                                                                                                                                                                                                                                                                   
|12.1 | Rule
        13a-14(a) Certification of CEO (Section 302)                                                                                                                                                                                                                                                                                                         
|     |                                                                                                                                                                                                                                                                                                                                                                   
|12.2 | Rule
        13a-14(a) Certification of CFO (Section 302)                                                                                                                                                                                                                                                                                                         
|     |                                                                                                                                                                                                                                                                                                                                                                   
|13.1 | Rule
        13a-14(b) Certification of CEO (Section 906)                                                                                                                                                                                                                                                                                                         
|     |                                                                                                                                                                                                                                                                                                                                                                   
|13.2 | Rule
        13a-14(b) Certification of CFO (Section 906)                                                                                                                                                                                                                                                                                                         
|     |                                                                                                                                                                                                                                                                                                                                                                   
|15.1 | Consent
        of Expert  David Reeves                                                                                                                                                                                                                                                                                                                          
|     |                                                                                                                                                                                                                                                                                                                                                                   
|15.2 | Consent
        of Expert  David Stone                                                                                                                                                                                                                                                                                                                           
|     |                                                                                                                                                                                                                                                                                                                                                                   
|15.3 | Consent
        of Expert  Thomas Tulp                                                                                                                                                                                                                                                                                                                           
|     |                                                                                                                                                                                                                                                                                                                                                                   
|15.4 | Consent
        of Expert  Deon van der Heever                                                                                                                                                                                                                                                                                                                   
|     |                                                                                                                                                                                                                                                                                                                                                                   
|99.1 | Consolidated
        balance sheets as at December 31, 2005 and 2004; consolidated statements
        of operations and deficit, and cash flows for the year ended December
        31, 2005, and the fourteen months ended December 31, 2004 and year ended
        October 31, 2003, together with Report of Independent Public Accounting
        Firm thereon;

---

- 112 -

|99.2 | Consolidated balance sheets
        as at December 31, 2003 and 2002; consolidated statements of operations
        and deficit, and cash flows for two months ended December 31, 2003 and
        2002, together with Report of Independent Public Accounting Firm thereon;
|---- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

---

- 113 -

SIGNATURES

Anooraq hereby certifies that it meets all of the requirements
for filing on Form 20-F and that it has duly caused and authorized the
undersigned to sign this annual report on its behalf.

ANOORAQ RESOURCES CORPORATION

Per:

/s/ Jeffrey R.
Mason     JEFFREY R.
MASON     Chief Financial Officer, and Secretary



DATED:         
July 7, 2006

---