---



ANOORAQ RESOURCES CORPORATION
  CONSOLIDATED FINANCIAL STATEMENTS

FOURTEEN MONTHS ENDED DECEMBER 31, 2004 
  AND YEARS ENDED OCTOBER 31, 2003 and 2002



(Expressed in Canadian Dollars, unless otherwise stated)

---



**REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM**

To the Board of Directors
  Anooraq Resources Corporation

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

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

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

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

As discussed in note 3(j) to the consolidated financial statements,
  the Company changed its method of accounting for stock-based compensation in
  2004. In addition, as discussed in note 3(k) to the consolidated financial statements,
  the Company changed its method of accounting for asset retirement obligations
  in 2004.

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

/s/ KPMG LLP

Chartered Accountants
  Vancouver, Canada
  March 17, 2005

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ANOORAQ RESOURCES CORPORATIONConsolidated Balance Sheets
  (Expressed in Canadian Dollars unless otherwise stated)

|                                                        |   | December 31 |   |   | October 31  |  
|------------------------------------------------------- | - | ----------- | - | - | ----------- | -
|                                                        |   | 2004        |   |   | 2003        |  
|                                                        |   |             |   |   |             |  
|Assets                                                  |   |             |   |   |             |  
|                                                        |   |             |   |   |             |  
|Current assets                                          |   |             |   |   |             |  
|Cash and equivalents                                    | $ | 14,945,355  |   | $ | 5,414,398   |  
|Amounts receivable
      (notes 4 and 8)                |   | 668,643     |   |   | 164,499     |  
|Prepaid
      expenses                                  |   | 138,642     |   |   | 60,819      |  
|                                                        |   | 15,752,640  |   |   | 5,639,716   |  
|                                                        |   |             |   |   |             |  
|Equipment(note 5)                                       |   | 197,995     |   |   | 16,990      |  
|Mineral property interests(note 6)                      |   | 10,075,000  |   |   | 4,200,000   |  
|                                                        |   |             |   |   |             |  
|                                                        | $ | 26,025,635  |   | $ | 9,856,706   |  
|                                                        |   |             |   |   |             |  
|                                                        |   |             |   |   |             |  
|Liabilities and Shareholders' Equity                    |   |             |   |   |             |  
|                                                        |   |             |   |   |             |  
|Current Liabilities                                     |   |             |   |   |             |  
|Accounts payable and
      accrued liabilities (note 8) | $ | 1,573,733   |   | $ | 528,277     |  
|                                                        |   |             |   |   |             |  
|                                                        |   |             |   |   |             |  
|Future income taxes(note 9)                             |   | 1,385,255   |   |   | –           |  
|                                                        |   |             |   |   |             |  
|Shareholders' equity                                    |   |             |   |   |             |  
|Share capital (note
      7)                            |   | 49,974,357  |   |   | 25,086,863  |  
|Contributed surplus
      (note 7(c))                   |   | 2,363,950   |   |   | 485,962     |  
|Deficit                                                 |   | (29,271,660 | ) |   | (16,244,396 | )
|                                                        |   | 23,066,647  |   |   | 9,328,429   |  
|                                                        |   |             |   |   |             |  
|Nature of operations (note 1)                           |   |             |   |   |             |  
|Commitments (note 6)                                    |   |             |   |   |             |  
|                                                        | $ | 26,025,635  |   | $ | 9,856,706   |  

See accompanying notes to consolidated financial statements

Approved by the Board of Directors

|/s/ Tumelo M. Motsisi | /s/ Ronald W. Thiessen
|--------------------- | ----------------------
|                      |                       
|Tumelo M. Motsisi     | Ronald W. Thiessen    
|Director              | Director              

---

ANOORAQ RESOURCES CORPORATIONConsolidated Statements of Operations
  (Expressed in Canadian Dollars unless otherwise stated)

|                                                             |   | Fourteen     |   |   |                        |   |   |            |  
|------------------------------------------------------------ | - | ------------ | - | - | ---------------------- | - | - | ---------- | -
|                                                             |   | months ended |   |   |                        |   |   |            |  
|                                                             |   | December 31  |   |   | Years ended October 31 |  
|                                                             |   | 2004         |   |   | 2003                   |   |   | 2002       |  
|                                                             |   |              |   |   |                        |   |   |            |  
|Expenses                                                     |   |              |   |   |                        |   |   |            |  
|Accounting, audit and
      legal                            | $ | 479,731      |   | $ | 32,657                 |   | $ | 82,253     |  
|Conference and travel                                        |   | 486,481      |   |   | 180,613                |   |   | 119,392    |  
|Consulting                                                   |   | 536,216      |   |   | 100,974                |   |   | 193,902    |  
|Exploration (schedule)                                       |   | 7,860,266    |   |   | 1,963,784              |   |   | 977,548    |  
|Office and administration                                    |   | 457,571      |   |   | 131,216                |   |   | 73,039     |  
|Salaries and benefits                                        |   | 834,223      |   |   | 402,989                |   |   | 459,249    |  
|Stock-based compensation
      - operations (note 7(c))      |   | 1,426,006    |   |   | 477,087                |   |   | –          |  
|Stock-based compensation
      - exploration (note 7(c))     |   | 1,040,542    |   |   | 8,875                  |   |   | –          |  
|Shareholders
      communications                            |   | 342,848      |   |   | 193,835                |   |   | 500,039    |  
|Trust
      and filing                                       |   | 159,633      |   |   | 17,539                 |   |   | 20,755     |  
|Loss before the following                                    |   | 13,623,517   |   |   | 3,509,569              |   |   | 2,426,177  |  
|Foreign exchange loss
      (gain)                           |   | 145,199      |   |   | (19                    | ) |   | (23,740    | )
|Interest income                                              |   | (485,452     | ) |   | (46,060                | ) |   | (38,341    | )
|Write-off
      (recovery) of amounts receivable (note 8(e)) |   | (256,000     | ) |   | 365,924                |   |   | –          |  
|Loss for the period                                          | $ | 13,027,264   |   | $ | 3,829,414              |   | $ | 2,364,096  |  
|                                                             |   |              |   |   |                        |   |   |            |  
|Basic and diluted loss per share                             | $ | 0.18         |   | $ | 0.11                   |   | $ | 0.08       |  
|                                                             |   |              |   |   |                        |   |   |            |  
|Weighted average number of common                            |   |              |   |   |                        |   |   |            |  
|shares
      outstanding                                     |   | 73,017,307   |   |   | 34,126,372             |   |   | 28,901,132 |  

See accompanying notes to consolidated financial statements

Consolidated Statements of Deficit
  (Expressed in Canadian Dollars)

|                             |   | Fourteen     |   |   |                        |   |   |             |  
|---------------------------- | - | ------------ | - | - | ---------------------- | - | - | ----------- | -
|                             |   | months ended |   |   |                        |   |   |             |  
|                             |   | December 31  |   |   | Years ended October 31 |  
|                             |   | 2004         |   |   | 2003                   |   |   | 2002        |  
|Deficit, beginning of period | $ | (16,244,396  | ) | $ | (12,414,982            | ) | $ | (10,050,886 | )
|Loss for the period          |   | (13,027,264  | ) |   | (3,829,414             | ) |   | (2,364,096  | )
|Deficit, end of the period   | $ | (29,271,660  | ) | $ | (16,244,396            | ) | $ | (12,414,982 | )

See accompanying notes to consolidated financial statements

---

ANOORAQ RESOURCES CORPORATIONConsolidated Statements of Cash Flows
  (Expressed in Canadian Dollars unless otherwise stated)

|                                                       |   | Fourteen     |   |   |                        |   |   |            |  
|------------------------------------------------------ | - | ------------ | - | - | ---------------------- | - | - | ---------- | -
|                                                       |   | months ended |   |   |                        |   |   |            |  
|                                                       |   | December 31  |   |   | Years ended October 31 |  
|                                                       |   | 2004         |   |   | 2003                   |   |   | 2002       |  
|                                                       |   |              |   |   |                        |   |   |            |  
|Cash provided by (used for):                           |   |              |   |   |                        |   |   |            |  
|                                                       |   |              |   |   |                        |   |   |            |  
|Operating activities                                   |   |              |   |   |                        |   |   |            |  
|Loss for the period                                    | $ | (13,027,264  | ) | $ | (3,829,414             | ) | $ | (2,364,096 | )
|Items not involving
      cash                         |   |              |   |   |                        |   |   |            |  
|Depreciation included in exploration expenses          |   | 39,121       |   |   | 20,637                 |   |   | 18,199     |  
|Stock-based compensation (note 7(c))                   |   | 2,466,548    |   |   | 485,962                |   |   | –          |  
|Amounts receivable written off                         |   | –            |   |   | 365,924                |   |   | –          |  
|Mineral properties written off                         |   | –            |   |   | –                      |   |   | 1          |  
|Shares issued for property option payments             |   |              |   |   |                        |   |   |            |  
|included in exploration
      expenses                 |   | 340,000      |   |   | 203,125                |   |   | –          |  
|Changes in non-cash
      operating working capital    |   |              |   |   |                        |   |   |            |  
|Amounts receivable                                     |   | (504,144     | ) |   | (100,715               | ) |   | 64,354     |  
|Prepaid expenses                                       |   | (77,823      | ) |   | (7,784                 | ) |   | (22,523    | )
|Accounts payable and accrued liabilities               |   | 1,045,456    |   |   | 436,163                |   |   | (138,191   | )
|                                                       |   | (9,718,106   | ) |   | (2,426,102             | ) |   | (2,442,256 | )
|                                                       |   |              |   |   |                        |   |   |            |  
|Investing activities                                   |   |              |   |   |                        |   |   |            |  
|Mineral property acquistion
      costs                |   | (4,489,745   | ) |   | –                      |   |   | –          |  
|Purchase of equipment                                  |   | (220,126     | ) |   | –                      |   |   | –          |  
|                                                       |   | (4,709,871   | ) |   | –                      |   |   | –          |  
|                                                       |   |              |   |   |                        |   |   |            |  
|Financing activities                                   |   |              |   |   |                        |   |   |            |  
|Issuance of common
      shares                        |   | 25,380,632   |   |   | 5,151,590              |   |   | 3,356,836  |  
|Issue costs                                            |   | (1,421,698   | ) |   | (316,326               | ) |   | (17,265    | )
|Issuance of common
      shares for cash, net of costs |   | 23,958,934   |   |   | 4,835,264              |   |   | 3,339,571  |  
|                                                       |   |              |   |   |                        |   |   |            |  
|Increase in cash and equivalents                       |   | 9,530,957    |   |   | 2,409,162              |   |   | 897,315    |  
|Cash and equivalents, beginning of period              |   | 5,414,398    |   |   | 3,005,236              |   |   | 2,107,921  |  
|Cash and equivalents, end of period                    | $ | 14,945,355   |   | $ | 5,414,398              |   | $ | 3,005,236  |  
|                                                       |   |              |   |   |                        |   |   |            |  
|                                                       |   |              |   |   |                        |   |   |            |  
|Supplementary information                              |   |              |   |   |                        |   |   |            |  
|Interest paid                                          | $ | 23,584       |   | $ | –                      |   | $ | –          |  
|Interest received                                      | $ | (509,036     | ) | $ | (46,060                | ) | $ | (38,341    | )
|Taxes paid                                             | $ | –            |   | $ | –                      |   | $ | –          |  
|                                                       |   |              |   |   |                        |   |   |            |  
|Non-cash operating, financing and investing activities |   |              |   |   |                        |   |   |            |  
|Shares issued for property option agreements           | $ | –            |   | $ | 203,125                |   | $ | –          |  
|Increase in mineral property for future income taxes   | $ | 1,385,255    |   | $ | –                      |   | $ | –          |  

See accompanying notes to consolidated financial statements

---

ANOORAQ RESOURCES CORPORATIONConsolidated Schedules of Exploration Expenses
  (Expressed in Canadian Dollars unless otherwise stated)

|                                                   |   | Fourteen     |  |   |                        |  |   |           | 
|-------------------------------------------------- | - | ------------ |  | - | ---------------------- |  | - | --------- | 
|                                                   |   | months ended |  |   |                        |  |   |           | 
|                                                   |   | December 31  |  |   | Years ended October 31 | 
|Republic of South Africa                           |   | 2004         |  |   | 2003                   |  |   | 2002      | 
|                                                   |   |              |  |   |                        |  |   |           | 
|Northern Limb of the Bushveld Complex              |   |              |  |   |                        |  |   |           | 
|Assays and analysis                                | $ | 1,550,516    |  | $ | 207,939                |  | $ | 33,768    | 
|Depreciation                                       |   | 39,121       |  |   | 20,637                 |  |   | 18,199    | 
|Drilling                                           |   | 2,972,042    |  |   | 308,552                |  |   | 55,446    | 
|Engineering                                        |   | 788,238      |  |   | 111,177                |  |   | 142,846   | 
|Environmental and socioeconomic                    |   | 68,689       |  |   | 63,142                 |  |   | 42,701    | 
|Geological and consulting                          |   | 993,136      |  |   | 603,000                |  |   | 425,225   | 
|Graphics                                           |   | 47,101       |  |   | 32,772                 |  |   | 65,124    | 
|Property fees and assessments                      |   | 68,628       |  |   | 72,948                 |  |   | 39,143    | 
|Property option payments                           |   | 369,765      |  |   | 213,125                |  |   | –         | 
|Site activities                                    |   | 480,387      |  |   | 218,116                |  |   | 100,914   | 
|Transportation                                     |   | 229,157      |  |   | 112,376                |  |   | 54,182    | 
|                                                   |   | 7,606,780    |  |   | 1,963,784              |  |   | 977,548   | 
|                                                   |   |              |  |   |                        |  |   |           | 
|Eastern Limb of the Bushveld Complex               |   |              |  |   |                        |  |   |           | 
|Engineering                                        |   | 93,539       |  |   | –                      |  |   | –         | 
|Environmental and socioeconomic                    |   | 1,554        |  |   | –                      |  |   | –         | 
|Geological and consulting                          |   | 29,294       |  |   | –                      |  |   | –         | 
|Graphics                                           |   | 8,060        |  |   | –                      |  |   | –         | 
|Property option payments                           |   | 2,783        |  |   | –                      |  |   | –         | 
|Site activities                                    |   | 4,533        |  |   | –                      |  |   | –         | 
|Transportation                                     |   | 113,723      |  |   | –                      |  |   | –         | 
|                                                   |   | 253,486      |  |   | –                      |  |   | –         | 
|                                                   |   |              |  |   |                        |  |   |           | 
|Exploration expenses before the following          |   | 7,860,266    |  |   | 1,963,784              |  |   | 977,548   | 
|Stock-based
      compensation (note 7(c))         |   | 1,040,542    |  |   | 8,875                  |  |   | –         | 
|Exploration expenses                               |   | 8,900,808    |  |   | 1,972,659              |  |   | 977,548   | 
|Cumulative expenditures, beginning
      of period |   | 7,991,408    |  |   | 6,018,749              |  |   | 5,041,201 | 
|Cumulative expenditures, end of
      period       | $ | 16,892,216   |  | $ | 7,991,408              |  | $ | 6,018,749 | 

See accompanying notes to consolidated financial statements

---

|ANOORAQ RESOURCES CORPORATION
      Notes to Consolidated Financial Statements 
      Fourteen months ended December 31, 2004 and years ended October 31, 2003
      and 2002
      (Expressed in Canadian Dollars, unless otherwise stated)
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                                                                                            

|1.  | Nature of operations                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|    | Anooraq Resources Corporation
        (the "Company" or "Anooraq") is incorporated in the Province of British
        Columbia, Canada and its principal business activity is the exploration
        of mineral property interests. Since 1999, the Company has focused on
        mineral property interests located in the Republic of South Africa, with
        particular attention on the Bushveld Complex (note 6).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|    | During 2004, the Company
        changed its fiscal year end from October 31 to December 31.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|    | The Company is in the process
        of exploring its mineral property interests and has not yet determined
        whether its mineral property interests contain economically recoverable
        mineral reserves. The underlying value and the recoverability of the amounts
        shown for mineral property interests are entirely dependent upon the existence
        of economically recoverable mineral reserves, the ability of the Company
        to obtain the necessary financing to complete the exploration and development
        of the mineral property interests, and future profitable production or
        proceeds from the disposition of the mineral property interests.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|    | The consolidated financial
        statements are prepared on the basis that the Company will continue as
        a going concern. At December 31, 2004, the Company had working capital
        of approximately $14 million which, although expected to be sufficient
        to allow the Company to meet its commitments and fund its operations for
        the next fiscal year, may not be sufficient to meet it’s planned
        business objectives. Management recognizes that the Company may need to
        generate additional financial resources in order meet its planned business
        objectives. However, there can be no assurances that the Company will
        continue to obtain additional financial resources and/or achieve profitability
        or positive cash flows. If the Company is unable to obtain adequate additional
        financing, the Company will be required to curtail operations and exploration
        activities. Furthermore, failure to continue as a going concern would
        require that the Company’s assets and liabilities be restated on
        a liquidation basis which would differ significantly from the going concern
        basis.
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|2.  | Basis of presentation
        and principles of consolidation                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|    | These financial statements
        have been prepared in accordance with Canadian generally accepted accounting
        principles. The results of applying measurement accounting principles
        generally accepted in the United States are set out in note 11.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|    | The consolidated financial
        statements include the accounts of the Company and its subsidiaries, all
        of which are wholly owned. The Company's investment in the Ga-Phasha joint
        venture (note 6(b)) is consolidated on a proportionate basis. All material
        intercompany balances and transactions have been eliminated.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|3.  | Significant accounting
        policies                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|(a) | Cash and equivalents                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|    | Cash and equivalents consist
        of cash and highly liquid investments, having maturity dates of three
        months or less from the date of purchase, that are readily convertible
        to known amounts of cash.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     

---

|ANOORAQ RESOURCES CORPORATION
      Notes to Consolidated Financial Statements 
      Fourteen months ended December 31, 2004 and years ended October 31, 2003
      and 2002
      (Expressed in Canadian Dollars, unless otherwise stated)
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                                                                                            

|(b) | Equipment                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|    | Equipment is carried at cost less accumulated depreciation.
        Depreciation is provided on a declining balance basis at various rates
        ranging from 15% to 30% per annum.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   
|(c) | Mineral property interests                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   
|    | Exploration
        expenses incurred prior to the determination of the feasibility of mining
        operations and option payments, until such time as the option is exercised
        or an interest in the property is earned, are expensed as incurred. 
        Mineral property acquisition
        costs subsequent to exercising the option or earning an interest in the
        property, and exploration and development expenditures incurred subsequent
        to the determination of the feasibility of mining operations are deferred
        until the property to which they relate is placed into production, sold,
        allowed to lapse or abandoned. Mineral property acquisition costs include
        the cash consideration and the fair market value of common shares issued
        for mineral property interests, based on the trading price of the shares,
        pursuant to the terms of the agreement. These costs are amortized over
        the estimated life of the property following commencement of commercial
        production, or written off if the property is sold, allowed to lapse or
        abandoned or when an impairment in value is determined to have occurred.

        Administrative expenditures
          are expensed in the period incurred.
|   
|(d) | Share capital                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   
|    | The Company records proceeds from share issuances
        net of issue costs. Shares issued for consideration other than cash are
        valued at the quoted price on the date the agreement to issue the shares
        was reached and announced.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   
|(e) | Income taxes                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   
|    | The Company uses the asset and liability method
        of accounting for income taxes. Under this method, future income tax assets
        and liabilities are computed based on differences between the carrying
        amounts of assets and liabilities on the balance sheet and their corresponding
        tax values, generally using the substantively enacted income tax rates
        expected to apply to taxable income in the years in which those temporary
        differences are expected to be recovered or settled. Future income tax
        assets also result from unused loss carry forwards and other deductions.
        Future tax assets are recognized to the extent that they are considered
        more likely than not to be realized. The recognition of future income
        tax assets is adjusted, if necessary, by the use of a valuation allowance
        to reflect the estimated realizable amount.                                                                                                                                                                                                                                                                                                                                                                   
|   
|(f) | Loss per share                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   
|    | Basic loss per share is calculated by dividing the
        loss available to common shareholders by the weighted average number of
        common shares outstanding during the period. For all periods presented,
        loss available to common shareholders equals the reported loss.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       

---

|ANOORAQ RESOURCES CORPORATION
      Notes to Consolidated Financial Statements 
      Fourteen months ended December 31, 2004 and years ended October 31, 2003
      and 2002
      (Expressed in Canadian Dollars, unless otherwise stated)
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                                                                                            

|    | Diluted loss per common share is calculated using
        the treasury stock method. Under the treasury stock method, the weighted
        average number of common shares outstanding used for the calculation of
        diluted loss per share assumes that the proceeds to be received on the
        exercise of dilutive share options and warrants are used to repurchase
        common shares at the average market price during the year. In the Company's
        case, diluted loss per share is the same as basic loss per share as the
        effect of including outstanding options and warrants in the loss per share
        calculation would be anti-dilutive.                                                                                                                        
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(g) | Fair value of financial instruments                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   
|    | The carrying amounts of cash and equivalents, amounts
        receivable, and accounts payable and accrued liabilities approximate their
        fair values due to their short-term nature. It is not practicable to determine
        the fair values of amounts receivable due from/to related parties (note
        8) due to the related party nature of such amounts and the absence of
        a secondary market for such instruments.                                                                                                                                                                                                                                                                                                                                                             
|   
|(h) | Translation of foreign currencies                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   
|    | All of the Company's foreign operations are integrated.
        Monetary assets and liabilities of the Company's integrated foreign operations
        are translated into Canadian dollars at exchange rates in effect at the
        balance sheet date. Non-monetary assets and liabilities are translated
        at historical exchange rates unless such items are carried at market,
        in which case they are translated at the exchange rates in effect on the
        balance sheet date. Revenues and expenses, except depreciation, are translated
        at the average exchange rates for the year. Depreciation is translated
        at the same exchange rate as the assets to which it relates. Gains or
        losses on translation are recorded in the statement of operations.
|   
|(i) | Use of estimates                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   
|    | The preparation of financial statements requires
        management to make estimates and assumptions that affect the reported
        amounts of assets and liabilities and the disclosure of contingent assets
        and liabilities at the date of the financial statements, and the reported
        amounts of revenues and expenses during the reporting year. Significant
        areas requiring the use of management estimates include the determination
        of the recoverability of mineral property interests, determination of
        reclamation obligations and the assumptions used in determining fair value
        of non-cash stock- based compensation. Actual results could differ from
        these estimates.                                                             
|   
|(j) | Stock-based compensation                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   
|    | Effective November 1, 2002, the Company adopted
        the new accounting standard of the Canadian Institute of Chartered Accountants
        (“CICA”), Section 3870 “Stock-Based Compensation and
        Other Stock-Based Payments (“HB 3870”). Under the new standard,
        stock options and other stock-based payments to non-employees, and employee
        awards that are direct awards of stock, call for settlement in cash or
        other assets, or are stock appreciation rights that call for settlement
        by issuance of equity instruments, granted on or after November 1, 2002,
        are accounted for using the fair value based method.                                                                                                                               

---

|ANOORAQ RESOURCES CORPORATION
      Notes to Consolidated Financial Statements 
      Fourteen months ended December 31, 2004 and years ended October 31, 2003
      and 2002
      (Expressed in Canadian Dollars, unless otherwise stated)
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                                                                                            

|    | On adoption of HB 3870, the Company elected to use
        the settlement method of accounting for stock options granted to employees,
        and to disclose the pro forma effect of accounting for these awards under
        the fair value method. Effective November 1, 2003, in connection with
        amendments to HB 3870, the Company changed the method of application of
        its stock-based compensation accounting policy so as to measure all stock
        options granted at fair value and to recognize the compensation expense
        over the vesting period, with a corresponding credit to contributed surplus.
        This change has been applied prospectively for options granted on or after
        November 1, 2003, as allowed under the transitional provisions of HB 3870.                                                                               
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|    | Prior to the adoption of the new recommendations
        in 2002, no compensation expense was recorded for the Company’s
        stock-based plan when options or incentives were granted. Any consideration
        paid by directors and employees on exercise of stock options was credited
        to share capital.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   
|(k) | Asset retirement obligations                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   
|    | During the period ended December 31, 2004, the Company
        adopted the Canadian Institute of Chartered Accountants ("CICA") Handbook
        Section 3110 "Asset Retirement Obligations" ("HB 3110"). This new standard
        recognizes statutory, contractual or other legal obligations related to
        the retirement of tangible long-lived assets when such obligations are
        incurred, if a reasonable estimate of fair value can be made. These obligations
        are measured initially at fair value and the resulting costs capitalized
        to the carrying value of the related asset. In subsequent periods, the
        liability is adjusted for any changes in the amount or timing and for
        the discounting of the underlying future cash flows. The capitalized asset
        retirement cost is amortized to operations over the life of the asset.
|   
|    | Prior to the adoption of HB 3110, the Company had
        accounted for reclamation and closure costs by accruing an amount associated
        with the retirement of tangible long-lived assets as a charge to operations
        over the life of the asset.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   
|    | The Company adopted HB 3110 retroactively with a
        restatement of prior periods presented; however, the adoption of HB 3110
        resulted in no changes to amounts previously presented.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   
|(l) | Segment disclosures                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   
|    | The Company operates in a single segment, being
        the exploration of mineral properties within the geographic areas disclosed
        in note 10.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   
|(m) | Comparative figures                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   
|    | Certain of the prior periods' comparative figures
        have been restated to conform to the presentation adopted for the current
        period.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               

---

|ANOORAQ RESOURCES CORPORATION
      Notes to Consolidated Financial Statements 
      Fourteen months ended December 31, 2004 and years ended October 31, 2003
      and 2002
      (Expressed in Canadian Dollars, unless otherwise stated)
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                                                                                            

|4. | Amounts receivable                        
|-- | ------------------------------------------
|  
|   | Amounts receivable comprise the following:

| |                                                  |   | December 31, |  |   | October 31, | 
| | ------------------------------------------------ | - | ------------ |  | - | ----------- | 
| |                                                  |   | 2004         |  |   | 2003        | 
| | Value-added taxes recoverable                    | $ | 588,190      |  | $ | 162,910     | 
| | Employee expense advances                        |   | 10,354       |  |   | 1,589       | 
| | Other receivables                                |   | 7,188        |  |   | –           | 
| | Hunter Dickinson Inc., and subsidiaries (note 8) |   | 62,911       |  |   | –           | 
| |                                                  | $ | 668,643      |  | $ | 164,499     | 

|5. | Equipment
|-- | ---------

| |          |   | December 31, 2004 |  |   | October 31, 2003 | 
| | -------- | - | ----------------- |  | - | ---------------- | 
| |          |   |                   |  |   | Accumulated      | 
| |          |   | Cost              |  |   | depreciation     | 
| | Office   | $ | 65,846            |  | $ | 34,794           | 
| | Vehicles |   | 253,468           |  |   | 86,525           | 
| |          | $ | 319,314           |  | $ | 121,319          | 

|6. | Mineral property interests
|-- | --------------------------

| | Mineral Property Acquisition Costs |   | December 31, |  |   | October 31, | 
| | ---------------------------------- | - | ------------ |  | - | ----------- | 
| |                                    |   | 2004         |  |   | 2003        | 
| | Platreef Properties (note 6(a))    | $ | 4,200,000    |  | $ | 4,200,000   | 
| | Ga-Phasha Project (note 6(b))      |   | 5,875,000    |  |   | –           | 
| | Balance, end of period             | $ | 10,075,000   |  | $ | 4,200,000   | 

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

---

|ANOORAQ RESOURCES CORPORATION
      Notes to Consolidated Financial Statements 
      Fourteen months ended December 31, 2004 and years ended October 31, 2003
      and 2002
      (Expressed in Canadian Dollars, unless otherwise stated)
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                                                                                            

| | The Company acquired its rights under the 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 pay cash of $25,000
        (paid) and issue shares in stages to Hinterland, to a maximum of 875,000
        shares based on project expenditures and a bonus of 625,000 shares for
        each 7 million PGM ounces defined on the project. Under this agreement,
        378,500 shares were issued to Hinterland to November 2003 and on November
        13, 2003, the Company issued an additional 400,000 common shares to Hinterland
        as full and final negotiated settlement under this agreement.
      In South Africa, many mineral claim areas were historically
        defined by farm boundaries and consequently, are commonly referred to
        as "farms".
      On May 23, 2000, the Company added to its mineral rights
        in the region by acquiring through Plateau the option to purchase a 100%
        interest in portion 2 of the Elandsfontein 766LR farm located contiguous
        to the pre-existing Platreef properties, pursuant to an agreement with
        MSA Projects (Proprietary) Limited. The option required staged issuances
        of a maximum of 500,000 common shares of the Company (of which 412,500
        shares have been issued to December 31, 2004 and no further share issuances
        are expected) and aggregate cash payments of US$350,000 (of which
        US$54,250 and $15,000 have been paid).
      In July 2001, Plateau acquired the right to purchase
        a 100 percent interest in the farm Hamburg 737LR (2,126 hectares) and
        Portion 1 of the farm Elandsfontein 766LR (428 hectares), located contiguous
        to the north end of the then-existing Platreef properties. Consideration
        for the exploration rights to these properties, 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.
      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
        its common shares, recorded at a value 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, which were exercised in their entirety in July 2003.
      In August 2002, the Company entered into a five year
        prospecting contract, expiring August 2007, with an option to extend the
        agreement for an additional three years with the South African Department
        of Mines and Energy (“DME”) for farm Noord Holland 775LR (1,229
        hectares) bringing the aggregate land package of its Platreef Property
        to approximately 13,400 hectares. Annual option fees ranging from ZAR
        3 per hectare to ZAR 18 per hectare are payable to the DME.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

---

|ANOORAQ RESOURCES CORPORATION
      Notes to Consolidated Financial Statements 
      Fourteen months ended December 31, 2004 and years ended October 31, 2003
      and 2002
      (Expressed in Canadian Dollars, unless otherwise stated)
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                                                                                            

| | Rietfontein
      On October 10, 2001, the Company completed an agreement
        with African Minerals Ltd., now Ivanhoe Nickel and Platinum Ltd. (“Ivanplats”),
        a private affiliate of Ivanhoe Capital Corporation, whereby Ivanplats
        has the right to earn a 50% interest in the Company's 2,900 hectare Rietfontein
        2KS farm ("Rietfontein"). Under the terms of this agreement, Ivanplats
        must incur at least $750,000 in expenditures pursuant to exploration
        activities undertaken on Rietfontein in accordance with an approved program
        in each of the ensuing two years (of which the year one program has been
        completed) to obtain the right to form a 50/50 joint venture with the
        Company on Rietfontein. There is disagreement over budgets, compilation
        and analysis of the exploration results, and the overall adequacy and
        completeness of Ivanplats exploration activities. The Company and Ivanplats
        are currently in discussions over these matters, both outside of and within
        a formal arbitration process, pursuant to the terms of the earn-in agreement.
      Rustenburg (“Kwanda”)
      On May 16, 2002, the Company completed an agreement
        with Rustenburg Platinum Mines Limited ("Rustenburg"), a wholly owned
        subsidiary of Anglo American Platinum Corporation Limited (together "Anglo
        Platinum"), for the right to acquire up to an 80% interest in twelve new
        PGM properties located on the Northern Limb of the Bushveld Complex.
      Under the agreements with Anglo Platinum, the Company
        has acquired an initial 50% interest in the PGM rights to the twelve farms
        and can maintain this interest by making staged exploration expenditure
        totalling South African Rand ("ZAR") 25 million within five years. The
        Company is required to spend ZAR 2.5 million in year one (which has been
        completed), ZAR 5 million in each of years two (which has been completed),
        three, and four, and ZAR 7.5 million in year five.
      If a mineral resource is identified, the Company can
        earn an additional 30% interest by bringing the property into commercial
        production. Rustenburg will retain a 20% interest in the joint venture.
        The agreements also include plans to involve local communities in future
        development of the properties. Any participation by local and regional
        communities will be provided out of Rustenburg's interest and any participation
        in the venture by a Historically Disadvantaged South Africans ("HDSA")
        partner will be provided out of the Company's interest.
      Drenthe-Overysel (“Boikgantsho”)
      On November 26, 2003, the Company announced that it
        had entered into a Joint Venture Agreement with Potgietersrus Platinums
        Limited ("PPRust"), a wholly owned subsidiary of Anglo American Platinum
        Corporation Limited (together "Anglo Platinum"). The Joint Venture was
        formed to explore and develop PGMs, gold and nickel mineralization on
        the Company's Drenthe 778LR and Witrivier 777LR farms and a portion of
        PPRust's adjacent Overysel 815LR farm. These farms are located on the
        Northern Limb of the Bushveld Complex.
      The objective is to explore and develop a large-scale
        open pit deposit with the potential to utilize nearby milling, smelting
        and refining facilities which could provide substantial cost advantages
        to
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

---

|ANOORAQ RESOURCES CORPORATION
      Notes to Consolidated Financial Statements 
      Fourteen months ended December 31, 2004 and years ended October 31, 2003
      and 2002
      (Expressed in Canadian Dollars, unless otherwise stated)
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                                                                                            

|    | 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 which lies south
        of and contiguous to the Drenthe 778LR farm.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|    | Pursuant to the terms of the Joint Venture Agreement,
        the Company and Anglo Platinum will form an initial 50/50 Joint Venture
        (the "Boikgantsho JV") to explore these farms for a period of up to five
        years. During that period, Anooraq will operate the exploration programs,
        and spend up to ZAR12.35 million (of which the entire amount has been
        spent) on behalf of the Boikgantsho JV. Anooraq will then have the option
        to proceed on a year-by-year basis and to take the project to a bankable
        feasibility study ("BFS") level.                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   
|    | Once a BFS has been completed, the parties, by agreement,
        may proceed to exploitation subject to relevant regulatory requirements.
        If both partners decide to proceed, then a joint management committee
        will be established to oversee development and operations. At commencement
        of exploitation, the joint venture interest allotted to each of Anooraq
        and Anglo Platinum will be determined in proportion to the relative value
        of the metals contained in each contributed property as reflected in the
        BFS. Anooraq or Anglo Platinum, as the case may be, each has the right
        to make a cash payment to the other party or to fund additional capital
        contributions to equalize their respective contributions. During development,
        the Boikgantsho JV will be seeking a Black Economic Empowerment ("BEE")
        partner to participate in the project, which may itself be Anooraq, with
        the original Boikgantsho JV partners dividing the remaining interest.
|   
|    | Should the Company choose not to proceed, Anglo
        Platinum shall have the option of acquiring the Company's interest at
        the aggregate of (i) the net present value of exploiting the Company's
        mineral rights as a stand alone mining operation, by applying an agreed
        discount rate as determined in the BFS, and (ii) all exploration expenditures
        (as defined) incurred by the Company up to the completion of the BFS.
        Should Anglo Platinum decide not to contribute to exploitation, its interest
        will be diluted over time in terms of a formula taking into account expenditure
        on the project by the contributory parties. Anglo Platinum will remain
        entitled to a minimum 12.5% non-contributory interest, adjusted depending
        on the final PGM royalty to be established under the South African Mineral
        and Petroleum Royalty Bill, to a maximum of 15%.                                                                                                        
|   
|    | Anglo Platinum has the right to enter into a PGM
        Ore or Concentrate Purchase and Disposal Agreement at the exploitation
        phase, based on standard commercial terms, whereby PGM produced from the
        operation would be treated at Anglo Platinum's facilities.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   
|(b) | Eastern Limb of the Bushveld Complex, Republic
        of South Africa                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   
|    | Ga-Phasha Project                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   
|    | In January 2004, the Company announced it had agreed
        to terms whereby the Company and Pelawan Investments (Proprietary) Limited
        ("Pelawan"), a private South African BEE company, would combine their
        respective PGM assets, comprising the Company's Northern and Western Limb
        PGM projects and Pelawan's 50% participation interest in the Ga-Phasha
        (previously                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        

---

|ANOORAQ RESOURCES CORPORATION
      Notes to Consolidated Financial Statements 
      Fourteen months ended December 31, 2004 and years ended October 31, 2003
      and 2002
      (Expressed in Canadian Dollars, unless otherwise stated)
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                                                                                            

| | known as Paschaskraal) PGM
        Project ("Ga-Phasha") on the Eastern Limb of the Bushveld Complex in South
        Africa. The Ga-Phasha property consists of four farms – Portion
        1 of Paschaskraal 466KS, and the whole of farms Klipfontein 465KS, De
        Kamp 507KS and Avoca 472KS – covering an area of approximately 9,700
        hectares.
      The mineral title relating to the Ga-Phasha Project
        is held by Micawber 277 (Proprietary) Limited ("Micawber"), a private
        South African corporation which was owned 50% by Anglo Platinum and 50%
        by Pelawan.
      Pursuant to the terms of the agreement between the Company
        and Pelawan, the Company acquired Pelawan's 50% shareholding in Micawber
        and the rights to its 50% participation interest in the Ga-Phasha Project
        in return for 91.2 million common shares of the Company (the "Consideration
        Shares") and cash payments totalling ZAR 15,652,744 ($3,055,416).
        Of the Consideration Shares, approximately 83 million will be held in
        escrow until the earlier of September 29, 2010 or twelve months after
        the commencement of commercial production from the Ga-Phasha Project.
      The transaction was completed on September 29, 2004
        and consequently Anooraq became a BEE company. The Ga-Phasha Project is
        a 50/50 joint venture between the Company, through Plateau, and Anglo
        Platinum, through its wholly owned subsidiary Rustenburg Platinum Mines
        Limited, governed by, among other things, a shareholders' agreement relating
        to Micawber entered into on September 22, 2004. Work on the Ga-Phasha
        Project is continuing toward the preparation of a bankable feasibility
        study.
      The share exchange agreement which gave effect to the
        combination 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 52% interest in the Company. In November 2005, Anooraq
        and Pelawan agreed to extend the Finalization Date to the earlier of:
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| | (a)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| | (b)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| | (c)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| | 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 to date and, to the extent that
        no such financings have been undertaken, the Deemed Dilutive Financings
        described above.
      The transaction constitutes a “reverse take-over”
        under the policies of the TSX Venture exchange. This transaction has been
        accounted for as an acquisition by Anooraq of Micawber's 50% interest
        in its mineral properties. However, because neither the fair value of
        the Anooraq shares issued, nor the fair value of the mineral property
        interests acquired could be readily determined, the acquisition has been
        recorded at the net book value, as determined in accordance with Canadian
        generally accepted accounting principles, of Micawber's net assets acquired,
        being nil, plus related transaction costs.
      The acquisition costs were accounted for as follows:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           

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

| | The Company accounts for its interest in Micawber,
        which holds the Ga-Phasha Project, using the proportionate consolidation
        method.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------

---

|ANOORAQ RESOURCES CORPORATION
      Notes to Consolidated Financial Statements 
      Fourteen months ended December 31, 2004 and years ended October 31, 2003
      and 2002
      (Expressed in Canadian Dollars, unless otherwise stated)
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                                                                                            

| | The following is a summary of the Company's proportionate
        share of Micawber as at December 31, 2004 and for the period from acquisition
        on September 29, 2004 to December 31, 2004, included in the Company's
        consolidated financial statements:
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |                                         |   | December 31, |   | 
| | --------------------------------------- | - | ------------ | - | 
| |                                         |   | 2004         |   | 
| | Current assets                          | $ | 24,045       |   | 
| | Non-current assets                      |   | –            |   | 
| | Current liabilities                     |   | 219,432      |   | 
| | Non-current liabilities                 |   | –            |   | 
| | Revenues                                |   | –            |   | 
| | Expenses                                |   | 195,387      |   | 
| | Net loss                                |   | (195,387     | ) | 
| | Cash flows used in operating activities |   | (195,387     | ) | 
| | Cash flows used in investing activities |   | –            |   | 
| | Cash flows used in financing activities |   | –            |   | 

|c) | Western Limb of the Bushveld Complex, Republic
        of South Africa                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|-- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|   | Thusong Joint Venture                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|  
|   | In May 2003, the Company entered into a joint venture
        agreement with Rustenburg to form a joint venture to explore and develop
        PGMs, gold and nickel mineralization on the Wachteenbietjieslaagte 4JQ,
        Vogelstruiskraal 400KQ and Cyferkuil 1JQ farms, which are located on the
        western limb of the Bushveld Complex, approximately 75 kilometres north
        of the town of Rustenburg, South Africa, adjacent to Anglo Platinum’s
        Union operations.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|  
|   | Pursuant to the terms of the joint venture agreement,
        the Company and Anglo Platinum will form an initial 50/50 joint venture
        (the "Thusong JV") to explore the three farms for a period of up to five
        years. During that period, the Company will operate exploration programs,
        and spend up to ZAR 12 million on behalf of the Thusong JV. The Company
        will have the option to proceed to take the project to a BFS level. Once
        the BFS has been completed, the parties, by agreement, may jointly or
        separately proceed to exploitation. During development, the Thusong JV
        will be seeking a BEE partner to participate in the project. If both partners
        decide to proceed, then a joint management committee will be established
        to oversee development and operations. Should Anglo Platinum decide not
        to contribute to exploitation, its interest will be diluted over time
        in terms of a formula taking into account expenditure on the project by
        the contributing parties. Anglo Platinum will remain entitled to a minimum
        17.5% non-contributory interest, adjusted depending on the final PGM royalty
        established under the South African Mineral and Petroleum Royalty Bill
        to a maximum of 20%. Should the Company decide not to proceed, Anglo Platinum
        has the right to buy out the Company’s interest at the pro-rata
        net present value of exploiting the farms as determined in the BFS.

---

|ANOORAQ RESOURCES CORPORATION
      Notes to Consolidated Financial Statements 
      Fourteen months ended December 31, 2004 and years ended October 31, 2003
      and 2002
      (Expressed in Canadian Dollars, unless otherwise stated)
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                                                                                            

|7.  | Share capital                                                                                                                                                                                                                        
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                      
|(a) | Authorized share capital                                                                                                                                                                                                             
|    |                                                                                                                                                                                                                                      
|    | 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.
|    |                                                                                                                                                                                                                                      
|(b) | Issued and outstanding common shares                                                                                                                                                                                                 

| | Common shares issued and outstanding                                 |       | Number of   |  |   |               |  
| | -------------------------------------------------------------------- | ----- | ----------- |  | - | ------------- | -
| |                                                                      | Price | Shares      |  |   | Dollar Amount |  
| | Balance, October 31, 2001                                            |       | 27,384,880  |  | $ | 16,708,903    |  
| | Issued during 2002:                                                  |       |             |  |   |               |  
| | Share purchase options
      exercised                               | $0.50 | 14,500      |  |   | 7,250         |  
| | Share purchase options
      exercised                               | $0.60 | 7,000       |  |   | 4,200         |  
| | Share purchase warrants
      exercised                              | $0.70 | 4,482,800   |  |   | 3,137,960     |  
| | Private placement,
      August 2002, net of issue costs (note 7(f)) | $0.80 | 259,283     |  |   | 190,161       |  
| | Balance, October 31, 2002                                            |       | 32,148,463  |  |   | 20,048,474    |  
| | Issued during fiscal 2003:                                           |       |             |  |   |               |  
| | Shares issued for property
      option                              | $0.75 | 270,833     |  |   | 203,125       |  
| | Share purchase options
      exercised                               | $0.60 | 1,206,000   |  |   | 720,090       |  
| | Share purchase warrants
      exercised                              | $0.72 | 5,138,876   |  |   | 3,435,560     |  
| | Private placement,
      May 2003, net of issue costs (note 7(g))    | $0.52 | 1,400,000   |  |   | 679,614       |  
| | Balance, October 31, 2003                                            |       | 40,164,172  |  |   | 25,086,863    |  
| | Issued during fiscal 2004:                                           |       |             |  |   |               |  
| | Shares issued for property
      option (note 6(a))                  | $0.85 | 400,000     |  |   | 340,000       |  
| | Share purchase options
      exercised                               | $0.75 | 3,419,300   |  |   | 3,143,950     |  
| | Share purchase warrants
      exercised                              | $0.85 | 3,313,125   |  |   | 2,822,529     |  
| | Private placement,
      Dec 2003, net of issue costs (note 7(h))    | $2.10 | 9,523,810   |  |   | 18,635,143    |  
| | Shares issued to acquire
      Ga-Phasha Project (note 6(b))         |       | 91,200,000  |  |   | –             |  
| | Share issue cost of
      Ga-Phasha project                          |       | –           |  |   | (54,128       | )
| | Balance, December 31, 2004                                           |       | 148,020,407 |  | $ | 49,974,357    |  

|(c) | Share Option Plan                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|    | The Company has a share option plan approved by
        the shareholders that allows it to grant options, subject to regulatory
        terms and approval, to its directors, employees, officers, and consultants
        to acquire up to 10,800,000 common shares. As at December 31, 2004, 2,610,000
        of these options were outstanding, 4,646,800 had been exercised, and 3,543,200
        remained available to grant. The exercise price of each option is set
        by the Board of Directors at the time of grant but cannot be less than
        the market price (less permissible discounts) on the TSX Venture Exchange.
        Options typically have a maximum term of two to three years and terminate
        30 days following the termination of the optionee’s employment or
        term of engagement, except in the case of retirement or death. Vesting
        of options is at the discretion of the Board of Directors at the time
        the options are granted.

---

|ANOORAQ RESOURCES CORPORATION
      Notes to Consolidated Financial Statements 
      Fourteen months ended December 31, 2004 and years ended October 31, 2003
      and 2002
      (Expressed in Canadian Dollars, unless otherwise stated)
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                                                                                            

| | The continuity of share purchase options is as follows:
| | -------------------------------------------------------

| |                            |                |                   |   | Contractual     
| | -------------------------- | -------------- | ----------------- | - | ----------------
| |                            | Weighted       |                   |   | weighted average
| |                            | average        |                   |   | remaining life  
| |                            | exercise price | Number of options |   | (years)         
| | Balance, October 31, 2001  | $ 0.59         | 1,619,000         |   | 1.62            
| | Granted                    | 0.83           | 2,439,000         |   |                 
| | Exercised                  | 0.53           | (21,500           | ) |                 
| | Expired or
      cancelled | 0.59           | (280,000          | ) |                 
| | Balance, October 31, 2002  | 0.75           | 3,756,500         |   | 1.59            
| | Granted                    | 1.35           | 2,852,000         |   |                 
| | Exercised                  | 0.60           | (1,206,000        | ) |                 
| | Expired                    | 0.56           | (88,500           | ) |                 
| | Cancelled                  | 0.68           | (114,000          | ) |                 
| | Balance, October 31, 2003  | 1.12           | 5,200,000         |   | 1.36            
| | Granted                    | 1.89           | 897,500           |   |                 
| | Exercised                  | 0.75           | (3,419,300        | ) |                 
| | Cancelled                  | 0.97           | (68,200           | ) |                 
| | Balance, December 31, 2004 | $ 1.87         | 2,610,000         |   | 1.54            

| | Options outstanding at December 31, 2004 were as follows:
| | ---------------------------------------------------------

|                     |        | Number of   | Number of  
|-------------------- | ------ | ----------- | -----------
|                     | Option | options     | options    
|Expiry date          | price  | outstanding | exercisable
|July 29, 2005        | $0.60  | 50,000      | 37,500     
|September 8, 2005    | $0.85  | 100,000     | 100,000    
|September 30, 2005   | $0.85  | 50,000      | 50,000     
|October 21, 2005     | $2.00  | 1,585,000   | 1,585,000  
|October 26, 2006     | $1.95  | 590,000     | 515,000    
|October 26, 2006     | $2.00  | 35,000      | 30,000     
|October 26, 2006     | $1.64  | 200,000     | 200,000    
|Total                |        | 2,610,000   | 2,517,500  
|Average option price |        | $1.87       | $1.87      

---

|ANOORAQ RESOURCES CORPORATION
      Notes to Consolidated Financial Statements 
      Fourteen months ended December 31, 2004 and years ended October 31, 2003
      and 2002
      (Expressed in Canadian Dollars, unless otherwise stated)
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                                                                                            

| | The exercise prices of all share purchase options
        granted during the period were equal to the market price at the grant
        date. Using an option pricing model with the assumptions noted below,
        the estimated fair value of all options granted during fiscal 2004 and
        2003 and the estimated fair value of options granted to non-employees
        during 2002 have been reflected in the consolidated statement of operations
        as follows:
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |                                                   |   | Fourteen    |   |   |            |  |   |           
| | ------------------------------------------------- | - | ----------- | - | - | ---------- |  | - | ----------
| |                                                   |   | months      |   |   |            |  |   |           
| |                                                   |   | ended       |   |   | Year ended |  |   | Year ended
| |                                                   |   | December 31 |   |   | October 31 |  |   | October 31
| |                                                   |   | 2004        |   |   | 2003       |  |   | 2002      
| |                                                   |   |             |   |   |            |  |   |           
| | Stock-based compensation – Exploration            | $ | 1,040,542   |   | $ | 8,875      |  | $ | –         
| | Stock-based compensation – Operations             |   | 1,426,006   |   |   | 477,087    |  |   | –         
| |                                                   |   |             |   |   |            |  |   |           
| | Credited to contributed surplus during the period |   | 2,466,548   |   |   | 485,962    |  |   | –         
| | Share purchase options exercised, credited to     |   |             |   |   |            |  |   |           
| | share capital                                     |   | (588,560    | ) |   | –          |  |   | –         
| | Contributed surplus, beginning of the period      |   | 485,962     |   |   | –          |  |   | –         
| | Contributed surplus, end of period                | $ | 2,363,950   |   | $ | 485,962    |  | $ | –         

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

| |                         | 2004    | 2003    | 2002   
| | ----------------------- | ------- | ------- | -------
| | Risk free interest rate | 3%      | 3%      | 3%     
| | Expected life           | 2 years | 2 years | 2 years
| | Volatility              | 88%     | 40%     | 40%    
| | Expected dividends      | nil     | nil     | nil    

|(d) | Share purchase warrants                                         
|--- | ----------------------------------------------------------------
|   
|    | The continuity of share purchase warrants is as
        follows:

| | Note Reference             |            |   | 6(a)       |   | 7(e)       |   | 7(f)     |   | 7(h)      |  |            |  
| | -------------------------- | ---------- | - | ---------- | - | ---------- | - | -------- | - | --------- |  | ---------- | -
| | Expiry date                | Aug. 3,    |   | Aug. 28,   |   | Dec. 21,   |   | Dec. 27, |   | June 1,   |  |            |  
| |                            | 2002       |   | 2003       |   | 2003       |   | 2003     |   | 2005      |  |            |  
| | Exercise price             | $0.70      |   | $0.70      |   | $0.85      |   | $0.88    |   | $2.50     |  | TOTAL      |  
| | Balance, October 31, 2001  | 4,797,800  |   | 4,500,000  |   | 3,692,718  |   | –        |   | –         |  | 12,990,518 |  
| | Issued                     | –          |   | –          |   | –          |   | 259,283  |   | –         |  | 259,283    |  
| | Exercised                  | (4,482,800 | ) | –          |   | –          |   | –        |   | –         |  | (4,482,800 | )
| | Expired                    | (315,000   | ) | –          |   | –          |   | –        |   | –         |  | (315,000   | )
| | Balance, October 31, 2002  | –          |   | 4,500,000  |   | 3,692,718  |   | 259,283  |   | –         |  | 8,452,001  |  
| | Exercised                  | –          |   | (4,500,000 | ) | (592,000   | ) | (46,876  | ) | –         |  | (5,138,876 | )
| | Balance, October 31, 2003  | –          |   | –          |   | 3,100,718  |   | 212,407  |   | –         |  | 3,313,125  |  
| | Issued                     | –          |   | –          |   | –          |   | –        |   | 5,333,334 |  | 5,333,334  |  
| | Exercised                  | –          |   | –          |   | (3,100,718 | ) | (212,407 | ) | –         |  | (3,313,125 | )
| | Balance, December 31, 2004 | –          |   | –          |   | –          |   | –        |   | 5,333,334 |  | 5,333,334  |  

---

|ANOORAQ RESOURCES CORPORATION
      Notes to Consolidated Financial Statements 
      Fourteen months ended December 31, 2004 and years ended October 31, 2003
      and 2002
      (Expressed in Canadian Dollars, unless otherwise stated)
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                                                                                            

|(e) | Share purchase warrants                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|    | On December 10, 2002, the Company extended the expiry
        date of 3,692,718 warrants for an additional year to December 21, 2003,
        with the exercise price unchanged at $0.85.                                                                                                                                                                                                                                                                                                                                                                                                               
|   
|(f) | Private placement, August 2002                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   
|    | On August 27, 2002, the Company completed a $207,426
        private placement financing of 259,283 units at a price of $0.80 per
        unit. Each unit was comprised of one common share and a one common share
        purchase warrant exercisable at $0.88 per common share until December
        27, 2003. The warrants were subject to an accelerated expiry based on
        certain conditions.                                                                                                                                                                                              
|   
|(g) | Private placement, May 2003                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   
|    | On May 27, 2003, the Company completed a private
        placement financing consisting of 1,400,000 common shares at a price of
        $0.52 per share.                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   
|(h) | Private placement, December 2003                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   
|    | During December 2003, the Company completed a $20
        million private placement financing of 9,523,810 units at a price of $2.10
        per unit. Each unit was comprised of one common share and one-half of
        a common share purchase warrant, with each whole warrant exercisable at
        $2.50 per common share until June 1, 2005. The agents received 571,429
        share purchase warrants each exercisable into one common share at $2.50
        per common share until June 1, 2005. The fair value of warrants issued
        has been shown on a net basis in share capital.

---

|ANOORAQ RESOURCES CORPORATION
      Notes to Consolidated Financial Statements 
      Fourteen months ended December 31, 2004 and years ended October 31, 2003
      and 2002
      (Expressed in Canadian Dollars, unless otherwise stated)
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                                                                                            

|8. | Related party transactions
|-- | --------------------------

| |                                           |      | Fourteen     |             |           
| | ----------------------------------------- | ---- | ------------ | ----------- | ----------
| |                                           |      | months ended | Year ended  | Year ended
| |                                           | Note | December 31  | October 31  | October 31
| | Services rendered by                      | Ref  | 2004         | 2003        | 2002      
| | Hunter Dickinson Inc.                     | (a)  | $ 1,512,441  | $ 1,281,758 | $ 896,550 
| | Hunter Dickinson Group Inc.               | (b)  | 17,360       | 28,722      | –         
| | Pelawan Investments (Proprietary) Limited | (d)  | 745,438      | –           | –         
| | CEC Engineering Ltd.                      | (e)  | 135,104      | 166,969     | 142,825   

| |                                                 |     | As at       |   | As at      |   | 
| | ----------------------------------------------- | --- | ----------- | - | ---------- | - | 
| |                                                 |     | December 31 |   | October 31 |   | 
| | Related party balances receivable (payable)     |     | 2004        |   | 2003       |   | 
| | Hunter
      Dickinson Inc.                     | (c) | $ 24,195    |   | $ (235,305 | ) | 
| | CEC Engineering Ltd.                            | (e) | 24,118      |   | –          |   | 
| | Pelawan
      Investments (Proprietary) Limited | (d) | 44,080      |   | –          |   | 
| | Tecnicos HD de Mexico
      SA de CV            | (a) | (58,933     | ) | –          |   | 
| | Servicios
      HD de Mexico SA de CV           | (a) | 97,649      |   | –          |   | 
| | Mainland Exploration
      Limited Partnership  | (f) | –           |   | –          |   | 

|(a) | Hunter Dickinson Inc. ("HDI") and its wholly owned
        subsidiaries, including Tecnicos HD de Mexico SA de CV and Servicios HD
        de Mexico SA de CV, are private companies with certain directors in common
        that provide geological, corporate development, administrative and management
        services to, and incur third party costs on behalf of, the Company on
        a full cost recovery basis pursuant to an agreement dated December 31,
        1996.                                                                                                                      
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(b) | Hunter Dickinson Group Inc. ("HDGI") is a private
        company with certain directors in common that provides consulting services
        to, and incurs costs on behalf of, the Company, at market rates.                                                                                                                                                                                                                                                                                                                                                                                               
|   
|(c) | The balances receivable from (payable to) HDI have
        resulted from advances against future work, services, or cost reimbursements,
        or from HDI providing periodic short-term working capital advances to
        the Company. These balances are included within amounts receivable (note
        4) or accounts payable and accrued liabilities on the consolidated balance
        sheets.                                                                                                                                                                                                  
|   
|(d) | Pelawan Investments (Proprietary) Limited ("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 (note 6(b)). During the period from Pelawan
        becoming a significant shareholder on 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.

---

|ANOORAQ RESOURCES CORPORATION
      Notes to Consolidated Financial Statements 
      Fourteen months ended December 31, 2004 and years ended October 31, 2003
      and 2002
      (Expressed in Canadian Dollars, unless otherwise stated)
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                                                                                            

|(e) | During the period ended December 31, 2004, the Company
        paid or accrued $135,104 (year ended October 31, 2003 – $166,969)
        to CEC Engineering Ltd, a private company owned by a director, for engineering
        and project management services at market rates.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(f) | Mainland Exploration Limited Partnership (“Mainland”)
        is a limited partnership that invests in exploration properties and had
        provided certain services to the Company. Certain directors of the Company
        were also directors of Mainland’s general partner. To October 31,
        2000, the Company had advanced $201,000 to Mainland. During the period
        ended October 31, 2003, the Company determined that this amount receivable
        (plus interest) from Mainland was likely uncollectible and accordingly,
        the amount receivable was expensed during the year ended October 31, 2003.
        Subsequently, during the year ended December 31, 2004, the Company received
        $256,000 as full and final settlement of this amount receivable.
|   
|9.  | Income taxes                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   
|    | Substantially all of the difference between the
        actual income tax expense (recovery) of $nil and the expected income
        tax recovery based on statutory tax rates relates to the benefit of losses
        not recognized.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   
|    | As at December 31, 2004 the tax effect of the significant
        components within the Company’s future tax asset (liability) were
        as follows:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             

| |                                   |   | December 31, |   |   | October 31, |  
| | --------------------------------- | - | ------------ | - | - | ----------- | -
| |                                   |   | 2004         |   |   | 2003        |  
| | Future income tax assets          |   |              |   |   |             |  
| | Mineral
      property interests  | $ | 3,239,000    |   | $ | 1,421,000   |  
| | Loss carry
      forwards         |   | 2,677,000    |   |   | 1,859,000   |  
| | Equipment                         |   | 7,000        |   |   | (5,000      | )
| | Resource-related
      tax pools  |   | –            |   |   | 321,000     |  
| | Other
      tax pools             |   | 451,000      |   |   | 104,000     |  
| | Subtotal                          |   | 6,374,000    |   |   | 3,700,000   |  
| | Valuation
      allowance         |   | (6,374,000   | ) |   | (3,700,000  | )
| | Net future
      income tax asset |   | –            |   |   | –           |  
| |                                   |   |              |   |   |             |  
| | Future income tax liability       |   |              |   |   |             |  
| | Mineral
      property interests  | $ | 1,385,255    |   | $ | –           |  

| | At December 31, 2004, the Company had losses available
        for income tax purposes in Canada totalling approximately $6.6 million
        (2003 - $5.1 million), expiring in various periods from 2005 to 2011.
        The Company had capital losses available of $nil (2002 - $1.0
        million), which, when available, can be used to offset future capital
        gains. As a result of the transaction referred to in note 6(b), for Canadian
        income tax purposes a change in control was deemed to have occurred, and
        consequently the capital losses expired. The Company had no (2003 - $0.9
        million) resource tax pools available in Canada, which, when available,
        may be carried forward and utilized to reduce future taxes related to
        certain resource income.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

---

|ANOORAQ RESOURCES CORPORATION
      Notes to Consolidated Financial Statements 
      Fourteen months ended December 31, 2004 and years ended October 31, 2003
      and 2002
      (Expressed in Canadian Dollars, unless otherwise stated)
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                                                                                            

|    | A future income tax liability of $1,385,255
        arising from the transaction referred to in note 6(b) was recorded.
|--- | -----------------------------------------------------------------------------------------------------------------------
|   
|10. | Segmented information                                                                                                  

| | For the 14 months         |   |            |   |   |          |   |   |              |   |   |             |  
| | ------------------------- | - | ---------- | - | - | -------- | - | - | ------------ | - | - | ----------- | -
| | ended December 31,        |   |            |   |   |          |   |   |              |   |   |             |  
| | 2004                      |   | Canada     |   |   | Mexico   |   |   | South Africa |   |   | Total       |  
| | Exploration expenditures  | $ | –          |   | $ | –        |   | $ | 7,860,266    |   | $ | 7,860,266   |  
| | Loss for the year         |   | (4,086,230 | ) |   | (4,323   | ) |   | (8,936,711   | ) |   | (13,027,264 | )
| | Interest and other income |   | 432,551    |   |   | –        |   |   | 52,901       |   |   | 485,452     |  
| | Total assets              |   | 14,626,537 |   |   | 44,151   |   |   | 11,354,947   |   |   | 26,025,635  |  
| | Equipment                 |   | –          |   |   | –        |   |   | 197,995      |   |   | 197,995     |  
| |                           |   |            |   |   |          |   |   |              |   |   |             |  
| | For the year ended        |   |            |   |   |          |   |   |              |   |   |             |  
| | October 31, 2003          |   | Canada     |   |   | Mexico   |   |   | South Africa |   |   | Total       |  
| | Exploration expenditures  | $ | –          |   | $ | –        |   | $ | 1,963,784    |   | $ | 1,963,784   |  
| | Loss for the year         |   | (1,672,726 | ) |   | (128,681 | ) |   | (2,028,007   | ) |   | (3,829,414  | )
| | Interest and other income |   | 43,978     |   |   | –        |   |   | 2,082        |   |   | 46,060      |  
| | Total assets              |   | 5,387,584  |   |   | 41,911   |   |   | 4,427,211    |   |   | 9,856,706   |  
| | Equipment                 |   | –          |   |   | –        |   |   | 16,990       |   |   | 16,990      |  
| |                           |   |            |   |   |          |   |   |              |   |   |             |  
| | For the year ended        |   |            |   |   |          |   |   |              |   |   |             |  
| | October 31, 2002          |   | Canada     |   |   | Mexico   |   |   | South Africa |   |   | Total       |  
| | Exploration expenditures  | $ | –          |   | $ | –        |   | $ | 977,548      |   | $ | 977,548     |  
| | Loss for the year         |   | (1,408,153 | ) |   | (6,789   | ) |   | (949,154     | ) |   | (2,364,096  | )
| | Interest income           |   | 37,780     |   |   | –        |   |   | 561          |   |   | 38,341      |  
| | Total assets              |   | 3,082,376  |   |   | 161,143  |   |   | 4,482,087    |   |   | 7,725,606   |  
| | Equipment                 |   | –          |   |   | –        |   |   | 37,627       |   |   | 37,627      |  



|11. | Differences between Canadian and United
        States generally accepted accounting principles                                                                                                                                                                                                                                                                                                                                   
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|    | These financial statements have been prepared
        in accordance with Canadian generally accepted accounting principles ("Canadian
        GAAP"). A description of United States generally accepted accounting principles
        ("US GAAP") and rules prescribed by the United States Securities and Exchange
        Commission ("SEC") that result in material measurement differences from
        Canadian GAAP follows:
|   
|    | (a)                                                                                                                                                                                                                                                                                                                                                                                                                               

---

|ANOORAQ RESOURCES CORPORATION
      Notes to Consolidated Financial Statements 
      Fourteen months ended December 31, 2004 and years ended October 31, 2003
      and 2002
      (Expressed in Canadian Dollars, unless otherwise stated)
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                                                                                            

| |     | method of accounting as prescribed by APB Opinion
        No. 25 ("APB 25"). To October 31, 2002, the Company had elected to measure
        compensation cost for its plans using APB 25 for US GAAP purposes. As
        a result of changes to Canadian GAAP for the year ended October 31, 2003,
        there were no material differences in the treatment by the Company with
        respect to stock based compensation under US and Canadian GAAP for the
        year ended October 31, 2003.                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |     | United States Statement of Financial Accounting
        Standards 148 ("SFAS 148"), "Accounting for Stock-Based Compensation
        - Transition and Disclosure - an amendment of FASB Statement No. 123",
        permits a company to adopt a fair value methodology on a prospective basis.
        Effective November 1, 2003, for US GAAP purposes, the Company prospectively
        adopted the fair value method of accounting for stock-based compensation,
        a treatment consistent with the accounting treatment used for Canadian
        GAAP.                                                                                                                                                                                                                                                                                                                                                                                                                
|
| |     | For the fourteen month period ended December 31,
        2004, and for the years ended October 31, 2003, and October 31, 2002 there
        were no differences in stock-based compensation expense in respect of
        non-employee share options which would be required to be charged to operations
        under US GAAP, and therefore no differences exist. However, for US GAAP
        purposes stock-based compensation expense would be classified in the consolidated
        statements of operations by the nature of the services provided and not
        as a separate line item.                                                                                                                                                                                                                                                                                                                                                                               
|
| | (b) | United States Statement of Financial Accounting
        Standards No. 143 ("SFAS 143"), "Accounting for Asset Retirement Obligation",
        requires a company to record the fair value of an asset retirement obligation
        as a liability in the period in which it incurs a legal obligation associated
        with the retirement of tangible long-lived assets that result from the
        acquisition, construction, development and/or normal use of the assets.
        The company would also record a corresponding asset which is amortized
        over the life of the asset. Subsequent to the initial measurement of the
        asset retirement obligation, the obligation will be adjusted at the end
        of each period to reflect the passage of time (accretion expense) and
        changes in the estimated future cash flows underlying the obligation (asset
        retirement cost).                                                      
|
| |     | The Company has adopted SFAS 143 effective November
        1, 2003 and has determined there is no material difference between Canadian
        GAAP and US GAAP as the Platreef, Rietfontein, Drenthe-Overysel and Ga-Phasha
        properties have indeterminable asset retirement obligations due to the
        exploration stage of such mineral properties, and no significant disturbance
        has occurred on the properties.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|
| | (c) | In August 2001, the Financial Accounting Standards
        Board ("FASB") issued Statement of Financial Accounting Standards No.
        144, "Accounting for the Impairment or Disposal of Long-Lived Assets"
        ("SFAS 144"). SFAS 144 addresses financial accounting and reporting for
        the impairment or disposal of long-lived assets. This statement requires
        that long-lived assets be reviewed for impairment whenever events or changes
        in circumstances indicate that the carrying amount of an asset may not
        be recoverable. Recoverability of assets to be held and used is measured
        by a comparison of the carrying amount of an asset to future net cash
        flows expected to be generated by the asset. If the carrying amount of
        an asset exceeds its estimated future cash flows, an impairment charge
        is recognized in the amount by which the carrying amount of the asset
        exceeds the

---

|ANOORAQ RESOURCES CORPORATION
      Notes to Consolidated Financial Statements 
      Fourteen months ended December 31, 2004 and years ended October 31, 2003
      and 2002
      (Expressed in Canadian Dollars, unless otherwise stated)
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                                                                                            

| |     | fair value of the asset. SFAS 144 also
        broadens the definition of discontinued operations to include all distinguishable
        components of an entity that will be eliminated from ongoing operations.
        The Company adopted SFAS 144 on November 1, 2003, on a prospective basis,
        and there are no material differences between the treatment under Canadian
        and US GAAP.                                                                                                                                                                                                                            
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | (d) | Canadian
        GAAP provides for investments in jointly controlled entities to be accounted
        for using proportionate consolidation. Under US GAAP, investments in incorporated
        joint ventures are to be accounted for using the equity method. Under
        an accommodation of the United States Securities and Exchange Commission,
        the accounting for joint ventures need not be reconciled from Canadian
        GAAP to US GAAP. The different accounting treatment affects only the display
        and classification of financial statement items and not net income or
        shareholders' equity.
|
| | (e) | Pursuant to US GAAP, the Company would
        be considered a development stage company as the Company is devoting efforts
        to establishing commercially viable mineral properties. However, the identification
        of the Company as such for accounting purposes does not impact the measurement
        principles applied in these consolidated financial statements.                                                                                                                                                                                                                                                  
|
| | (f) | Impact of recent United States accounting
        pronouncements:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|
| |     | (i)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|
| |     | (ii)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|
| |     | (iii)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        

| |  |  | (A) | the mineral property acquisition costs of $5,875,000
        (2003 – $nil) related to the Ga-Phasha Project would be excluded
        from mineral property interests and would be presented as an equity investment,
        "Investment in Ga-Phasha Project", on the consolidated balance
        sheets;
| |  |  | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  |  |     |                                                                                                                                                                                                                                                                                                             
| |  |  | (B) | expenses relating to the Ga-Phasha Project of $195,387
        (2003 – $nil) would be excluded from exploration expenses and would
        be presented as an equity loss in the consolidated statement of operations,                                                                                      
| |  |  |     |                                                                                                                                                                                                                                                                                                             
| |  |  | (C) | current assets would exclude the Company's proportionate
        share of Micawber's current assets of $24,045 (2003 - $nil),                                                                                                                                                                               
| |  |  |     |                                                                                                                                                                                                                                                                                                             
| |  |  | (D) | current liabilities would exclude the Company's proportionate
        share of Micawber's current liabilities of $219,432 (2003 - $nil), and                                                                                                                                                                
| |  |  |     |                                                                                                                                                                                                                                                                                                             
| |  |  | (E) | the "Investment in Ga-Phasha Project" would
        be shown net of the future income tax liability of $1,385,255 (2003 –
        nil).                                                                                                                                                                     

---

|ANOORAQ RESOURCES CORPORATION
      Notes to Consolidated Financial Statements 
      Fourteen months ended December 31, 2004 and years ended October 31, 2003
      and 2002
      (Expressed in Canadian Dollars, unless otherwise stated)
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                                                                                            

The effect of the above differences between Canadian GAAP
  and US GAAP on the Company's consolidated balance sheets and consolidated statements
  of operations and deficit is summarized as follows:

|                                                                            |   |              |  |   | As at        |   |   | As at       | 
|--------------------------------------------------------------------------- | - | ------------ |  | - | ------------ | - | - | ----------- | 
|                                                                            |   |              |  |   | December 31, |   |   | October 31, | 
|Consolidated Balance Sheets                                                 |   |              |  |   | 2004         |   |   | 2003        | 
|Total assets under Canadian GAAP                                            |   |              |  | $ | 26,025,635   |   | $ | 9,856,706   | 
|Exclusion of current assets of Micawber (note 11(f)(iii)(C))                |   |              |  |   | (24,045      | ) |   | -           | 
|Equity loss of "Investment in Ga-Phasha
      Project" (note 11(f)(iii)(B)) |   |              |  |   | (195,387     | ) |   | -           | 
|Equity loss of "Investment in Ga-Phasha Project"
      (note 11(f)(iii)(E)) |   |              |  |   | (1,385,255   | ) |   | -           | 
|Total assets under US GAAP                                                  |   |              |  | $ | 24,420,948   |   | $ | 9,856,706   | 
|                                                                            |   |              |  |   |              |   |   |             | 
|Total liabilities under Canadian GAAP                                       |   |              |  | $ | 2,958,988    |   | $ | 528,277     | 
|Exclusion of current liabilities of Micawber (note 11(f)(iii)(D))           |   |              |  |   | (219,432     | ) |   | -           | 
|Equity
      loss of "Investment in Ga-Phasha Project" (note 11(f)(iii)(E)) |   |              |  |   | (1,385,255   | ) |   | -           | 
|Total liabilities under Canadian and US GAAP                                |   |              |  | $ | 1,354,301    |   | $ | 528,277     | 
|                                                                            |   |              |  |   |              |   |   |             | 
|Shareholders' equity under Canadian and US GAAP                             |   |              |  | $ | 23,066,647   |   | $ | 9,328,429   | 
|                                                                            |   |              |  |   |              |   |   |             | 
|                                                                            |   | Year ended   |  |   | Year ended   |   |   | Year ended  | 
|                                                                            |   | December 31, |  |   | October 31,  |   |   | October 31, | 
|Consolidated Statements of Operations                                       |   | 2004         |  |   | 2003         |   |   | 2002        | 
|Loss for the year under Canadian and US GAAP                                | $ | 13,027,264   |  | $ | 3,829,414    |   | $ | 2,364,096   | 
|Basic and diluted loss per share for the year under                         |   |              |  |   |              |   |   |             | 
|Canadian and US GAAP                                                        | $ | 0.18         |  | $ | 0.11         |   | $ | 0.08        | 

There are no material differences between Canadian GAAP and
  US GAAP in the consolidated statements of cash flows for the fourteen month
  period ended December 31, 2004, and for the years ended October 31, 2003, and
  October 31, 2002.

---