---



|CONSOLIDATED FINANCIAL STATEMENTS                       
|--------------------------------------------------------
|                                                        
|YEARS ENDED DECEMBER 31, 2007, 2006 AND 2005            
|                                                        
|                                                        
|(Expressed in Canadian Dollars, unless otherwise stated)

---



REPORT OF INDEPENDENT REGISTERED PUBLIC
  ACCOUNTING FIRM

To the Board of Directors of Anooraq Resources Corporation

We have audited the accompanying consolidated balance sheets of
  Anooraq Resources Corporation (the Company) as at December 31, 2007 and 2006 and
  the related consolidated statements of operations and comprehensive loss,
  shareholders equity and cash flows for each of the years in the three-year
  period ended December 31, 2007. These consolidated financial statements are the
  responsibility of the Companys management. Our responsibility is to express an
  opinion on these consolidated financial statements based on our audits.

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

In our opinion, the consolidated financial statements referred
  to above present fairly, in all material respects, the financial position of the
  Company as at December 31, 2007 and 2006 and the results of its operations and
  its cash flows for each of the years in the three-year period ended December 31,
  2007 in conformity with Canadian generally accepted accounting principles.

As discussed in note 4 to the consolidated financial
  statements, the Company changed its method of accounting for financial
  instruments and derivatives in 2007.

Canadian generally accepted accounting principles vary in
  certain significant respects from US generally accepted accounting principles.
  Information relating to the nature and effect of such differences is presented
  in note 13 to the consolidated financial statements.

We also have audited, in accordance with the standards of the
  Public Company Accounting Oversight Board (United States), the Company's
  internal control over financial reporting as of December 31, 2007 based on the
  criteria established in Internal ControlIntegrated Frameworkissued by
  the Committee of Sponsoring Organizations of the Treadway Commission (COSO), and
  our report dated June 25, 2008 expressed an unqualified opinion on the
  effectiveness of the Companys internal control over financial reporting.

|                     
|---------------------
|Chartered Accountants
|                     
|Vancouver, Canada    
|                     
|June 25, 2008        

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

---

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

|                                         |   | December 31 |   |   | December 31 |  
|---------------------------------------- | - | ----------- | - | - | ----------- | -
|                                         |   | 2007        |   |   | 2006        |  
|                                         |   |             |   |   |             |  
|Assets                                   |   |             |   |   |             |  
|                                         |   |             |   |   |             |  
|Current assets                           |   |             |   |   |             |  
|Cash and equivalents                     | $ | 7,131,821   |   | $ | 12,775,145  |  
|Amounts receivable                       |   | 167,779     |   |   | 159,079     |  
|Due from related
      parties (note 9)  |   |            |   |   | 138,616     |  
|Prepaid expenses                         |   | 469,555     |   |   | 104,164     |  
|                                         |   | 7,769,155   |   |   | 13,177,004  |  
|                                         |   |             |   |   |             |  
|Deferred financing costs(note 7)         |   |            |   |   | 337,852     |  
|Equipment(note 5)                        |   | 105,494     |   |   | 73,315      |  
|Mineral property interests(note 6)       |   | 9,078,714   |   |   | 8,240,751   |  
|                                         | $ | 16,953,363  |   | $ | 21,828,922  |  
|                                         |   |             |   |   |             |  
|                                         |   |             |   |   |             |  
|Liabilities and Shareholders' Equity     |   |             |   |   |             |  
|                                         |   |             |   |   |             |  
|Current Liabilities                      |   |             |   |   |             |  
|Accounts payable and accrued liabilities | $ | 475,102     |   | $ | 1,027,709   |  
|Due to related parties (note
      9)    |   | 45,609      |   |   | 6,435       |  
|Current portion of term loan (note 7)    |   | 1,892,197   |   |   |            |  
|                                         |   | 2,412,908   |   |   | 1,034,144   |  
|                                         |   |             |   |   |             |  
|Term loan(note 7)                        |   | 9,806,636   |   |   | 11,818,677  |  
|                                         |   | 12,219,544  |   |   | 12,852,821  |  
|                                         |   |             |   |   |             |  
|Shareholders' equity                     |   |             |   |   |             |  
|Share capital (note 8(a))                |   | 51,855,350  |   |   | 50,207,363  |  
|Contributed surplus                      |   | 13,254,905  |   |   | 4,849,043   |  
|Deficit                                  |   | (60,376,436 | ) |   | (46,080,305 | )
|                                         |   | 4,733,819   |   |   | 8,976,101   |  
|                                         |   |             |   |   |             |  
|Nature of operations (note 1)            |   |             |   |   |             |  
|Commitments (notes 6(b) and 8(c))        |   |             |   |   |             |  
|Proposed
      transaction (note 12 )    |   |             |   |   |             |  
|                                         | $ | 16,953,363  |   | $ | 21,828,922  |  

See accompanying notes to consolidated financial
statements

Approved by the Board of Directors

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

---

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

|                                                                       |   | Year ended December 31 |  
|---------------------------------------------------------------------- | - | ---------------------- | -
|                                                                       |   | 2007                   |  
|Expenses                                                               |   |                        |  
|Accounting, audit and legal                                            | $ | 416,745                |  
|Accretion on term loan                                                 |   | 112,459                |  
|Conference and travel                                                  |   | 492,106                |  
|Consulting                                                             |   | 177,809                |  
|Exploration (schedule)                                                 |   | 876,900                |  
|Foreign exchange loss (gain)                                           |   | (588,115               | )
|Gain on disposal of equipment                                          |   |                       |  
|Interest expense                                                       |   | 2,042,711              |  
|Interest income                                                        |   | (799,985               | )
|Office and administration                                              |   | 451,908                |  
|Salaries and benefits                                                  |   | 2,016,689              |  
|Stock-based compensation - office and
      administration (note 8(b)) |   | 7,215,670              |  
|Stock-based compensation -
      exploration (note 8(b))               |   | 1,491,849              |  
|Shareholders communications                                            |   | 258,882                |  
|Trust and filing                                                       |   | 269,503                |  
|Loss before the following                                              |   | 14,435,131             |  
|Future income tax recovery (note 10)                                   |   | (139,000               | )
|Loss for the year                                                      |   | 14,296,131             |  
|Other comprehensive loss                                               |   |                       |  
|Total
      Comprehensive Loss                                         | $ | 14,296,131             |  
|                                                                       |   |                        |  
|Basic and diluted
      loss per share                                 | $ | 0.08                   |  
|                                                                       |   |                        |  
|Weighted average
      number of common shares outstanding             |   | 168,377,927            |  

See accompanying notes to consolidated financial
statements

---

|ANOORAQ RESOURCES CORPORATION                  
|-----------------------------------------------
|Consolidated Statements of Shareholders' Equity
|(Expressed in Canadian Dollars)                
|                                               

|                                                                         |  |                   |  |   | Year ended        |   |  |             |  |   | Year ended  |  
|------------------------------------------------------------------------ |  | ----------------- |  | - | ----------------- | - |  | ----------- |  | - | ----------- | -
|                                                                         |  | December 31, 2007 |  |   | December 31, 2006 |  
|                                                                         |  |                   |  |   |                   |   |  |             |  |   |             |  
|                                                                         |  |                   |  |   |                   |   |  |             |  |   |             |  
|                                                                         |  | Number of         |  |   |                   |   |  | Number of   |  |   |             |  
|Share capital                                                            |  | shares            |  |   |                   |   |  | shares      |  |   |             |  
|Balance at beginning of the year                                         |  | 148,220,407       |  | $ | 50,207,363        |   |  | 148,220,407 |  | $ | 50,207,363  |  
|Share purchase options exercised at
      $1.40 per share                |  | 883,200           |  |   | 1,236,480         |   |  |            |  |   |            |  
|Share purchase options
      exercised at $0.95 per share                |  | 100,000           |  |   | 95,000            |   |  |            |  |   |            |  
|Share purchase options exercised at
      $2.97 per share                |  | 5,000             |  |   | 14,850            |   |  |            |  |   |            |  
|Fair value of stock
      options allocated to shares issued on exercise |  |                  |  |   | 301,657           |   |  |            |  |   |            |  
|Common shares issued (note 6(b))                                         |  | 36,000,000        |  |   |                  |   |  |            |  |   |            |  
|Balance at end of the year                                               |  | 185,208,607       |  | $ | 51,855,350        |   |  | 148,220,407 |  | $ | 50,207,363  |  
|                                                                         |  |                   |  |   |                   |   |  |             |  |   |             |  
|Contributed surplus                                                      |  |                   |  |   |                   |   |  |             |  |   |             |  
|Balance at beginning of the year                                         |  |                   |  | $ | 4,849,043         |   |  |             |  | $ | 4,824,697   |  
|Stock-based
      compensation                                           |  |                   |  |   | 8,707,519         |   |  |             |  |   | 24,346      |  
|Fair value of stock options allocated to shares issued on exercise       |  |                   |  |   | (301,657          | ) |  |             |  |   |            |  
|Balance at end of the year                                               |  |                   |  | $ | 13,254,905        |   |  |             |  | $ | 4,849,043   |  
|                                                                         |  |                   |  |   |                   |   |  |             |  |   |             |  
|Deficit                                                                  |  |                   |  |   |                   |   |  |             |  |   |             |  
|Balance at beginning of the year                                         |  |                   |  | $ | (46,080,305       | ) |  |             |  | $ | (41,575,461 | )
|Loss for the year                                                        |  |                   |  |   | (14,296,131       | ) |  |             |  |   | (4,504,844  | )
|Balance at
      end of the year                                         |  |                   |  | $ | (60,376,436       | ) |  |             |  | $ | (46,080,305 | )
|                                                                         |  |                   |  |   |                   |   |  |             |  |   |             |  
|                                                                         |  |                   |  |   |                   |   |  |             |  |   |             |  
|TOTAL SHAREHOLDERS' EQUITY                                               |  |                   |  | $ | 4,733,819         |   |  |             |  | $ | 8,976,101   |  

The accompanying notes are an integral part of these
consolidated financial statements.

---

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

|                                                                          |   | Year ended December 31 |  
|------------------------------------------------------------------------- | - | ---------------------- | -
|                                                                          |   | 2007                   |  
|Operating activities                                                      |   |                        |  
|Loss for the year                                                         | $ | (14,296,131            | )
|Items not involving cash                                                  |   |                        |  
|Amortization included in exploration expenses                             |   | 24,009                 |  
|Accretion on term
      loan                                              |   | 112,459                |  
|Future income tax recovery                                                |   | (139,000               | )
|Accrued interest
      on term loan (note 7)                              |   | 1,775,862              |  
|Stock-based compensation (note 8(b))                                      |   | 8,707,519              |  
|Gain on disposal
      of equipment                                       |   |                       |  
|Unrealized foreign exchange gain                                          |   | (410,350               | )
|Equity loss in
      exploration expenditures (note 6)                    |   | 920,608                |  
|Changes in non-cash operating
      working capital                       |   |                        |  
|Amounts receivable                                                        |   | (8,700                 | )
|Amounts due to and from related parties                                   |   | 177,790                |  
|Prepaid expenses                                                          |   | (365,391               | )
|Accounts payable
      and accrued liabilities                            |   | (200,966               | )
|Cash and
      equivalents used by operating activities                   |   | (3,702,291             | )
|                                                                          |   |                        |  
|Investing activities                                                      |   |                        |  
|Purchase of equipment                                                     |   | (56,188                | )
|Proceeds on disposal of equipment                                         |   |                       |  
|Equity investment (note 6)                                                |   | (1,481,571             | )
|Cash and
      equivalents provided by (used by) investing activities     |   | (1,537,759             | )
|                                                                          |   |                        |  
|Financing activities                                                      |   |                        |  
|Issuance of common shares                                                 |   | 1,346,330              |  
|Financing costs paid                                                      |   | (445,917               | )
|Term loan                                                                 |   |                       |  
|Cash and
      equivalents provided by financing activities               |   | 900,413                |  
|                                                                          |   |                        |  
|Effect of exchange
      rate changes on cash and equivalents             |   | (1,303,687             | )
|Increase (decrease) in cash and
      equivalents                         |   | (5,643,324             | )
|Cash and
      equivalents, beginning of year                             |   | 12,775,145             |  
|Cash and equivalents, end of year                                         | $ | 7,131,821              |  
|                                                                          |   |                        |  
|                                                                          |   |                        |  
|Supplementary information                                                 |   |                        |  
|Interest paid                                                             | $ | 266,849                |  
|Interest received                                                         | $ | (799,985               | )
|Miscellaneous income                                                      | $ |                       |  
|Taxes paid                                                                | $ |                       |  
|                                                                          |   |                        |  
|Non-cash operating, financing and investing
      activities              |   |                        |  
|Financing costs accrued in accounts payable
      and accrued liabilities | $ |                       |  
|Fair value of options allocated to shares issued on
      exercise        | $ | 301,657                |  

See accompanying notes to consolidated financial
statements

---

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

|Republic of South Africa                         |   | Year ended December 31 | 
|------------------------------------------------ | - | ---------------------- | 
|                                                 |   | 2007                   | 
|Northern Limb of the Bushveld Complex            |   |                        | 
|Amortization                                     | $ | 24,009                 | 
|Assays and analysis                              |   | 200                    | 
|Drilling                                         |   |                       | 
|Engineering                                      |   | 19,784                 | 
|Environmental and socioeconomic                  |   |                       | 
|Geological and consulting                        |   | 41,369                 | 
|Graphics                                         |   | 5,104                  | 
|Property fees and assessments                    |   | 9,303                  | 
|Property option payments                         |   | 12,016                 | 
|Site activities                                  |   | 12,717                 | 
|Transportation                                   |   | 4,036                  | 
|                                                 |   | 128,538                | 
|                                                 |   |                        | 
|Eastern Limb of the Bushveld Complex             |   |                        | 
|Assays and analysis                              |   |                       | 
|Drilling                                         |   |                       | 
|Engineering                                      |   |                       | 
|Geological and consulting                        |   | 748,362                | 
|Graphics                                         |   |                       | 
|Property fees and assessments                    |   |                       | 
|Site activities                                  |   |                       | 
|Transportation                                   |   |                       | 
|                                                 |   | 748,362                | 
|                                                 |   |                        | 
|Exploration expenses before the
      following  |   | 876,900                | 
|Stock-based
      compensation (note 8(b))       |   | 1,491,849              | 
|Exploration expenses                             |   | 2,368,749              | 
|Cumulative
      expenditures, beginning of year |   | 23,613,314             | 
|Cumulative expenditures, end of year             | $ | 25,982,063             | 

See accompanying notes to consolidated financial
statements

---

|ANOORAQ RESOURCES CORPORATION                                 
|--------------------------------------------------------------
|Notes to Consolidated Financial Statements                    
|For the years ended December 31, 2007, 2006 and 2005          
|(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).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|    | The Company is in the process of exploring its mineral
      property interests and has not yet determined whether its mineral property
      interests contain economically recoverable mineral reserves. The
      underlying value and the recoverability of the amounts shown for mineral
      property interests are entirely dependent upon the existence of
      economically recoverable mineral reserves, the ability of the Company to
      obtain the necessary financing to complete the exploration and development
      of the mineral property interests, and future profitable production or
      proceeds from the disposition of the mineral property interests.                                                                                                                                                                                                                                                                                                     
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|    | The consolidated financial statements are prepared on the
      basis that the Company will continue as a going concern. Management
      recognizes that the Company will need to generate additional financial
      resources in order to meet its planned business objectives. While the
      Company forecasts that it has adequate cash and cash equivalents to fund
      identified 2008 expenditure requirements, there can be no assurances that
      the Company will continue to obtain additional financial resources and/or
      achieve profitability or positive cash flows. If the Company is unable to
      obtain adequate additional financing, the Company will be required to
      curtail operations and exploration activities. Furthermore, failure to
      continue as a going concern would require that the Companys assets and
      liabilities be restated on a liquidation basis which would differ
      significantly from the going concern basis.
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|2.  | BASIS OF PRESENTATION AND PRINCIPLES OF
      CONSOLIDATION                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|    | These financial statements have been prepared in
      accordance with Canadian generally accepted accounting principles. The
      consolidated financial statements include the accounts of the Company and
      its subsidiaries, all of which are wholly owned.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|    | The Company's investment in the Ga-Phasha joint
      venture (note 6(b)) is accounted for using the equity method.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|    | 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. At
      December 31, 2007, of the $7,131,821 cash and equivalents held by the
      Company, $6,557,885                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    

---

|ANOORAQ RESOURCES CORPORATION                           
|--------------------------------------------------------
|Notes to Consolidated Financial Statements              
|For the years ended December 31, 2007, 2006 and 2005    
|(Expressed in Canadian Dollars, unless otherwise stated)

|    | (ZAR 45,540,868) were held in South African Rand (ZAR) (2006  $11,738,214 (ZAR 71,011,579)).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|(b) | Equipment                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|    | Equipment is carried at cost less accumulated amortization. Amortization is provided on a declining balance basis at various rates ranging from 15% to 30% per annum.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|(c) | Mineral property interests                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|    | Exploration expenses incurred prior to determination of the feasibility of mining operations and periodic option payments are expensed as incurred. Mineral property acquisition costs, and exploration and development expenditures
      incurred subsequent to the determination of the feasibility of mining operations and approval of development by the Company, are capitalized until the property to which they relate is placed into production, sold, allowed to lapse or abandoned.                                                                                                                                                                                                                                                                                                                                                                                                                     
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|    | Mineral property acquisition costs include the cash consideration and the fair market value of common shares and warrants issued for mineral property interests, pursuant to the terms of the relevant agreements. These costs will be
      amortized over the estimated life of the property following commencement of commercial production, or written off if the property is sold, allowed to lapse or abandoned, or when an impairment of value has been determined to have occurred.                                                                                                                                                                                                                                                                                                                                                                                                                         
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|(d) | Investments                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|    | Investments in entities over which the Company exercises significant influence are accounted for using the equity method. Investments in joint ventures which the Company jointly controls and are not variable interest entities are
      accounted for using the proportionate consolidation method.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|(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, using the substantively enacted or enacted income tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled.
      Future income tax assets also result from unused loss carry forwards and other deductions. Future tax assets are recognized to the extent that they are considered more likely than not to be realized. The carrying value of future income tax assets is
      adjusted, if necessary, by the use of a valuation allowance to reflect the amount that is considered to be more likely than not to be realized.
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|(f) | Income (loss) per share                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|    | Basic income (loss) per share is calculated by dividing the income (loss) available to common shareholders by the weighted average number of common shares outstanding during the period. For all years presented, income (loss)
      available to common shareholders equals the reported loss.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   

---

|ANOORAQ RESOURCES CORPORATION                           
|--------------------------------------------------------
|Notes to Consolidated Financial Statements              
|For the years ended December 31, 2007, 2006 and 2005    
|(Expressed in Canadian Dollars, unless otherwise stated)

|    | Diluted income (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 income (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 years presented, diluted loss per share is the same as
      basic loss per share as the effect of including outstanding options and warrants in the loss per share calculation would be anti-dilutive.                                                                                                
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|(g) | Translation of foreign currencies                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|    | The Company's functional currency is the Canadian dollar. Monetary assets and liabilities denominated in a foreign currency are translated into Canadian dollars at exchange rates in effect at the balance sheet date. Non-monetary
      assets and liabilities are translated at historical exchange rates unless such items are carried at fair value, in which case they are translated at the exchange rates in effect on the balance sheet date. Revenues and expenses, except amortization,
      are translated at the average exchange rates for the year. Amortization is translated at the same exchange rate as the assets to which it relates. Gains or losses on translation are recorded in the statement of operations.          
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|(h) | 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 impairment of mineral property interests, determination
      of reclamation obligations, determination of valuation allowances for future income tax assets, and the assumptions used in determining fair value of non-cash stock-based compensation. Actual results could differ from these estimates.
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|(i) | Stock-based compensation                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|    | The Company has a share option plan which is described in note 8(b). The Company records all stock-based payments granted using the fair value method.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|    | Under the fair value method, stock-based compensation is measured at the fair value on the grant date and charged to operations over the vesting period with a corresponding credit to contributed surplus.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|    | Consideration received on the exercise of stock options is recorded as share capital and the related contributed surplus is transferred to share capital.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|(j) | Asset retirement obligations                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|    | The Company recognizes statutory, contractual or other legal obligations related to the retirement of tangible long-lived assets when such obligations are incurred, if a reasonable estimate of fair value can be made. These
      obligations are measured initially at fair value and the resulting costs are capitalized to the carrying value of the related asset. In subsequent periods, the liability is                                                                                                                                                                                                                                                                                                                                 

---

|ANOORAQ RESOURCES CORPORATION                                 
|--------------------------------------------------------------
|Notes to Consolidated Financial Statements                    
|For the years ended December 31, 2007, 2006 and 2005          
|(Expressed in
      Canadian Dollars, unless otherwise stated)

|    | 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.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|(k) | Variable interest entities                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|    | The Company accounts for variable interest entities
      (VIE) in accordance with the Canadian Institute of Chartered Accountants
      (CICA) Accounting Guideline 15, "Consolidation of Variable Interest
      Entities" ("AcG15"). AcG15 prescribes the application of consolidation
      principles for entities that meet the definition of a VIE and for which
      the Company is considered the primary beneficiary. VIEs are entities in
      which equity investors do not have the characteristics of a controlling
      financial interest or do not have sufficient equity at risk for the entity
      to finance its activities without additional subordinated financial
      support from other parties. The primary beneficiary is the party that has
      exposure to a majority of the expected losses and/or expected residual
      returns of the VIE. An enterprise holding other than a voting interest in
      a VIE could, subject to certain conditions, be required to consolidate the
      VIE if it is considered its primary beneficiary. The Company has concluded
      that the Ga-Phasha Project qualifies as a VIE but that the Company is not
      the primary beneficiary.
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|(l) | Segment disclosures                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|    | The Company operates in a single operating segment, being
      the exploration of mineral properties in South Africa.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|(m) | Comparative figures                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|    | Certain of the prior years comparative figures have been
      restated to conform to the presentation adopted for the current year.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|4.  | CHANGES IN ACCOUNTING POLICY                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|(a) | Newly Adopted Accounting Policies                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|    | Effective January 1, 2007, the Company adopted the
      following new accounting standards issued by the Canadian Institute of
      Chartered Accountants (CICA) relating to financial instruments and
      accounting changes. As required by the transitional provisions of these
      new standards, these new standards have been adopted with no restatement
      to prior period financial statements.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|    | (i) Section 3855  Financial Instruments 
      Recognition and Measurement                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|    | This standard requires all financial instruments within
      its scope, including derivatives, to be recognized on the balance sheet
      and measured either at fair value or, in certain circumstances at cost or
      amortized cost.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|    | All financial instruments are classified into one of the
      following categories: held for trading, held- to-maturity,
      available-for-sale, loans and receivables and other financial liabilities.
      Initial and subsequent measurement and recognition of changes in the value
      of financial instruments depends on their initial classification:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             

---

|ANOORAQ RESOURCES CORPORATION                                 
|--------------------------------------------------------------
|Notes to Consolidated Financial Statements                    
|For the years ended December 31, 2007, 2006 and 2005          
|(Expressed in
      Canadian Dollars, unless otherwise stated)

| | Held-to-maturity investments, loans and receivables, and other financial
        liabilities are initially measured at fair value and subsequently measured at
        amortized cost. Amortization of premiums or discounts and losses due to
        impairment are included in current period net income (loss).
      Available-for-sale financial assets are measured at fair value. Changes in
        fair value are included in other comprehensive income (loss) until the gain or
        loss is recognized in income when the asset is sold or deemed to be
        permanently impaired.
      Held for trading financial instruments are measured at fair value. All
        changes in fair value are included in net income (loss) in the current
        period..
      All derivative financial instruments are measured at fair value, even when
        they are part of a hedging relationship. Changes in fair value are included in
        net income (loss) in the period in which they arise, except for hedge
        transactions which qualify for hedge accounting treatment in which case gains
        and losses are recognized in accumulated other comprehensive income.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

All financial assets and liabilities
  are recognized when the entity becomes a party to the contract creating the
  asset or liability. On adoption of the standards on January 1, 2007, the
  Companys outstanding financial assets and liabilities were recognized and
  measured in accordance with the new requirements as if these requirements had
  always been in effect. However, no adjustments to opening deficit or opening
  accumulated other comprehensive income were required. In accordance with this
  new standard, deferred financing costs of $337,852 relating to the issuance of
  the term loan are no longer presented as a separate asset on the balance sheet
  and are now included in the carrying value of the term loan, and are amortized
  to interest expense using the effective interest rate method.

(ii) Section 3865  Hedges

This new standard specifies the
  circumstances under which hedge accounting is permissible and how hedge
  accounting may be performed. The Company currently does not have any financial
  instruments which qualify for hedge accounting.

(iii) Section 1530  Comprehensive
  Income

Comprehensive income is the change in
  the Companys shareholder equity that results from transactions and other events
  from other than the Companys shareholders and includes items that would not
  normally be included in net income (loss), such as unrealized gains or losses on
  available-for-sale investments. This standard requires certain gains and losses
  that would otherwise be recorded as part of net income to be presented in other
  accumulated comprehensive income until it is considered appropriate to recognize
  into net income. This standard requires the presentation of comprehensive
  income, and its components in a separate financial statement that is displayed
  with the same prominence as the other financial statements. Accumulated other
  comprehensive income is presented as a new category in shareholders equity. As
  at December 31, 2007, the Company had no accumulated other comprehensive income
  and for the year ended December 31, 2007, comprehensive loss equals net
  loss.

(iv) Section 1506 - Accounting
  Changes

This standard establishes criteria for
  changing accounting policies, together with the accounting treatment and
  disclosure of changes in accounting policies, changes in accounting estimates
  and

---

|ANOORAQ RESOURCES CORPORATION                                 
|--------------------------------------------------------------
|Notes to Consolidated Financial Statements                    
|For the years ended December 31, 2007, 2006 and 2005          
|(Expressed in
      Canadian Dollars, unless otherwise stated)

correction of errors. As a result,
  changes in accounting policies are only permitted when required by a primary
  source of generally accepted accounting principles or when the change will
  result in more reliable and more relevant information.

|(b) | Accounting Policies Not Yet
      Adopted
|--- | -----------------------------------------

(i ) Section 1535  Capital
  Disclosures

This standard requires disclosure of an
  entity's objectives, policies and processes for managing capital, quantitative
  data about what the entity regards as capital and whether the entity has
  complied with any capital requirements and, if it has not complied, the
  consequences of such non-compliance. This standard is effective for the Company
  for interim and annual periods relating to fiscal years beginning on or after
  January 1, 2008, The Company is currently evaluating the effects of adopting
  this standard.

(ii) Financial Instruments 
  Disclosure (Section 3862) and Presentation (Section 3863)

These standards replace CICA 3861,
  Financial Instruments  Disclosure and Presentation. They increase the
  disclosures currently required, which will enable users to evaluate the
  significance of financial instruments for an entity's financial position and
  performance, including disclosures about fair value. In addition, disclosure is
  required of qualitative and quantitative information about exposure to risks
  arising from financial instruments, including specified minimum disclosures
  about credit risk, liquidity risk and market risk. The quantitative disclosures
  must provide information about the extent to which the entity is exposed to
  risk, based on information provided internally to the entitys key management
  personnel. This standard is effective for the Company for interim and annual
  periods beginning on or after January 1, 2008. The Company expects that its
  disclosures will be expanded to incorporate the additional requirements.

(iii) Amendments to Section 1400 
  Going Concern

CICA 1400, General Standards of
  Financial Statement Presentation, was amended to include requirements to assess
  and disclose an entity's ability to continue as a going concern. The new
  requirements are effective for interim and annual financial statements relating
  to fiscal years beginning on or after January 1, 2008. The Company is currently
  evaluating the impact of this new standard.

(iv) International Financial
  Reporting Standards ("IFRS")

In 2006, the Canadian Accounting
  Standards Board ("AcSB") published a new strategic plan that will significantly
  affect financial reporting requirements for Canadian companies. The AcSB
  strategic plan outlines the convergence of Canadian GAAP with IFRS over an
  expected five year transitional period. In February 2008, the AcSB announced
  that 2011 is the changeover date for publicly-listed companies to use IFRS,
  replacing Canada's own GAAP. The date is for interim and annual financial
  statements relating to fiscal years beginning on or after January 1, 2011. The
  transition date of January 1, 2011 will require the restatement for comparative
  purposes of amounts reported by the Company for the year ended December 31,
  2010. While the Company has begun assessing the adoption of IFRS for 2011, the
  financial reporting impact of the transition to IFRS cannot be reasonably
  estimated at this time.

---

|ANOORAQ RESOURCES CORPORATION                                 
|--------------------------------------------------------------
|Notes to Consolidated Financial Statements                    
|For the years ended December 31, 2007, 2006 and 2005          
|(Expressed in
      Canadian Dollars, unless otherwise stated)

|5. | EQUIPMENT
|-- | ---------

| |          |   | December 31, 2007 |  |   | December 31, 2006 | 
| | -------- | - | ----------------- |  | - | ----------------- | 
| |          |   |                   |  |   | Accumulated       | 
| |          |   | Cost              |  |   | amortization      | 
| | Office   | $ | 66,840            |  | $ | 14,575            | 
| | Vehicles |   | 116,368           |  |   | 63,139            | 
| |          | $ | 183,208           |  | $ | 77,714            | 

|6. | MINERAL PROPERTY
      INTERESTS
|-- | --------------------------------

| |                                                     |   | Year ended        |   |   | Year ended        |  
| | --------------------------------------------------- | - | ----------------- | - | - | ----------------- | -
| |                                                     |   | December 31, 2007 |   |   | December 31, 2006 |  
| | Ga-Phasha Project (note 6(b))                       |   |                   |   |   |                   |  
| | Balance, beginning of year                          | $ | 4,040,751         |   | $ | 4,302,000         |  
| | Equity loss  exploration expenses                  |   | (920,608          | ) |   | (555,677          | )
| | Net investments during
      the period             |   | 1,481,571         |   |   | 59,428            |  
| | Equity gain  future income tax
      recovery      |   | 139,000           |   |   | 121,000           |  
| | Equity gain  foreign exchange                      |   | 138,000           |   |   | 114,000           |  
| | Ga-Phasha Project, end of year                      |   | 4,878,714         |   |   | 4,040,751         |  
| | Platreef Properties  acquisition costs (note 6(a)) |   | 4,200,000         |   |   | 4,200,000         |  
| | Balance, end
      of year                          | $ | 9,078,714         |   | $ | 8,240,751         |  

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

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

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

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

On May 23, 2000, the Company added to
  its mineral rights in the region by acquiring through Plateau the option to
  purchase a 100% interest in portion 2 of the Elandsfontein 766LR farm located
  contiguous to the pre-existing Platreef properties, pursuant to an agreement
  with MSA Projects (Proprietary) Limited. The option required staged issuances of
  a maximum of 500,000 common shares of the Company (of which 412,500 shares have
  been issued to December 31, 2007 and no further share issuances are expected)
  and aggregate cash payments up to a maximum of US$350,000 (of which US$99,250
  and $15,000 have been paid).

---

|ANOORAQ RESOURCES CORPORATION                                 
|--------------------------------------------------------------
|Notes to Consolidated Financial Statements                    
|For the years ended December 31, 2007, 2006 and 2005          
|(Expressed in
      Canadian Dollars, unless otherwise stated)

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

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

Rietfontein

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

Kwanda (Rustenburg)

On May 16, 2002, the Company completed
  an agreement with Rustenburg Platinum Mines Limited ("Rustenburg"), a wholly
  owned subsidiary of Anglo American Platinum Corporation Limited ("Anglo
  Platinum"), for the right to acquire up to an 80% interest in twelve PGM
  properties located on the Northern Limb of the Bushveld Complex.

Under the agreements with Anglo
  Platinum, the Company has acquired an initial 50% interest in the PGM rights to
  the twelve farms and can maintain this interest by making staged exploration
  expenditure totaling ZAR 25 million within five years. The Company is required
  to, and did, spend ZAR 2.5 million in year one, ZAR 5 million in year two, and
  was required to spend ZAR 5 million in each of years three and four and ZAR 7.5
  million in year five. The Company has not completed its exploration expenditure
  requirement from year three to five, and both parties have mutually agreed to
  suspend indefinitely the expenditures requirements for years three to 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

---

|ANOORAQ RESOURCES CORPORATION                                 
|--------------------------------------------------------------
|Notes to Consolidated Financial Statements                    
|For the years ended December 31, 2007, 2006 and 2005          
|(Expressed in
      Canadian Dollars, unless otherwise stated)

venture by a Historically
  Disadvantaged South Africans ("HDSA") partner will be provided out of the
  Company's interest.

Boikgantsho
  (Drenthe-Overysel)

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

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

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

Once a BFS has been completed, the
  parties, by agreement, may proceed to exploitation subject to relevant
  regulatory requirements. If both partners decide to proceed, then a joint
  management committee will be established to oversee development and operations.
  At commencement of exploitation, the joint venture interest allotted to each of
  Anooraq and Anglo Platinum will be determined in proportion to the relative
  value of the metals contained in each contributed property as reflected in the
  BFS. Anooraq or Anglo Platinum, as the case may be, each has the right to make a
  cash payment to the other party or to fund additional capital contributions to
  equalize their respective contributions. During development, the Boikgantsho JV
  will be seeking a Black Economic Empowerment ("BEE") partner to participate in
  the project (which may be Anooraq itself) with the original Boikgantsho JV
  partners dividing the remaining interest.

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

---

|ANOORAQ RESOURCES CORPORATION                                 
|--------------------------------------------------------------
|Notes to Consolidated Financial Statements                    
|For the years ended December 31, 2007, 2006 and 2005          
|(Expressed in
      Canadian Dollars, unless otherwise stated)

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

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

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 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 totaling ZAR 15,652,744 ($3,055,416).
  Approximately 83 million Consideration Shares are being held in escrow until the
  earlier of September 29, 2010 or twelve months after the commencement of
  commercial production from the Ga-Phasha Project at which time they will be
  released.

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

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

---

|ANOORAQ RESOURCES CORPORATION                                 
|--------------------------------------------------------------
|Notes to Consolidated Financial Statements                    
|For the years ended December 31, 2007, 2006 and 2005          
|(Expressed in
      Canadian Dollars, unless otherwise stated)

The acquisition costs were accounted
  for as follows:

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

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

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

The share exchange agreement further
  provided that, to the extent that if no such dilutive financings had taken place
  by the Finalization Date, certain dilutive financings were deemed to have
  occurred by that date. The purpose was to make allowance for the dilutive effect
  on Pelawans shareholding of the anticipated financings for mine development of
  the Projects and safeguard the status of Anooraq as a BEE company. For the
  purposes of calculating whether, by virtue of such deemed dilutive financings,
  any common shares were required to be issued to Pelawan in order to maintain a
  minimum 52% shareholding, the share exchange agreement provided that the quantum
  of such deemed financings would equal: (a) 30% of the estimated development
  costs in accordance with the bankable feasibility studies in respect of the
  Projects, less cash on hand, or (b) to the extent that such bankable feasibility
  studies had not been prepared as at the Finalization Date, $70.8 million related
  to the Ga-Phasha Project and $27.6 million related to the Drenthe-Overysel
  Project, less cash on hand (the Deemed Dilutive Financings). Following the
  Finalization Date, Anooraq has the right but not the obligation to issue
  additional common shares to Pelawan in order to maintain Pelawans minimum
  shareholding.

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

---

|ANOORAQ RESOURCES CORPORATION                                 
|--------------------------------------------------------------
|Notes to Consolidated Financial Statements                    
|For the years ended December 31, 2007, 2006 and 2005          
|(Expressed in
      Canadian Dollars, unless otherwise stated)

52% interest in the Company. In
  November 2005, Anooraq and Pelawan agreed to extend the Finalization Date.

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

| | (i)   | Anooraq issued 36 million common shares (Adjustment
      Consideration Shares) to Pelawan as consideration for the
      settlement.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| | ----- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| | (ii)  | Anooraq issued to Pelawan share purchase warrants for the
      purchase of 167 million common shares in Anooraq (BEE Warrants)
      exercisable until December 31, 2008. The BEE Warrants can be exercised at
      the higher of (a) $1.35 if exercised on or before December 31, 2007 or
      $1.48 if exercised after December 31, 2007 or (b) at a price that is 50%
      less than the price per Anooraq common share payable by arms length
      parties under an equity financing undertaken by the Company that either
      raises an amount of at least $98.4 million or is undertaken pursuant to a
      material transaction (a Concurrent Financing).                                                                                                                                                                                                                                                         
| |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| | (iii) | From the date of issue (June 14, 2007) of the Adjustment
      Consideration Shares to Pelawan in (i) above or as a result of the
      exercise of any of the BEE Warrants up to the closing date of the
      Concurrent Financing, the common shares issued to Pelawan pursuant thereto
      will be subject to a lock up arrangement and Pelawan will not be entitled
      to dispose of any of these shares, save for the exemption referred to in
      (iv) below and the payment of taxes. After the closing date of the
      Concurrent Financing, the disposal of such shares shall remain subject to
      the original lock up agreement entered into between Pelawan and Anooraq
      under the terms of the original RTO transaction (the BEE Lock Up), which
      is the earlier of September 29, 2010 or twelve months after the
      commencement of commercial production from the Ga-Phasha
      Project.
| |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| | (iv)  | Anooraq has agreed to grant Pelawan an exemption to the
      BEE Lock Up for the purposes of facilitating Pelawans financing of the
      exercise of the BEE Warrants. In the event that Pelawan exercises any BEE
      Warrants, Pelawan shall, in its sole discretion, be entitled to dispose
      that number of common shares up to 25% (or such greater amount as is
      required to facilitate the financing of the exercise of the BEE Warrants)
      of the aggregate common shares issued to Pelawan pursuant to such
      exercise, provided that all of the proceeds received by Pelawan from such
      disposal shall be applied by Pelawan to support the financing of the
      exercise of the BEE Warrants and reasonable expenses related to such
      exercise.                                                                                                                                         
| |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| | (v)   | On the occurrence of a Concurrent Financing, Pelawan
      shall be obliged to exercise the BEE Warrants to ensure that, at a
      minimum, Anooraq retains its status as a 52% controlled Black Economic
      Empowerment ("BEE") company, in compliance with undertakings given by
      Pelawan and the Company in favour of the South African Reserve Bank and
      Anglo Platinum Limited.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   

---

|ANOORAQ RESOURCES CORPORATION                                 
|--------------------------------------------------------------
|Notes to Consolidated Financial Statements                    
|For the years ended December 31, 2007, 2006 and 2005          
|(Expressed in
      Canadian Dollars, unless otherwise stated)

Pursuant to the exercise of the BEE
  Warrants, the Company entered into an amending agreement (the Amending
  Agreement) with Pelawan to amend the exercise procedure of the BEE Warrants to
  allow Pelawan to finance the exercise of the BEE Warrants by way of a Bridge
  Loan Facility from Rand Merchant Bank (RMB). Pursuant to the Amending
  Agreement, on December 20, 2007, Pelawan exercised the BEE Warrants at a price
  per common share of $1.35 by depositing an escrowed amount equal to the
  aggregate exercise price for the BEE Warrants ($ 225 million or ZAR 1,586
  billion) into an interest bearing account with RMB, to be released pursuant to a
  Deposit Account Agreement (the Deposit Agreement) between RMB, Pelawan
  Investments (Pty) Ltd and Anooraq upon the satisfaction of certain release
  conditions, as follows:

The earlier of:

| | Pelawan repaying the Bridge Loan Facility in full.Pelawan placing a new cash deposit (in ZAR) in an amount equal to the
        funds to be released from the deposit account with RMB, and Pelawan granting
        RMB its rights, title and interest in the cash deposit as security for the
        Bridge Loan Facility.Pelawan securing an on demand guarantee for an amount equal to the funds
        to be released from the deposit account. The guarantee will be in favour of
        RMB guaranteeing the performance of Pelawans obligations under the Bridge
        Loan Facility and should come from a counterparty acceptable to RMB and
        approved by the Company.Pelawan encumbering its Anooraq shares in favour of RMB. The value of the
        shares to be encumbered to RMB should equal the amount requested to be
        released from the deposit account. The share value is determined based on the
        share price of Anooraq on the TSX Venture Exchange on a 5 day volume weighted
        average traded price, commencing 5 days prior to the date upon which value is
        determined, converted from Canadian Dollars to ZAR at the foreign exchange
        closing rate on the last day of the 5 day period.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

and;

| | Evidence to the satisfaction of RMB that all necessary regulatory
        approvals in respect of the subscription of Anooraq shares and the issue
        thereof pursuant to Pelawans exercise of the BEE Warrants has been received.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

The common shares underlying the BEE
  Warrants will be issued to Pelawan upon receipt from escrow by the Company of
  the exercise price per common share, plus the interest accrued thereon up to the
  date of release.

Should the common shares underlying
  the BEE Warrants be issued in full, Pelawans resulting shareholding in Anooraq
  will increase to approximately 81% of the current issued and outstanding common
  shares of the Company. The Company intends to use the proceeds of the BEE
  Warrants exercise, when received, as partial funding for the proposed
  acquisition of 51% of Lebowa from Anglo Platinum (note 12). Should the release
  conditions not be satisfied and there is no close, the warrant exercise is void
  and Anooraq will not receive the proceeds of the exercise nor the interest
  earned from the deposit account and the BEE warrants will continue to exist in
  accordance with their terms until expiry or in accordance with the terms of the
  Settlement Agreement.

---

|ANOORAQ RESOURCES CORPORATION                                 
|--------------------------------------------------------------
|Notes to Consolidated Financial Statements                    
|For the years ended December 31, 2007, 2006 and 2005          
|(Expressed in
      Canadian Dollars, unless otherwise stated)

|7. | TERM LOAN
|-- | ---------

| |                     |   |                   |   |   |                   |  | 
| | ------------------- | - | ----------------- | - | - | ----------------- |  | 
| |                     |   | As at             |   |   | As at             |  | 
| |                     |   | December 31, 2007 |   |   | December 31, 2006 |  | 
| | Total term loan     | $ | 11,698,833        |   | $ | 11,818,677        |  | 
| | Current portion     |   | (1,892,197        | ) |   |                  |  | 
| | Non-current portion | $ | 9,806,636         |   | $ | 11,818,677        |  | 

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

The first interest payment is due and
  payable in January 2008, with other subsequent interest payments due and payable
  in six month intervals thereafter. No principal payments are required until
  maturity of the loan on September 30, 2010. However, the agreement allows for
  early repayment at the option of the Company. In connection with the loan, the
  Company incurred financing fees of $445,917, equal to 4% of the loan. As at
  December 31, 2006, the unamortized fees totaled $337,852. Effective January 1,
  2007, the unamortized amount was reclassified to the carrying value of the term
  loan in accordance with CICA Section 3855.

The Company is required to spend 85% of
  the loan amount to fund work towards the preparation of and operational
  expenditures contemplated in a bankable feasibility study for the Ga-Phasha
  project. Accrued interest expense on the term loan amounted to $1,888,321 (ZAR
  12,263,772) for the year ended December 31, 2007 (2006  $253,071 (ZAR
  1,498,346)) and has been included in the carrying value of the term loan.

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

|8.    | SHARE CAPITAL                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|----- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|*(a)* | Authorized share capital                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|      | The Company's authorized share capital consists of an
      unlimited number of common shares without par value.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|(b)   | Share option plan                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|      | The Company has a share option plan approved by the
      Companys shareholders that allows it to grant options, subject to
      regulatory terms and approval, to its directors, employees, officers, and
      consultants to, as at December 31, 2007, acquire up to 18,300,000 common
      shares, of which 7,695,000 options were outstanding and 4,770,000 remained
      available to grant. The exercise price of each option is set by the Board
      of Directors at the time of grant but cannot be less than the market price
      (less permissible discounts) on the TSX Venture Exchange. Options have a
      term

---

|ANOORAQ RESOURCES CORPORATION                                 
|--------------------------------------------------------------
|Notes to Consolidated Financial Statements                    
|For the years ended December 31, 2007, 2006 and 2005          
|(Expressed in
      Canadian Dollars, unless otherwise stated)

of up to a maximum of ten years
  (however, the Company has historically granted options for up to a term of five
  years), and terminate 30 to 90 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. The continuity of share purchase options is as
  follows:

| |                            |   |                |  |  |                   |   |  | Contractual      | 
| | -------------------------- | - | -------------- |  |  | ----------------- | - |  | ---------------- | 
| |                            |   | Weighted       |  |  |                   |   |  | weighted average | 
| |                            |   | average        |  |  |                   |   |  | remaining life   | 
| |                            |   | exercise price |  |  | Number of options |   |  | (years)          | 
| | Balance, December 31, 2004 | $ | 1.87           |  |  | 2,610,000         |   |  | 1.54             | 
| | Granted                    |   | 1.39           |  |  | 4,233,200         |   |  |                  | 
| | Exercised                  |   | 0.79           |  |  | (200,000          | ) |  |                  | 
| | Expired                    |   | 2.00           |  |  | (1,522,500        | ) |  |                  | 
| | Cancelled                  |   | 1.60           |  |  | (342,500          | ) |  |                  | 
| | Balance, December 31, 2005 | $ | 1.47           |  |  | 4,778,200         |   |  | 3.61             | 
| | Cancelled                  |   | 1.90           |  |  | (235,000          | ) |  |                  | 
| | Expired                    |   | 1.84           |  |  | (555,000          | ) |  |                  | 
| | Balance, December 31, 2006 | $ | 1.39           |  |  | 3,988,200         |   |  | 3.23             | 
| | Granted                    |   | 2.99           |  |  | 5,005,000         |   |  |                  | 
| | Exercised                  |   | 1.36           |  |  | (988,200          | ) |  |                  | 
| | Cancelled                  |   | 1.40           |  |  | (310,000          | ) |  |                  | 
| | Balance, December 31, 2007 | $ | 2.43           |  |  | 7,695,000         |   |  | 4.12             | 

Options outstanding and exercisable at
  December 31, 2007 were as follows:

| |                            |   |              |  |   | Number of   |  |   |                |  |  | Weighted     | 
| | -------------------------- | - | ------------ |  | - | ----------- |  | - | -------------- |  |  | ------------ | 
| |                            |   |              |  |   | options     |  |   | Number of      |  |  | average life | 
| | Expiry date                |   | Option price |  |   | outstanding |  |   | options vested |  |  | (years)      | 
| | December 17, 2010          | $ | 1.40         |  |   | 2,695,000   |  |   | 2,695,000      |  |  | 3.0          | 
| | July 1, 2010               | $ | 2.97         |  |   | 119,000     |  |   | 119,000        |  |  | 2.5          | 
| | October 15, 2012           | $ | 3.27         |  |   | 376,000     |  |   | 251,000        |  |  | 4.8          | 
| | October 15, 2012           | $ | 2.97         |  |   | 4,505,000   |  |   | 4,250,000      |  |  | 4.8          | 
| | Total                      |   |              |  |   | 7,695,000   |  |   | 7,315,000      |  |  |              | 
| | Average option
      price |   |              |  | $ | 2.43        |  | $ | 2.40           |  |  |              | 

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

| |                                                            | Year ended  | Year ended  | Year ended 
| | ---------------------------------------------------------- | ----------- | ----------- | -----------
| |                                                            | December 31 | December 31 | December 31
| |                                                            | 2007        | 2006        | 2005       
| | Stock-based compensation  Exploration                     | $ 1,491,849 | $ 15,209    | $ 714,243  
| | Stock-based
      compensation  Office and administration | 7,215,670   | 9,137       | 1,822,010  
| | Credited to contributed surplus during the period          | 8,707,519   | 24,346      | 2,536,253  

---

|ANOORAQ RESOURCES CORPORATION                                 
|--------------------------------------------------------------
|Notes to Consolidated Financial Statements                    
|For the years ended December 31, 2007, 2006 and 2005          
|(Expressed in
      Canadian Dollars, unless otherwise stated)

The fair value of the options granted
  during the year ended December 31, 2007 was $9,320,262 (2006  $Nil, 2005 
  $2,523,653). The assumptions used to estimate the fair value of options granted
  during the period were:

| |                         | 2007          | 2006 | 2005   
| | ----------------------- | ------------- | ---- | -------
| | Risk free interest rate | 4%            |     | 3%     
| | Expected life           | 2.5 - 5 years |     | 4 years
| | Volatility              | 71 - 74%      |     | 82%    
| | Expected dividends      | nil           |     | nil    

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

| | Expiry date                             |   | June
      1, |   |   | December 31, |   |  |              |  
| | --------------------------------------- | - | ------------- | - | - | ------------ | - |  | ------------ | -
| |                                         |   | 2005          |   |   | 2008         |   |  |              |  
| | Exercise price                          | $ | 2.50          |   | $ | 1.35         |   |  | TOTAL        |  
| |                                         |   |               |   |   |              |   |  |              |  
| | Balance, December 31, 2004              |   | 5,333,334     |   |   |             |   |  | 5,333,334    |  
| | Issued                                  |   |              |   |   |             |   |  |             |  
| | Exercised                               |   |              |   |   |             |   |  |             |  
| | Expired                                 |   | (5,333,334    | ) |   |             |   |  | (5,333,334   | )
| | Balance, December 31, 2005 and 2006     |   |              |   |   |             |   |  |             |  
| | Issued (note 6(b)(ii))                  |   |              |   |   | 167,000,000  |   |  | 167,000,000  |  
| | Reserved for exercise (note
      6(b)) |   |              |   |   | (167,000,000 | ) |  | (167,000,000 | )
| | Expired                                 |   |              |   |   |             |   |  |             |  
| | Balance, December 31, 2007              |   |              |   |   |             |   |  |             |  

Pursuant to the Amending Agreement in
  note 6(b), Pelawan has exercised the Warrants by depositing an escrowed amount
  equal to the aggregate exercise price for the Warrants ($225 million or ZAR
  1,586 billion) into an interest bearing account with RMB, to be released
  pursuant to a deposit account agreement (the Deposit Agreement) between RMB,
  Pelawan Investments (Pty) Ltd and Anooraq upon the satisfaction of certain
  release conditions (note 6(b)). The common shares underlying the Warrants has
  been reserved for issuance to Pelawan upon receipt by the Company of the
  exercise price per common share, plus the interest accrued thereon up to the
  date of release. Should the release conditions not be satisfied and there is no
  close, the warrant exercise is void and Anooraq will not receive the proceeds of
  the exercise of the BEE Warrants nor the interest earned from the deposit
  account and the BEE warrants will continue to exist in accordance with their
  terms until expiry or in accordance with the terms of the Settlement
  Agreement.

---

|ANOORAQ RESOURCES CORPORATION                                 
|--------------------------------------------------------------
|Notes to Consolidated Financial Statements                    
|For the years ended December 31, 2007, 2006 and 2005          
|(Expressed in
      Canadian Dollars, unless otherwise stated)

|9. | RELATED PARTY TRANSACTIONS AND
      BALANCES
|-- | ---------------------------------------------

| |                                           |  |      |  |   |         |  |   | Year ended  |  |   |           | 
| | ----------------------------------------- |  | ---- |  | - | ------- |  | - | ----------- |  | - | --------- | 
| |                                           |  | Note |  |   |         |  |   | December 31 |  |   |           | 
| | Services rendered
      by                |  | ref  |  |   | 2007    |  |   | 2006        |  |   | 2005      | 
| | Hunter Dickinson Services Inc.            |  | (a)  |  | $ | 798,330 |  | $ | 1,023,633   |  | $ | 1,297,159 | 
| | Hunter Dickinson Group Inc.               |  | (b)  |  |   |        |  |   |            |  |   | 9,600     | 
| | Pelawan Investments (Proprietary) Limited |  | (c)  |  |   |        |  |   |            |  |   | 658,035   | 
| | CEC Engineering Ltd.                      |  | (d)  |  |   | 26,589  |  |   | 127,781     |  |   | 166,662   | 

| |                                             |  |     |  |   | December 31 |  |   | December 31 |  | 
| | ------------------------------------------- |  | --- |  | - | ----------- |  | - | ----------- |  | 
| | Related party
      balances receivable     |  |     |  |   | 2007        |  |   | 2006        |  | 
| | Hunter Dickinson Services Inc.              |  | (a) |  | $ |            |  | $ | 98,820      |  | 
| | Southgold Exploration (Proprietary) Limited |  | (e) |  |   |            |  |   | 39,796      |  | 
| | Receivable from related parties             |  |     |  | $ |            |  | $ | 138,616     |  | 
| |                                             |  |     |  |   |             |  |   |             |  | 
| |                                             |  |     |  |   | December 31 |  |   | December 31 |  | 
| | Related party balances payable              |  |     |  |   | 2007        |  |   | 2006        |  | 
| | Hunter Dickinson Services Inc.              |  | (a) |  | $ | 44,042      |  | $ |            |  | 
| | CEC
      Engineering Ltd.                  |  | (d) |  |   | 1,567       |  |   | 6,435       |  | 
| | Payable to related parties                  |  |     |  | $ | 45,609      |  | $ | 6,435       |  | 

|(a) | Hunter Dickinson Services Inc. ("HDSI") is a private
      company owned equally by eight public companies, one of which is the
      Company. HDSI has certain directors in common with the Company and
      provides geological, corporate development, administrative and management
      services to, and incurs third party costs on behalf of, the Company and
      its subsidiaries on a full cost recovery basis pursuant to an agreement
      dated December 31, 1996.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|(b) | Hunter Dickinson Group Inc. ("HDGI") was a private
      company with certain directors in common with the Company that provided
      consulting services to, and incured costs on behalf of, the Company, at
      market rates.                                                                                                                                                                                                                                                 
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|(c) | Pelawan is a private South African BEE company which is a
      significant shareholder of the Company and which has certain directors in
      common with the Company (note 6(b)). Pelawan became a majority shareholder
      on September 29, 2004. During the year ended December 31, 2005, the
      Company paid $658,035 for technical, administrative and management
      services provided to, and repayment of costs paid on behalf of, the
      Company.             
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|(d) | During the year ended December 31, 2007, the Company paid
      or accrued $26,589 (2006  $127,781, 2005  $166,662) to CEC Engineering
      Ltd ("CEC"), a private company owned by a former director, for engineering
      and project management services at market rates.                                                                                                                                                                                                   
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|(e) | Southgold Exploration (Proprietary) Limited ("Southgold")
      is a wholly-owned subsidiary of Great Basin Gold Ltd., a Canadian public
      company which has certain directors in common with the Company. Southgold
      shares certain premises and other facilities with the Company pursuant to
      a cost-sharing arrangement based on a full cost recovery
      basis.                                                                                               

---

|ANOORAQ RESOURCES CORPORATION                                 
|--------------------------------------------------------------
|Notes to Consolidated Financial Statements                    
|For the years ended December 31, 2007, 2006 and 2005          
|(Expressed in
      Canadian Dollars, unless otherwise stated)

|10. | INCOME TAXES                                                                                                                                            
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                         
|    | As at December 31, 2007 and 2006 the tax effect of the
      significant components of the Companys future tax asset (liability) were
      as follows:

| |                             |   | December
      31, |   |   | December
      31, |  
| | --------------------------- | - | ------------------ | - | - | ------------------ | -
| |                             |   | 2007               |   |   | 2006               |  
| | Future income tax assets    |   |                    |   |   |                    |  
| | Mineral property interests  | $ | 3,675,000          |   | $ | 4,157,000          |  
| | Loss carry forwards         |   | 3,916,000          |   |   | 5,789,000          |  
| | Equipment                   |   | 17,000             |   |   | 17,000             |  
| | Other
      tax pools       |   | 2,330,000          |   |   | 1,386,000          |  
| | Subtotal                    |   | 9,938,000          |   |   | 11,349,000         |  
| | Valuation allowance         |   | (9,938,000         | ) |   | (11,349,000        | )
| | Net future income tax asset |   |                   |   |   |                   |  
| |                             |   |                    |   |   |                    |  
| | Future income tax liability |   |                    |   |   |                    |  
| | Mineral property interests  | $ | 633,000            |   | $ | 910,000            |  

The Companys future income tax
  liability relates to its equity investment in the Ga-Phasha Project and is
  classified as part of its equity investment (note 6(b)).

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

| |                                            |   | December 31, |   |   | December 31, |   |   | December 31, |  
| | ------------------------------------------ | - | ------------ | - | - | ------------ | - | - | ------------ | -
| |                                            |   | 2007         |   |   | 2006         |   |   | 2005         |  
| | Combined Canadian federal and provincial   |   | 34.12%       |   |   | 34.12%       |   |   | 34.87%       |  
| | statutory rate                             |   |              |   |   |              |   |   |              |  
| |                                            |   |              |   |   |              |   |   |              |  
| | Income tax at statutory rates              | $ | (4,972,000   | ) | $ | (1,578,000   | ) | $ | (4,313,000   | )
| | Stock based compensation                   |   | 2,971,000    |   |   | 70,000       |   |   | 1,366,000    |  
| | Other non-deductible items                 |   | 3,097,000    |   |   | -            |   |   | (461,000     | )
| | Difference in foreign tax rates            |   | (1,164,000   | ) |   | (299,000     | ) |   | 455,000      |  
| | Reduction in statutory tax rates           |   | 415,000      |   |   | 336,000      |   |   | 223,000      |  
| | Effect of unrealized foreign currency loss |   | 925,000      |   |   | (561,000     | ) |   | (237,000     | )
| | Change in
      valuation allowance        |   | (1,411,000   | ) |   | 1,911,000    |   |   | 2,902,000    |  
| |                                            | $ | (139,000     | ) | $ | (121,000     | ) | $ | (65,000      | )

At December 31, 2007, the Company had
  losses available for income tax purposes in Canada totalling approximately $12.4
  million (2006  $10.9 million), expiring in various periods from 2008 to 2027.
  The Company has losses available for income tax purposes in South Africa
  totaling $2.0 million (2006  $2.0 million) which can be carried forward
  indefinitely.

---

|ANOORAQ RESOURCES CORPORATION                                 
|--------------------------------------------------------------
|Notes to Consolidated Financial Statements                    
|For the years ended December 31, 2007, 2006 and 2005          
|(Expressed in
      Canadian Dollars, unless otherwise stated)

|11. | SEGMENTED INFORMATION
|--- | ---------------------

| | For the year ended       |   |             |   |   |         |   |   |              |   |   |             |  
| | ------------------------ | - | ----------- | - | - | ------- | - | - | ------------ | - | - | ----------- | -
| | December 31, 2007        |   | Canada      |   |   | Mexico  |   |   | South Africa |   |   | Total       |  
| | Exploration expenditures | $ |            |   | $ |        |   | $ | 876,900      |   | $ | 876,900     |  
| | Loss for the year        |   | (10,549,834 | ) |   | (4,839  | ) |   | (3,741,458   | ) |   | (14,296,131 | )
| | Total assets             |   | 896,740     |   |   | 26,602. |   |   | 16,030,021   |   |   | 16,953,363  |  
| | Equipment                |   |            |   |   |        |   |   | 105,494      |   |   | 105,494     |  
| |                          |   |             |   |   |         |   |   |              |   |   |             |  
| |                          |   |             |   |   |         |   |   |              |   |   |             |  
| |                          |   |             |   |   |         |   |   |              |   |   |             |  
| | For the year ended       |   |             |   |   |         |   |   |              |   |   |             |  
| | December 31, 2006        |   | Canada      |   |   | Mexico  |   |   | South Africa |   |   | Total       |  
| | Exploration expenditures | $ |            |   | $ |        |   | $ | 751,325      |   | $ | 751,325     |  
| | Loss for the year        |   | (1,894,272  | ) |   | (726    | ) |   | (2,609,846   | ) |   | (4,504,844  | )
| | Total assets             |   | 1,252,044   |   |   | 31,441. |   |   | 20,545,437   |   |   | 21,828,922  |  
| | Equipment                |   |            |   |   |        |   |   | 73,315       |   |   | 73,315      |  
| |                          |   |             |   |   |         |   |   |              |   |   |             |  
| |                          |   |             |   |   |         |   |   |              |   |   |             |  
| |                          |   |             |   |   |         |   |   |              |   |   |             |  
| | For the year ended       |   |             |   |   |         |   |   |              |   |   |             |  
| | December 31, 2005        |   | Canada      |   |   | Mexico  |   |   | South Africa |   |   | Total       |  
| | Exploration expenditures | $ |            |   | $ |        |   | $ | 5,240,321    |   | $ | 5,240,321   |  
| | Loss for the year        |   | (4,302,015  | ) |   | (8,841  | ) |   | (7,992,945   | ) |   | (12,303,801 | )
| | Total assets             |   | 4,645,858   |   |   | 32,166. |   |   | 9,157,572    |   |   | 13,835,596  |  
| | Equipment                |   |            |   |   |        |   |   | 174,163      |   |   | 174,163     |  

|12. | PROPOSED TRANSACTION
|--- | --------------------

Acquisition of Lebowa Platinum Mines
  (Limited)

On September 4, 2007, the Company and
  Anglo Platinum announced that they had entered into a detailed transaction
  framework agreement (the TFA). Pursuant to the TFA, Anglo Platinum will sell
  to Anooraq an effective 51% of Lebowa Platinum Mines Limited (Lebowa) and an
  effective 1% controlling interest in the Ga-Phasha PGM Project (Ga-Phasha
  Project) for a total cash consideration of South African Rand 3.6 billion
  (approximately C$480 million). The parties have also reached an agreement, in
  principle, for the sale of an additional effective 1% controlling interest in
  both the Boikgantsho and Kwanda projects to Anooraq. This means that Anooraq
  will own and control Lebowa Platinum Mines as well as the Ga-Phasha, Boikgantsho
  and Kwanda exploration and development PGM projects through its 51% control
  interest, with 49% held by Anglo Platinum. These interests will be held through
  a new holding company.

The Company plans to fund the purchase
  consideration through a combination of debt and equity. The transaction is
  subject to a number of conditions and is expected to close during the first half
  of 2008. Certain of these conditions include:

| | Completion of confirmatory due diligence;Completion of definitive transaction agreements;Regulatory approvals;Stock exchange approvals;
| | ---------------------------------------------------------------------------------------------------------------------------------------

---

|ANOORAQ RESOURCES CORPORATION                                 
|--------------------------------------------------------------
|Notes to Consolidated Financial Statements                    
|For the years ended December 31, 2007, 2006 and 2005          
|(Expressed in
      Canadian Dollars, unless otherwise stated)

| | Financing; andShareholder approvals as required.
| | ------------------------------------------------

|13. | DIFFERENCES BETWEEN CANADIAN AND UNITED STATES
      GENERALLY ACCEPTED ACCOUNTING PRINCIPLES                                                                                                                                                                                                                                                                                                                                                           
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|    | These consolidated financial statements have been
      prepared in accordance with Canadian generally accepted accounting
      principles ("Canadian GAAP"). Material variations in the accounting
      measurement principles, practices and methods used in preparing these
      financial statements from measurement principles, practices and methods
      accepted in the United States (US GAAP) are described and quantified
      below.
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|    | Had the Company followed US GAAP, certain items on the
      consolidated statements of operations and deficit, and balance sheets
      would have been reported as follows:                                                                                                                                                                                                                                                                           

| |                     |   |            |  |   | 2007        |  |   |            |  |   |            |  |   | 2006        |  |   |            | 
| | ------------------- | - | ---------- |  | - | ----------- |  | - | ---------- |  | - | ---------- |  | - | ----------- |  | - | ---------- | 
| |                     |   | Balance,   |  |   |             |  |   | Balance,   |  |   | Balance,   |  |   |             |  |   | Balance,   | 
| |                     |   | Canadian   |  |   |             |  |   | US         |  |   | Canadian   |  |   |             |  |   | US         | 
| |                     |   | GAAP       |  |   | Adjustments |  |   | GAAP       |  |   | GAAP       |  |   | Adjustments |  |   | GAAP       | 
| | Current assets      | $ | 7,769,155  |  | $ |            |  | $ | 7,769,155  |  | $ | 13,177,004 |  | $ |            |  | $ | 13,177,004 | 
| | Equipment           |   | 105,494    |  |   |            |  |   | 105,494    |  |   | 73,315     |  |   |            |  |   | 73,315     | 
| | Deferred            |   |            |  |   |             |  |   |            |  |   |            |  |   |             |  |   |            | 
| | financing costs (d) |   |           |  |   | 273,335     |  |   | 273,335    |  |   | 337,852    |  |   |            |  |   | 337,852    | 
| | Mineral property    |   | 9,078,714  |  |   |            |  |   | 9,078,714  |  |   | 8,240,751  |  |   |            |  |   | 8,240,751  | 
| |                     | $ | 16,953,363 |  | $ | 273,335     |  | $ | 17,226,698 |  | $ | 21,828,922 |  | $ |            |  | $ | 21,828,922 | 
| |                     |   |            |  |   |             |  |   |            |  |   |            |  |   |             |  |   |            | 
| | Current liabilities | $ | 2,412,908  |  | $ |            |  | $ | 2,412,908  |  | $ | 1,034,144  |  | $ |            |  | $ | 1,034,144  | 
| | Term loan           |   | 9,806,636  |  |   | 273,335     |  |   | 10,079,971 |  |   | 11,818,677 |  |   |            |  |   | 11,818,677 | 
| | Stockholders       |   | 4,733,819  |  |   |            |  |   | 4,733,819  |  |   | 8,976,101  |  |   |            |  |   | 8,976,101  | 
| | equity              |   |            |  |   |             |  |   |            |  |   |            |  |   |             |  |   |            | 
| |                     | $ | 16,953,363 |  | $ | 273,335     |  | $ | 17,226,698 |  | $ | 21,828,922 |  | $ |            |  | $ | 21,828,922 | 

There are no material differences
  between Canadian GAAP and US GAAP on the statements of operations and decifit as
  well as for total operating, investing or financing cash flows in the
  consolidated statements of cash flows.

A description of US GAAP and the rules
  prescribed by the United States Securities and Exchange Commission ("SEC") that
  result in differences from Canadian GAAP follows:

|a) | Stock based compensation                                                                                                                                                                                                                                                                                                                                                                                                                                        
|-- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   | In December 2004, Financial Accounting Standards Board
      ("FASB") issued Statement of Financial Accounting Standards No. 123
      (Revised 2006), "Share-Based Payment" ("SFAS 123R"), which is a
      revision of SFAS 123 "Accounting for Stock-Based Compensation". SFAS 123R
      supercedes APB Opinion No. 25, "Accounting for Stock Issued to
        Employees". SFAS 123R requires all share-based payments to employees,
      including grants

---

|ANOORAQ RESOURCES CORPORATION                           
|--------------------------------------------------------
|Notes to Consolidated Financial Statements              
|For the years ended December 31, 2007, 2006 and 2005    
|(Expressed in Canadian Dollars, unless otherwise stated)

|   | of employee stock options, be recognized in the income statement based on their fair values. In calculating compensation to be recognized, SFAS 123R requires the Company to estimate future forfeitures. Prior to adoption of SFAS
      123R, the Company's accounting for stock based compensation for US GAAP purposes was consistent with that used for Canadian GAAP. For Canadian GAAP purposes, the Company uses the fair value method to account for all stock option grants but accounts
      for forfeitures as they occur, as permitted by Canadian GAAP.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|-- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   | Based on the Company's historical stock option forfeiture rates, the expense that would be recognized for US GAAP purposes under SFAS 123R is not materially different from that recorded for Canadian GAAP purposes.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|b) | Exploration stage company                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   | Pursuant to US GAAP, the Company would be subject to the disclosure requirements applicable to an exploration stage enterprise as the Company is devoting its efforts to establishing commercially viable mineral properties. However,
      the identification of the Company as such for accounting purposes does not impact the measurement principles applied to these financial statements.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|c) | Income taxes                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   | Under Canadian GAAP, future tax assets and liabilities are recorded at substantially enacted tax rates. Under US GAAP, deferred tax assets and liabilities are recorded at enacted tax rates. There were no material differences
      between enacted and substantively enacted tax rates for the periods presented.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   | FASB Interpretation (FIN) No. 48: Accounting for Uncertainty in Income Taxes, an interpretation of FASB Statement No.109, was adopted by the Company on June 1, 2007. FIN 48 prescribes a recognition threshold and
      measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. The interpretation requires that the Company recognize the impact of a tax position in the financial
      statements if the position is more likely than not of being sustained on audit, based on the technical merits of the position. FIN 48 also provides guidance on de- recognition, classification, interest and penalties, accounting in interim periods
      and disclosure. In accordance with the provisions of FIN 48, any cumulative effect resulting from the change in accounting principle is to be recorded as an adjustment to the opening balance of deficit. The adoption of FIN 48 did not result in a
      material impact on the Companys consolidated financial position or results of operations.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|d) | Deferred financing costs                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   | During the year ended December 31, 2006, costs incurred in connection with the issue of long term debt were deferred and amortized on a straight line basis over the term of the debt under Canadian GAAP. For US GAAP purposes, these
      costs would be amortized using the effective interest rate method. However, this difference did not have a material impact on the consolidated financial statements during fiscal 2006.. This difference has been eliminated in 2007 upon the adoption of
      new accounting policies for Canadian GAAP as outlined in Note 4a(i).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        

---

|ANOORAQ RESOURCES CORPORATION                                 
|--------------------------------------------------------------
|Notes to Consolidated Financial Statements                    
|For the years ended December 31, 2007, 2006 and 2005          
|(Expressed in
      Canadian Dollars, unless otherwise stated)

|   | In accordance with the new standard, the accounting
      treatment for deferred financing costs is now consistent with US GAAP
      except that under Canadian GAAP, unamortized deferred financing costs are
      netted against the related debt where under U.S. GAAP it is shown as
      deferred financing costs.                                                                                                                                                                                                                       
|-- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|e) | Marketable securities                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   | During the prior fiscal years, short-term marketable
      securities are carried at the lower of aggregate cost or current market
      value, with any unrealized loss included in the statements of operations
      for Canadian GAAP purposes.                                                                                                                                                                                                                                                                                              
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   | Under US GAAP, Statement of Financial Accounting Standard
      No. 115, Accounting for Certain Investments in Debt and Equity
        Securities (SFAS 115) requires that certain equity investments must
      be classified into available-for-sale or trading securities and carried at
      fair market value. Any unrealized holding gains or losses are reported as
      a separate component of shareholders equity until realized for
      available-for-sale securities, and included in earnings for trading
      securities.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   | During the current fiscal year, this difference in
      accounting treatment has been eliminated due to the Companys adoption of
      the new accounting standards pertaining to financial instruments (note
      4).                                                                                                                                                                                                                                                                                                                        
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|f) | Impact of recent United States accounting
      pronouncements:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   | i)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   | ii)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   | iii)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             

---

|ANOORAQ RESOURCES CORPORATION                           
|--------------------------------------------------------
|Notes to Consolidated Financial Statements              
|For the years ended December 31, 2007, 2006 and 2005    
|(Expressed in Canadian Dollars, unless otherwise stated)

| | iv)  | In December 2007, the FASB issued SFAS No. 141R, Business Combinations,which requires recognition of the assets acquired, liabilities assumed and non-controlling interest arising in a business combination at their fair
      value as of the acquisition date. In addition, the costs of acquisition must be expensed. This statement will be effective for the Companys 2009 fiscal year.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| | ---- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| | v)   | In December 2007, the FASB issued SFAS No. 160, "Non-controlling Interests in Consolidated Financial Statements-An Amendment of ARB No. 51" ("SFAS 160"). SFAS 160 establishes accounting and reporting standards for the
      non-controlling interest in a subsidiary (previously referred to as minority interests). SFAS 160 also requires that a retained non-controlling interest upon the deconsolidation of a subsidiary be initially measured at its fair value. Upon adoption
      of SFAS 160, the Company would be required to report any non-controlling interests as a separate component of stockholders' equity. The Company would also be required to present any net income allocable to non-controlling interests and net income
      attributable to the stockholders of the Company separately in its consolidated statements of operations. SFAS 160 is effective for the Companys 2009 fiscal year, except for the presentation and disclosure requirements, which will be applied
      retroactively.
| |      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| | vi)  | In March 2008, the FASB issued FAS No. 161, Disclosure about Derivative Instruments and Hedging Activities (FAS 161). FAS 161 changes the disclosure requirements for derivative instruments and hedging
      activities by requiring enhanced disclosures about how and why an entity uses derivatives instruments, how derivative instruments and related hedged items affect an entitys operating results, financial position, and cash flows. FAS 161 is
      effective for the Companys 2009 fiscal year. Early adoption is permitted. The Company is currently reviewing the provisions of FAS 161. However, as the provisions of FAS 161 are only related to disclosure of derivative and hedging activities,
      the Company does not believe the adoption of FAS 161 will have a material impact on its consolidated operating results, financial position or cash flows.                                                                                                                                      
| |      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| | vii) | In May 2008, the FASB issued SFAS No. 162, The Hierarchy of Generally Accepted Accounting Principles ("SFAS No. 162"). The new standard is intended to improve financial reporting by identifying a consistent framework, or
      hierarchy, for selecting accounting principles to be used in preparing financial statements that are presented in conformity with U.S. generally accepted accounting principles (GAAP) for nongovernmental entities. SFAS No. 162 is effective 60 days
      following the Securities and Exchange Commission's approval of the Public Company Accounting Oversight Board Auditing amendments to AU Section 411, The Meaning of Present Fairly in Conformity with Generally Accepted Accounting Principles. The
      Company is currently evaluating the impact of adoption of SFAS No. 162 but does not expect adoption to have a material impact on results of operations, cash flows or financial position.                                                                                

---