---





ANOORAQ RESOURCES CORPORATION 
  CONSOLIDATED FINANCIAL STATEMENTS

TWO MONTHS ENDED DECEMBER 31, 2003 
  AND THE TWO MONTHS ENDED DECEMBER 31, 2002

(Expressed in Canadian Dollars, unless otherwise stated)



---

|                                                                                                                    |                                                                              | 
|------------------------------------------------------------------------------------------------------------------- | ---------------------------------------------------------------------------- | 
|                                                                                                                    |                                                                             
|                                                                                                                    |                                                                             
|KPMG LLP
      Chartered Accountants
      PO Box 10426 777 Dunsmuir Street
      Vancouver BC V7Y 1K3
      Canada | Telephone (604) 691-3000
      Fax (604) 691-3031
      Internet www.kpmg.ca

**REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM**

To the Board of Directors
  Anooraq Resources Corporation

We have audited the accompanying consolidated balance sheet
  of Anooraq Resources Corporation as at December 31, 2003 and the consolidated
  statements of operations, deficit and cash flows for the two-month period ended
  December 31, 2003. These consolidated financial statements are the responsibility
  of the Company's management. Our responsibility is to express an opinion on
  these consolidated financial statements based on our audit.

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

In our opinion, the consolidated financial statements referred
  to above present fairly, in all material respects, the financial position of
  Anooraq Resources Corporation as at December 31, 2003 and the results of its
  operations and its cash flows for the two-month period ended December 31, 2003
  in accordance with Canadian generally accepted accounting principles.

As discussed in note 3(j) to the consolidated financial statements,
  the Company changed its method of accounting for stock-based compensation during
  the two-month period ended December 31, 2003.

Canadian generally accepted accounting principles vary in
  certain significant respects from accounting principles generally accepted in
  the United States of America. Information relating to the nature and effect
  of such differences is presented in note 10 to the consolidated financial statements.

**KPMG LLP (signed)**
  Chartered Accountants

Vancouver, Canada
  July 7, 2006

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

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

|                                               |   | December 31 |   |   | December 31 |  
|---------------------------------------------- | - | ----------- | - | - | ----------- | -
|                                               |   | 2003        |   |   | 2002        |  
|                                               |   |             |   |   | (unaudited) |  
|Assets                                         |   |             |   |   |             |  
|                                               |   |             |   |   |             |  
|Current assets                                 |   |             |   |   |             |  
|Cash and equivalents                           | $ | 22,195,594  |   | $ | 391,566     |  
|Amounts receivable (note 4)                    |   | 156,369     |   |   | 277,923     |  
|Due from related parties (note 8)              |   | 4,379,227   |   |   | 2,659,918   |  
|Prepaid expenses                               |   | 46,696      |   |   | 27,840      |  
|                                               |   | 26,777,886  |   |   | 3,357,247   |  
|                                               |   |             |   |   |             |  
|Equipment(note 5)                              |   | 12,980      |   |   | 33,829      |  
|Mineral property interests(note 6)             |   | 4,200,000   |   |   | 4,200,000   |  
|                                               |   |             |   |   |             |  
|                                               | $ | 30,990,866  |   | $ | 7,591,076   |  
|                                               |   |             |   |   |             |  
|                                               |   |             |   |   |             |  
|Liabilities and Shareholders' Equity           |   |             |   |   |             |  
|                                               |   |             |   |   |             |  
|Current Liabilities                            |   |             |   |   |             |  
|Accounts payable and accrued
      liabilities | $ | 178,934     |   | $ | 320,597     |  
|                                               |   |             |   |   |             |  
|Shareholders' equity                           |   |             |   |   |             |  
|Share capital (note 7)                         |   | 47,662,409  |   |   | 20,142,225  |  
|Contributed surplus (note
      7(c))          |   | 620,593     |   |   | 14,262      |  
|Deficit                                        |   | (17,471,070 | ) |   | (12,886,008 | )
|                                               |   | 30,811,932  |   |   | 7,270,479   |  
|                                               |   |             |   |   |             |  
|Nature of operations (note 1)                  |   |             |   |   |             |  
|Commitments (note 6)                           |   |             |   |   |             |  
|Subsequent events (notes 6, 7 and 11)          |   |             |   |   |             |  
|                                               | $ | 30,990,866  |   | $ | 7,591,076   |  

See accompanying notes to consolidated financial
statements.

Approved by the Board of Directors

|/s/ Scott D. Cousens | /s/ Ronald W. Thiessen
|-------------------- | ----------------------
|                     |                       
|Scott D. Cousens     | Ronald W. Thiessen    
|Director             | Director              

---

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

|                                                                  |   | Two
      months |   |   | Two
      months |  
|----------------------------------------------------------------- | - | ---------------- | - | - | ---------------- | -
|                                                                  |   | ended            |   |   | ended            |  
|                                                                  |   | December 31      |   |   | December 31      |  
|                                                                  |   | 2003             |   |   | 2002             |  
|                                                                  |   |                  |   |   | (unaudited)      |  
|                                                                  |   |                  |   |   |                  |  
|Expenses                                                          |   |                  |   |   |                  |  
|Accounting, audit and legal                                       |   | 57,772           |   |   | 4,966            |  
|Conference and travel                                             |   | 27,257           |   |   | 31,945           |  
|Consulting                                                        |   | 53,509           |   |   | 13,410           |  
|Exploration (schedule)                                            |   | 682,319          |   |   | 322,644          |  
|Foreign exchange gain                                             |   | (6,402           | ) |   | (22,698          | )
|Interest income                                                   |   | (23,958          | ) |   | (11,302          | )
|Office and administration                                         |   | 39,359           |   |   | 17,052           |  
|Salaries and benefits                                             |   | 85,348           |   |   | 57,237           |  
|Stock-based compensation - operations (note
      7(c))           |   | 303,061          |   |   | 9,921            |  
|Stock-based compensation -
      exploration (note 7(c))          |   | 182,506          |   |   | 4,341            |  
|Shareholders communications                                       |   | 48,160           |   |   | 40,563           |  
|Trust and filing                                                  |   | 33,743           |   |   | 2,947            |  
|Recovery of amounts receivable (note 8(c))                        |   | (256,000         | ) |   |                 |  
|Loss for the period                                               | $ | 1,226,674        |   | $ | 471,026          |  
|                                                                  |   |                  |   |   |                  |  
|Basic and diluted loss per share                                  | $ | 0.03             |   | $ | 0.01             |  
|                                                                  |   |                  |   |   |                  |  
|Weighted average number of common                                 |   |                  |   |   |                  |  
|shares outstanding                                                |   | 43,776,918       |   |   | 32,271,414       |  
|                                                                  |   |                  |   |   |                  |  
|See accompanying notes to consolidated financial
      statements |   |                  |   |   |                  |  
|                                                                  |   |                  |   |   |                  |  
|                                                                  |   |                  |   |   |                  |  
|Consolidated Statements of Deficit                                |   |                  |   |   |                  |  
|(Expressed in
      Canadian Dollars)                             |   |                  |   |   |                  |  
|                                                                  |   |                  |   |   |                  |  
|                                                                  |   | Two months       |   |   | Two months       |  
|                                                                  |   | ended            |   |   | ended            |  
|                                                                  |   | December 31      |   |   | December 31      |  
|                                                                  |   | 2003             |   |   | 2002             |  
|                                                                  |   |                  |   |   | (unaudited)      |  
|Deficit, beginning of period                                      | $ | (16,244,396      | ) | $ | (12,414,982      | )
|Loss for the
      period                                         |   | (1,226,674       | ) |   | (471,026         | )
|Deficit, end of the period                                        | $ | (17,471,070      | ) | $ | (12,886,008      | )

See accompanying notes to consolidated financial
statements

---

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

|                                                       |   | Two months  |   |   | Two months  |  
|------------------------------------------------------ | - | ----------- | - | - | ----------- | -
|                                                       |   | ended       |   |   | ended       |  
|                                                       |   | December 31 |   |   | December 31 |  
|                                                       |   | 2003        |   |   | 2002        |  
|                                                       |   |             |   |   | (unaudited) |  
|Cash provided by (used for):                           |   |             |   |   |             |  
|                                                       |   |             |   |   |             |  
|Operating activities                                   |   |             |   |   |             |  
|Loss for the period                                    |   | (1,226,674  | ) |   | (471,026    | )
|Items not involving cash                               |   |             |   |   |             |  
|Depreciation included in exploration
      expenses    |   | 4,010       |   |   | 3,798       |  
|Stock-based compensation (note 7(c))                   |   | 485,567     |   |   | 14,262      |  
|Shares issued for property option
      payments       |   |             |   |   |             |  
|included
      in exploration expenses                 |   | 340,000     |   |   | 93,750      |  
|Changes in non-cash operating working capital          |   |             |   |   |             |  
|Amounts receivable                                     |   | 8,130       |   |   | 151,786     |  
|Amounts due to and from related
      parties          |   | (4,379,227  | ) |   | (2,659,918  | )
|Prepaid expenses                                       |   | 14,123      |   |   | 25,195      |  
|Accounts payable and accrued liabilities               |   | (349,343    | ) |   | 228,483     |  
|                                                       |   | (5,103,414  | ) |   | (2,613,670  | )
|                                                       |   |             |   |   |             |  
|Investing activities                                   |   |            |   |   |            |  
|                                                       |   |             |   |   |             |  
|Financing activities                                   |   |             |   |   |             |  
|Issuance of common shares                              |   | 23,234,610  |   |   |            |  
|Issue costs                                            |   | (1,350,000  | ) |   |            |  
|Issuance of
      common shares for cash, net of costs |   | 21,884,610  |   |   |            |  
|                                                       |   |             |   |   |             |  
|Increase in cash and equivalents                       |   | 16,781,196  |   |   | (2,613,670  | )
|Cash and equivalents,
      beginning of period        |   | 5,414,398   |   |   | 3,005,236   |  
|Cash and equivalents,
      end of period              | $ | 22,195,594  |   | $ | 391,566     |  
|                                                       |   |             |   |   |             |  
|                                                       |   |             |   |   |             |  
|Supplementary information                              |   |             |   |   |             |  
|Interest paid                                          | $ |            |   | $ |            |  
|Interest received                                      | $ | (23,958     | ) | $ | (11,302     | )
|Taxes paid                                             | $ |            |   | $ |            |  
|                                                       |   |             |   |   |             |  
|Non-cash operating, financing and investing activities |   |             |   |   |             |  
|Shares issued for property option agreements           | $ | 340,000     |   | $ | 93,750      |  
|Increase in mineral property for future income taxes   | $ |            |   | $ |            |  

See accompanying notes to consolidated financial statements

---

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

|                                                   |   | Two
      months |  |   | Two
      months | 
|-------------------------------------------------- | - | ---------------- |  | - | ---------------- | 
|                                                   |   | ended            |  |   | ended            | 
|Republic of South Africa                           |   | December 31      |  |   | December 31      | 
|                                                   |   | 2003             |  |   | 2002             | 
|                                                   |   |                  |  |   | (unaudited)      | 
|                                                   |   |                  |  |   |                  | 
|Northern Limb of the Bushveld Complex              |   |                  |  |   |                  | 
|Assays and analysis                                | $ | 20,475           |  | $ | 73,945           | 
|Depreciation                                       |   | 4,010            |  |   | 3,798            | 
|Drilling                                           |   | 17,827           |  |   |                 | 
|Engineering                                        |   | 26,617           |  |   | 2,302            | 
|Environmental and socioeconomic                    |   | 3,804            |  |   | 3,136            | 
|Geological and consulting                          |   | 62,979           |  |   | 75,461           | 
|Graphics                                           |   | 7,792            |  |   | 3,539            | 
|Property fees and assessments                      |   | 17,080           |  |   | 26,462           | 
|Property option payments                           |   | 340,000          |  |   | 93,750           | 
|Site activities                                    |   | 79,879           |  |   | 8,406            | 
|Transportation                                     |   | 101,856          |  |   | 31,845           | 
|Exploration expenses before the
      following    |   | 682,319          |  |   | 322,644          | 
|Stock-based
      compensation (note 7(c))         |   | 182,506          |  |   | 4,341            | 
|Exploration expenses                               |   | 864,825          |  |   | 326,985          | 
|Cumulative
      expenditures, beginning of period |   | 7,989,947        |  |   | 6,017,288        | 
|Cumulative expenditures, end of period             | $ | 8,854,772        |  | $ | 6,344,273        | 

See accompanying notes to consolidated financial
statements

---

|ANOORAQ RESOURCES CORPORATION                                         
|----------------------------------------------------------------------
|Notes to Consolidated Financial Statements                            
|For the two months ended December 31, 2003 and December 31,
      2002
|(Expressed in Canadian
      Dollars)                                 

|1. | Continuing 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
        properties. Since 1999, the Company has focused exclusively on mineral
        interests located in the Republic of South Africa with particular attention
        on the Bushveld Complex (notes 6 and 11).                                                                                                                                                                                                                 
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   | As at the date of these consolidated financial statements,
        the Company had not identified a body of commercial grade ore on any of
        its properties. The ability of the Company to recover the costs it has
        incurred to date on these properties is dependent upon the Company being
        able to identify a commercially viable ore body, to finance its exploration
        costs and to address any environmental, regulatory or other issues which
        may arise in the course of developing the property.                                                                                                   
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   | These consolidated financial statements have been prepared
        using Canadian generally accepted accounting principles assuming a going
        concern. The Company has incurred losses since inception and the ability
        of the Company to continue as a going concern depends upon its ability
        to develop profitable operations, and to continue to raise adequate financing.
        These financial statements do not reflect adjustments, which could be
        material, to the carrying values of assets and liabilities which may be
        required should the Company be unable to continue as a going concern.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|2. | Basis of presentation and principles of consolidation                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   | These consolidated financial statements have been prepared
        in accordance with Canadian generally accepted accounting principles.
        These consolidated financial statements have been prepared to comply with
        the rules and regulations of the United States Securities and Exchange
        Commission with respect to transition rules for changes in fiscal year
        ends. The Company has changed its fiscal year end from October 31 to December
        31 effective fiscal 2004.                                                                                                                              
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   | A reconciliation of material measurement differences
        between these principles and accounting principles generally accepted
        in the United States is shown in note 10.                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   | The consolidated financial statements include the accounts
        of the Companys wholly owned Mexican and Cayman Islands subsidiaries,
        and Plateau Resources (Proprietary) Limited (Plateau) located
        in the Republic of South Africa. All material intercompany balances and
        transactions have been eliminated.                                                                                                                                                                                                                                                                                                  

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|ANOORAQ RESOURCES CORPORATION                                         
|----------------------------------------------------------------------
|Notes to Consolidated Financial Statements                            
|For the two months ended December 31, 2003 and December 31,
      2002
|(Expressed in Canadian
      Dollars)                                 

|3. | Significant accounting policies
|-- | -------------------------------

|(a) | Cash and equivalents                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|    | Cash and equivalents consist of cash and highly liquid
        investments, having maturity dates of three months or less from the date
        of purchase, that are readily convertible to known amounts of cash.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|(b) | Equipment                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|    | Equipment is carried at cost less accumulated depreciation.
        Depreciation is provided on a declining balance basis at various rates
        ranging from 15% to 30% per annum.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|(c) | Mineral property interests                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|    | Exploration expenses incurred prior to determination
        of the feasibility of mining operations, periodic option payments and
        administrative expenditures 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 the receipt of required construction and exploration permits 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, based on the
        trading price of the shares, issued for mineral property interests, pursuant
        to the terms of the agreement. These costs are amortized over the estimated
        life of the property following commencement of commercial production,
        or written off if the property is sold, allowed to lapse or abandoned
        or when an impairment of value has occurred.                                                                                                                                                                                                                                                                                                                                                                                                                      
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|(d) | Share capital                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|    | The Company records proceeds from share issuances
        net of issue costs. Shares issued for consideration other than cash are
        valued at the quoted price on the date the agreement to issue the shares
        was reached and announced.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|(e) | Income taxes                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|    | The Company uses the asset and liability method of
        accounting for income taxes. Under this method, future income tax assets
        and liabilities are computed based on differences between the carrying
        amounts of assets and liabilities on the balance sheet and their corresponding
        tax values, using the enacted or substantively enacted income tax rates
        expected to apply to taxable income in the years in which those temporary
        differences are expected to be recovered or settled. Future income tax
        assets also result from unused loss carry forwards and other deductions.
        Future tax assets are recognized to the extent that they are considered
        more likely than not to be realized. The carrying value of future income
        tax assets is adjusted, if necessary, by the use of a valuation allowance
        to reflect the estimated realizable amount.

---

|ANOORAQ RESOURCES CORPORATION                                         
|----------------------------------------------------------------------
|Notes to Consolidated Financial Statements                            
|For the two months ended December 31, 2003 and December 31,
      2002
|(Expressed in Canadian
      Dollars)                                 

|(f) | Loss per share                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|    | Basic loss per share is calculated by dividing the
        loss available to common shareholders by the weighted average number of
        common shares outstanding during the period. For all periods presented,
        loss available to common shareholders equals the reported loss.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|    | Diluted loss per common share is calculated using
        the treasury stock method. Under the treasury stock method, the weighted
        average number of common shares outstanding used for the calculation of
        diluted loss per share assumes that the proceeds to be received on the
        exercise of dilutive share options and warrants are used to repurchase
        common shares at the average market price during the year. In the periods
        presented, diluted loss per share is the same as basic loss per share
        as the effect of including outstanding options and warrants in the loss
        per share calculation would be anti-dilutive.                                                                                                        
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|(g) | Fair value of financial instruments                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|    | The carrying amounts of cash and equivalents, amounts
        receivable, accounts payable and accrued liabilities approximate their
        fair values due to their short-term nature. It is not practicable to determine
        the fair value of due from related parties due to the related party nature
        of such amounts and the absence of a secondary market for such instruments.                                                                                                                                                                                                                                                                                                                                                                                            
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|(h) | Translation of foreign currencies                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|    | All of the Company's foreign operations are integrated.
        Monetary assets and liabilities denominated in a foreign currency are
        translated into Canadian dollars at exchange rates in effect at the balance
        sheet date. Non-monetary assets and liabilities are translated at historical
        exchange rates unless such items are carried at market, in which case
        they are translated at the exchange rates in effect on the balance sheet
        date. Revenues and expenses, except amortization, are translated at the
        average exchange rates for the year. Amortization is translated at the
        same exchange rate as the assets to which it relates. Gains or losses
        on translation are recorded in the statement of operations.
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|(i) | Use of estimates                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|    | The preparation of financial statements requires management
        to make estimates and assumptions that affect the reported amounts of
        assets and liabilities and the disclosure of contingent assets and liabilities
        at the date of the financial statements, and the reported amounts of revenues
        and expenses during the reporting period. Significant areas requiring
        the use of management estimates include the determination of potential
        impairments of asset values and rates for the depreciation, as well as
        the assumptions used in determining the fair value of non-cash stock-
        based compensation and warrants. Actual results could differ from these
        estimates.                                           

---

|ANOORAQ RESOURCES CORPORATION                                         
|----------------------------------------------------------------------
|Notes to Consolidated Financial Statements                            
|For the two months ended December 31, 2003 and December 31,
      2002
|(Expressed in Canadian
      Dollars)                                 

|(j) | Stock-based compensation                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|    | The Company has a share option plan, which is described
        in note 7(c).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|    | Effective November 1, 2002, the Company adopted the
        new accounting standard of the Canadian Institute of Chartered Accountants
        (CICA), Section 3870 Stock-Based Compensation and Other
        Stock-Based Payments (HB 3870). Under the new standard, stock
        options and other stock-based payments to non-employees, and employee
        awards that are direct awards of stock, call for settlement in cash or
        other assets, or are stock appreciation rights that call for settlement
        by issuance of equity instruments, granted on or after November 1, 2002,
        are accounted for using the fair value based method.                                                                                                                                       
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|    | On adoption of HB 3870, the Company elected to use the
        settlement method of accounting for stock options granted to employees,
        and to disclose the pro forma effect of accounting for these awards under
        the fair value method. Effective November 1, 2003, in connection with
        amendments to HB 3870, the Company changed the method of application of
        its stock-based compensation accounting policy so as to measure all stock
        options granted at fair value and to recognize the compensation expense
        over the vesting period, with a corresponding credit to contributed surplus.
        This change has been applied prospectively for options granted on or after
        November 1, 2003, as allowed under the transitional provisions of HB 3870.
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|    | Prior to the adoption of the new recommendations in
        2002, no compensation expense was recorded for the Companys stock-based
        plan when options or incentives were granted. Any consideration paid by
        directors and employees on exercise of stock options was credited to share
        capital. Had the Company used the fair value method, for options granted
        prior to November 1, 2003, to determine compensation cost for directors,
        officers and employees, the Company's loss, basic loss per share, and
        diluted loss per share for the two months ended December 31, 2003 and
        2002 would have been as follows:                                                                                                                                     

| |                                                   |   | Two months   |   |   | Two months   |  
| | ------------------------------------------------- | - | ------------ | - | - | ------------ | -
| |                                                   |   | ended        |   |   | ended        |  
| |                                                   |   | December 31, |   |   | December 31, |  
| |                                                   |   | 2003         |   |   | 2002         |  
| |                                                   |   |              |   |   | (unaudited)  |  
| | As reported                                       | $ | (1,226,674   | ) | $ | (471,026     | )
| | Estimated fair value of non-cash stock-based      |   |              |   |   |              |  
| | compensation to directors, officers and employees |   | (843,874     | ) |   | (80,085      | )
| | Pro forma loss                                    | $ | (2,070,548   | ) | $ | (551,111     | )
| |                                                   |   |              |   |   |              |  
| | Pro forma basic
      and diluted loss per share  | $ | (0.05        | ) | $ | (0.02        | )

---

|ANOORAQ RESOURCES CORPORATION                                         
|----------------------------------------------------------------------
|Notes to Consolidated Financial Statements                            
|For the two months ended December 31, 2003 and December 31,
      2002
|(Expressed in Canadian
      Dollars)                                 

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

| |                         |  | 2003      |  |  | 2002    | 
| | ----------------------- |  | --------- |  |  | ------- | 
| | Risk free interest rate |  | 3%        |  |  | 3%      | 
| | Expected life           |  | 1.9 years |  |  | 2 years | 
| | Expected volatility     |  | 85%       |  |  | 40%     | 
| | Expected dividends      |  | nil       |  |  | nil     | 

|(k) | Comparative figures                                                                                                                                  
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                      
|    | Certain of the prior periods comparative figures
        have been restated to conform with the presentation adopted for the current
        period.

|4. | Amounts receivable
|-- | ------------------

Amounts receivable comprise the following:

| |                               |   | December 31, |  |   | December 31, | 
| | ----------------------------- | - | ------------ |  | - | ------------ | 
| |                               |   | 2003         |  |   | 2002         | 
| |                               |   |              |  |   | (unaudited)  | 
| | Value-added taxes recoverable | $ | 155,188      |  | $ | 273,531      | 
| | Employee expense advances     |   | 1,181        |  |   | 1,589        | 
| | Other                         |   |             |  |   | 2,803        | 
| |                               | $ | 156,369      |  | $ | 277,923      | 

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

| |          |   | December 31, 2003 |  |   | December 31, 2002 *(unaudited)* | 
| | -------- | - | ----------------- |  | - | ------------------------------- | 
| |          |   |                   |  |   | Accumulated                     | 
| |          |   | Cost              |  |   | depreciation                    | 
| | Office   | $ | 30,421            |  | $ | 30,421                          | 
| | Vehicles |   | 68,769            |  |   | 55,789                          | 
| |          | $ | 99,190            |  | $ | 86,210                          | 

---

|ANOORAQ RESOURCES CORPORATION                                         
|----------------------------------------------------------------------
|Notes to Consolidated Financial Statements                            
|For the two months ended December 31, 2003 and December 31,
      2002
|(Expressed in Canadian
      Dollars)                                 

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

| | Mineral Property Acquisition Costs |   | December 31 |  |   | December 31 | 
| | ---------------------------------- | - | ----------- |  | - | ----------- | 
| |                                    |   | 2003        |  |   | 2002        | 
| |                                    |   |             |  |   | (unaudited) | 
| | Platreef Properties, South Africa  |   |             |  |   |             | 
| | Balance, beginning of the year     | $ | 4,200,000   |  | $ | 4,200,000   | 
| | Incurred during the period         |   |            |  |   |            | 
| | Balance, end of
      period       | $ | 4,200,000   |  | $ | 4,200,000   | 

|    | Refer also to Consolidated Statements of Exploration
        Expenses.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|(a) | Northern Limb of the Bushveld Complex, Republic of
        South Africa                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|    | Platreef                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|    | In October 1999, the Company acquired a two-stage right
        to purchase up to 100% of Pinnacle Resources Inc.'s ("Pinnacle") South
        African subsidiary, Plateau Resources (Proprietary) Limited ("Plateau"),
        which holds the Platreef platinum group mineral ("PGM") properties located
        on the Northern Limb of the Bushveld Complex in South Africa.                                                                                                                                                                                                                                                                                    
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|    | The Company acquired its rights under the October 1999
        agreement with Pinnacle as a consequence of reaching a settlement agreement
        with Gladiator Minerals Inc., subsequently renamed Hinterland Metals Inc.
        (Hinterland), pursuant to which Anooraq would issue shares
        in stages to Hinterland, to a maximum of 875,000 shares, as it proceeded
        with investments in Plateau. Under this agreement, 378,500 shares have
        been issued to Hinterland. On November 13, 2003, the Company issued 400,000
        common shares to Hinterland as full and final settlement under this agreement.                        
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|    | 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 766 LR farm located contiguous
        to the pre-existing Platreef properties, pursuant to an agreement with
        MSA Projects (Proprietary) Limited (the "Heads of" Agreement). The option
        required staged issuances totalling 500,000 common shares of the Company
        (of which 412,500 shares issued subsequent to December 31, 2003) and aggregate
        cash payments of US$350,000 (of which US$69,250 and Cdn$15,000 have been
        paid).

---

|ANOORAQ RESOURCES CORPORATION                                         
|----------------------------------------------------------------------
|Notes to Consolidated Financial Statements                            
|For the two months ended December 31, 2003 and December 31,
      2002
|(Expressed in Canadian
      Dollars)                                 

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

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

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

Reitfontein

On October 10, 2001, the Company completed
  an agreement with African Minerals Ltd. (AML), now Ivanhoe Nickel
  and Platinum Ltd. (Ivanplats), a private affiliate of Ivanhoe Capital
  Corporation, whereby Ivanplats has the right to earn a 50% joint venture 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 Ivantplat's exploration activities. The Company
  and Ivanplat are currently in discussions over these matters, both outside of
  and within an ongoing 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 subsidiary of Anglo American Platinum Corporation Limited (together Anglo
  Platinum), for the right to acquire up to an 80% interest in twelve new
  PGM properties located on the Northern Limb of the Bushveld Complex. Under the
  agreements with Anglo Platinum, the Company has acquired an initial 50% interest
  in the PGM rights to the twelve farms and can maintain this interest by making
  staged exploration expenditure totalling South African

---

|ANOORAQ RESOURCES CORPORATION                                         
|----------------------------------------------------------------------
|Notes to Consolidated Financial Statements                            
|For the two months ended December 31, 2003 and December 31,
      2002
|(Expressed in Canadian
      Dollars)                                 

Rand ("ZAR") 25 million within five
  years. The Company is required to spend ZAR 2.5 million in year one (which has
  been completed), ZAR 5 million in each of years two, three, and four, and ZAR
  7.5 million in year five. The Company has not yet fulfilled its expenditure
  requirements in respect to year three, but is in negotiations with Rustenburg
  to amend the exploration expenditure schedule.

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

Boikgantsho (Drenthe-Overysel)

On November 26, 2003, the Company
  announced that it had entered into a Joint Venture Agreement with Potgietersrust
  Platinums Limited (PPRust), a wholly owned subsidiary of Anglo American
  Platinum Corporation Limited (together Anglo Platinum). The Joint
  Venture was formed to explore and develop platinum group metals (PGM),
  gold and nickel mineralization on the Companys Drenthe 778LR and Witrivier
  777LR farms and 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, utilizing nearby milling, smelting and refining
  facilities which could provide substantial cost advantages to a new mining project.
  The Company is contributing its rights to the Drenthe 778LR farm on which a
  large PGM-nickel resource has been outlined in the Drenthe deposit, and the
  Witrivier 777LR farm if the deposit extends north on to Witrivier. PPRust is
  contributing its rights to the northern portion of the Overysel 815LR farm which
  lies south of and contiguous to the Drenthe 778LR farm.

Pursuant to the terms of the Joint
  Venture Agreement, Anooraq and Anglo Platinum will form an initial 50/50 Joint
  Venture (the 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 on behalf of the JV of which the entire amount
  has been spent subsequent to December 31, 2003. Anooraq will then have the option
  to proceed on a year-by-year basis and to take the project to a Bankable Feasibility
  Study (BFS).

Once the BFS has been completed, the
  parties, by agreement, may proceed to exploitation subject to relevant regulatory
  requirements. If both partners decide to proceed, then a joint management committee
  will be established to oversee development and operations. At commencement of
  exploitation the Joint Venture interest allotted to each of Anooraq and Anglo
  Platinum will be determined in proportion to the relative value of the metals
  contained in each contributed property as reflected in the BFS. During development,
  the JV will be seeking a Black Economic Empowerment partner to participate in
  the project, with the JV partners dividing the remaining interest.

---

|ANOORAQ RESOURCES CORPORATION                                         
|----------------------------------------------------------------------
|Notes to Consolidated Financial Statements                            
|For the two months ended December 31, 2003 and December 31,
      2002
|(Expressed in Canadian
      Dollars)                                 

|    | Should Anooraq choose not to proceed, then Anglo Platinum
        shall have the option to acquire Plateaus interest at the aggregate
        of (i) the net present value of exploiting Plateaus mineral rights
        as a stand alone 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 Plateau up to the completion of the BFS.
        Should Anglo Platinum decide not to contribute to exploitation, it remains
        entitled to dilute to a minimum 12.5% non-contributory interest, adjusted
        depending on the final PGM royalty established under the Mineral and Petroleum
        Royalty Bill, to a maximum of 15%.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|    | Anglo Platinum has the right to enter into a PGM Ore
        or Concentrate Purchase and Disposal Agreement at the exploitation phase,
        based on standard commercial terms, whereby PGM produced from the operation
        would be treated at Anglo Platinums facilities.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|(b) | Western Limb of the Bushveld Complex, South Africa                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|    | Thusong Joint Venture                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|    | In May 2003, the Company entered into a joint venture
        agreement with Rustenburg to form a joint venture to explore and develop
        PGMs, gold and nickel mineralization on the Wachteenbietjieslaagte 4JQ,
        Vogelstruiskraal 400KQ and Cyferkuil 1JQ farms, which are located on the
        western limb of the Bushveld Complex, approximately 75 kilometres north
        of the town of Rustenburg, adjacent to Anglo Platinums Union operations.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|    | Pursuant to the terms of the joint venture agreement,
        the Company and Anglo Platinum will form an initial 50/50 joint venture
        (the "Thusong JV") to explore the three farms for a period of up to five
        years from the date of the agreement. During that period, the Company
        will operate exploration programs, and spend up to ZAR 12 million on behalf
        of the Thusong JV. The Company will have the option to proceed to take
        the project to a BFS level. Once the BFS has been completed, the parties,
        by agreement, may jointly or separately proceed to exploitation. During
        development, the Thusong JV will be seeking a BEE partner (which could
        be the Company itself) to participate in the project. If both partners
        decide to proceed, then a joint management committee will be established
        to oversee development and operations. Should Anglo Platinum decide not
        to contribute to exploitation, its interest will be diluted over time
        pursuant to a formula taking into account expenditure on the project by
        the contributing parties. Anglo Platinum will remain entitled to a minimum
        17.5% non-contributory interest, adjusted depending on the final PGM royalty
        established under the South African Mineral and Petroleum Royalty Bill
        to a maximum of 20%. Should the Company decide not to proceed, Anglo Platinum
        has the right to buy out the Companys interest at the pro-rata net
        present value of exploiting the farms as determined in the BFS.
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|(c) | La Dicha Property, Mexico                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|    | In 1998, the Company acquired an option to purchase
        a 100% interest in the La Dicha property, located near Chilpancingo, Mexico,
        in consideration for total payments of US$500,000 (of which                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           

---

|ANOORAQ RESOURCES CORPORATION                                         
|----------------------------------------------------------------------
|Notes to Consolidated Financial Statements                            
|For the two months ended December 31, 2003 and December 31,
      2002
|(Expressed in Canadian
      Dollars)                                 

US$30,000 has been paid) and the issuance
  of 350,000 common shares of the Company in stages over four years. Subsequent
  to the date of the agreement and in contravention of its terms, the property
  vendor failed to maintain adequate title to five of the fourteen concessions
  and ownership of these concessions reverted to the Mexican government, which
  subsequently granted them to third parties pursuant to a public auction during
  the 1999 fiscal year. The Company terminated all payments to the property vendor
  during the 1999 fiscal year. The Company's remaining ownership interests, which
  were carried at a nominal value of $1, lapsed during the 2002 fiscal year and
  accordingly, were expensed in the 2002 fiscal year.

|7. | Share capital
|-- | -------------

|(a) | Authorized share capital                                                                 
|--- | -----------------------------------------------------------------------------------------
|    |                                                                                          
|    | Authorized share capital consists of 200,000,000 common
        shares without par value.
|    |                                                                                          
|(b) | Issued share capital                                                                     

| |                                                                    |  |        |  |  | Number of  |  |   | Dollar     | 
| | ------------------------------------------------------------------ |  | ------ |  |  | ---------- |  | - | ---------- | 
| | Common shares issued
      and outstanding                         |  | Price  |  |  | Shares     |  |   | Amount     | 
| | Balance, October 31, 2002 (unaudited)                              |  |        |  |  | 32,148,463 |  | $ | 20,048,474 | 
| | Issued during fiscal 2003:                                         |  |        |  |  |            |  |   |            | 
| | Shares issued for property option                                  |  | $ 0.75 |  |  | 270,833    |  |   | 203,125    | 
| | Share purchase options exercised                                   |  | $ 0.60 |  |  | 1,206,000  |  |   | 720,090    | 
| | Warrants exercised                                                 |  | $ 0.72 |  |  | 5,138,876  |  |   | 3,435,560  | 
| | Private
      placement, May 2003, net of issue costs (i)          |  | $ 0.52 |  |  | 1,400,000  |  |   | 679,614    | 
| | Balance, October 31, 2003                                          |  |        |  |  | 40,164,172 |  | $ | 25,086,863 | 
| | Issued during fiscal 2004:                                         |  |        |  |  |            |  |   |            | 
| | Shares issued for property option                                  |  | $ 0.85 |  |  | 400,000    |  |   | 340,000    | 
| | Share purchase options exercised                                   |  | $ 0.68 |  |  | 608,500    |  |   | 412,080    | 
| | Fair value of options allocated
      to shares issued on exercise |  |       |  |  |           |  |   | 350,936    | 
| | Warrants exercised                                                 |  | $ 0.85 |  |  | 3,313,125  |  |   | 2,822,529  | 
| | Private placement, December 2003, net of issue
      costs (ii)    |  | $ 2.10 |  |  | 9,523,810  |  |   | 18,650,001 | 
| | Balance, December
      31, 2003                                   |  |        |  |  | 54,009,607 |  | $ | 47,662,409 | 

| | (i)  | On May 27, 2003, the Company completed a private placement
        financing consisting of 1,400,000 common shares at a price of $0.52 per
        share.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| | ---- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| | (ii) | In December 2003, the Company completed a $20 million
        private placement financing of 9,523,810 units at a price of $2.10 per
        unit. Each unit was comprised of one common share and one-half of a common
        share purchase warrant, with each whole warrant exercisable at $2.50 per
        common share until June 1, 2005 The agents received 571,429 share purchase
        warrants each exercisable into one common share at $2.50 per common share
        until June 1, 2005. The fair value of warrants issued has been presented
        on a net basis in share capital. These warrants expired unexercised subsequent
        to December 31, 2003.

---

|ANOORAQ RESOURCES CORPORATION                                         
|----------------------------------------------------------------------
|Notes to Consolidated Financial Statements                            
|For the two months ended December 31, 2003 and December 31,
      2002
|(Expressed in Canadian
      Dollars)                                 

|(c) | Share Option Plan                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|    | Under the terms of the shareholder-approved Share Option
        Plan, the Company at December 31, 2003 had reserved up to 6,450,000 share
        options which are grantable to employees, consultants and directors at
        the discretion of the Board of Directors. The exercise price of each option
        is set by the Board of Directors at the time of grant but cannot be less
        than the market price (less permissible discounts) on the TSX Venture
        Exchange. Options typically have a maximum term of two to three years
        and terminate 30 days following the termination of the optionees
        employment or term of engagement, except in the case of retirement or
        death. Vesting of options is at the discretion of the Board of Directors
        at the time the options are granted.
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|    | As at December 31, 2003, 4,614,000 share purchase options
        were outstanding of which 3,855,750 had vested with optionees. These options
        were exercisable at prices ranging from $0.48 to $2.00 per share, as follows:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            

Option
      Number ofExpiry date
      price
      optionsOctober 29, 2004
      $0.84
      2,014,000December 11, 2004
      $0.48
      735,000May 9, 2005
      $0.50
      3,500July 29, 2005
      $0.60
      64,000September 8, 2005
      $0.85
      100,000September 30, 2005
      $0.85
      50,000October 21, 2005
      $2.00
      1,647,5004,614,000


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

| |                                                             |   | Two months ended |   |   | Two months ended | 
| | ----------------------------------------------------------- | - | ---------------- | - | - | ---------------- | 
| |                                                             |   | December 31      |   |   | December 31      | 
| |                                                             |   | 2003             |   |   | 2002             | 
| |                                                             |   |                  |   |   | (unaudited)      | 
| | Stock-based compensation  Exploration                      | $ | 182,506          |   | $ | 4,341            | 
| | Stock-based compensation
       Operations                 |   | 303,061          |   |   | 9,921            | 
| | Credited to contributed surplus during the
      period     |   | 485,567          |   |   | 14,262           | 
| | Share purchase options exercised, credited to share capital |   | (350,936         | ) |   |                 | 
| | Contributed surplus, beginning of the period                |   | 485,962          |   |   |                 | 
| | Contributed surplus,
      end of period                    | $ | 620,593          |   | $ | 14,262           | 

---

|ANOORAQ RESOURCES CORPORATION                                         
|----------------------------------------------------------------------
|Notes to Consolidated Financial Statements                            
|For the two months ended December 31, 2003 and December 31,
      2002
|(Expressed in Canadian
      Dollars)                                 

The assumptions used to estimate the
  fair value of options granted during the two month period ending December 31,
  2003 and 2002 were:

| |                         |  | 2003      |  |  | 2002    | 
| | ----------------------- |  | --------- |  |  | ------- | 
| |                         |  |           |  |  |         | 
| | Risk free interest rate |  | 3%        |  |  | 3%      | 
| | Expected life           |  | 1.9 years |  |  | 2 years | 
| | Volatility              |  | 85%       |  |  | 40%     | 
| | Expected dividends      |  | nil       |  |  | nil     | 

| |                                  |  |                  |  |  |                   |   |  | Contractual      | 
| | -------------------------------- |  | ---------------- |  |  | ----------------- | - |  | ---------------- | 
| |                                  |  | Weighted         |  |  |                   |   |  | weighted average | 
| | Option continuity schedule       |  | average exercise |  |  |                   |   |  | remaining life   | 
| |                                  |  | price            |  |  | Number of options |   |  | (years)          | 
| | Balance, October 31, 2002        |  | $0.75            |  |  | 3,756,500         |   |  | 1.59             | 
| | Granted                          |  | $1.35            |  |  | 2,852,000         |   |  |                  | 
| | Exercised                        |  | $0.60            |  |  | (1,206,000        | ) |  |                  | 
| | Expired                          |  | $0.56            |  |  | (88,500           | ) |  |                  | 
| | Cancelled                        |  | $0.68            |  |  | (114,000          | ) |  |                  | 
| | Balance, October 31, 2003        |  | $1.12            |  |  | 5,200,000         |   |  | 1.36             | 
| | Granted                          |  | $2.00            |  |  | 72,500            |   |  |                  | 
| | Exercised                        |  | $0.68            |  |  | (608,500          | ) |  |                  | 
| | Cancelled                        |  | $0.60            |  |  | (50,000           | ) |  |                  | 
| | Balance, December
      31, 2003 |  | $**1.19**        |  |  | 4,614,000         |   |  | 1.24             | 

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

| | Note Reference                   |  |            |   |  | (i)          |   |  | (ii)         |   |  | (iii)     |  |  |            |  
| | -------------------------------- |  | ---------- | - |  | ------------ | - |  | ------------ | - |  | --------- |  |  | ---------- | -
| | Expiry date                      |  | August 28, |   |  | December 21, |   |  | December 27, |   |  | June 1,   |  |  |            |  
| |                                  |  | 2003       |   |  | 2003         |   |  | 2003         |   |  | 2005      |  |  |            |  
| | Exercise price                   |  | $0.70      |   |  | $0.85        |   |  | $0.88        |   |  | $2.50     |  |  | TOTAL      |  
| | Balance, October 31, 2002        |  | 4,500,000  |   |  | 3,692,718    |   |  | 259,283      |   |  |          |  |  | 8,452,001  |  
| | Exercised                        |  | (4,500,000 | ) |  | (592,000     | ) |  | (46,876      | ) |  |          |  |  | (5,138,876 | )
| | Balance, October 31, 2003        |  |           |   |  | 3,100,718    |   |  | 212,407      |   |  |          |  |  | 3,313,125  |  
| | Issued                           |  |           |   |  |             |   |  |             |   |  | 5,333,334 |  |  | 5,333,334  |  
| | Exercised                        |  |           |   |  | (3,100,718   | ) |  | (212,407     | ) |  |          |  |  | (3.313,125 | )
| | Balance, December
      31, 2003 |  |           |   |  |             |   |  |             |   |  | 5,333,334 |  |  | 5,333,334  |  

| | (i)  | On December 10, 2002, the Company extended the expiry
        date of 3,692,718 warrants for an additional year to December 21, 2003,
        with the exercise price unchanged at $0.85. In October 2003, 592,000 of
        these warrants were exercised. The remaining 3,100,718 warrants were exercised
        in the current period.
| | ---- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |      |                                                                                                                                                                                                                                                                                                                                            
| | (ii) | On August 27, 2002, the Company completed a $207,426
        private placement financing of 259,283 units at a price of $0.80 per unit.
        Each unit was comprised of one common share and a one common share                                                                                                                         

---

|ANOORAQ RESOURCES CORPORATION                                         
|----------------------------------------------------------------------
|Notes to Consolidated Financial Statements                            
|For the two months ended December 31, 2003 and December 31,
      2002
|(Expressed in Canadian
      Dollars)                                 

| |       | purchase warrant exercisable at $0.88 per common share
        until December 27, 2003. The warrants are subject to an accelerated expiry
        of 45 days if the Companys shares trade on the TSX Venture Exchange
        for ten consecutive trading days at or above $1.32. In October 2003, 46,876
        of these warrants were exercised. The remaining 212,407 warrants were
        exercised in the current period.                                                                                                                                                                                                                                                                                                                                                      
| | ----- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | (iii) | On December 29, 2003, the Company completed a $20,000,000
        private placement financing of 9,523,810 units at a price of $2.10 per
        unit. Each unit was comprised of one common share and a one- half common
        share purchase warrant exercisable at $2.50 per common share until June
        1, 2005. The agents received 571,429 warrants each exercisable into one
        common share at $2.50 per common share until June 1, 2005. The warrants
        are subject to a 30-day accelerated expiry at the Companys option
        if the closing price of the Companys shares as traded on the TSX
        Venture Exchange for ten consecutive trading days is at least $5.00. These
        warrants expired unexercised subsequent to December 31, 2003.

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

| |                             |  |           |  |   | Two months ended  |  |   | Two months ended  | 
| | --------------------------- |  | --------- |  | - | ----------------- |  | - | ----------------- | 
| |                             |  |           |  |   | December 31       |  |   | December 31       | 
| |                             |  |           |  |   | 2003              |  |   | 2002              | 
| | Services rendered
      by: |  | Reference |  |   |                   |  |   | (unaudited)       | 
| | Hunter Dickinson Inc.       |  | (a)       |  | $ | 35,646            |  | $ | 231,382           | 
| | Hunter Dickinson Group Inc. |  | (a)       |  |   | 4,560             |  |   | 10,962            | 
| | CEC
      Engineering Ltd.  |  | (d)       |  |   | 16,559            |  |   | 13,194            | 
| |                             |  |           |  |   |                   |  |   |                   | 
| |                             |  |           |  |   | December 31, 2003 |  |   | December 31, 2002 | 
| |                             |  |           |  |   |                   |  |   | (unaudited)       | 
| | Balances receivable:        |  |           |  |   |                   |  |   |                   | 
| | Hunter Dickinson Inc.       |  | (b)       |  | $ | 4,379,227         |  | $ | 2,417,402         | 
| | Mainland Exploration        |  | (c)       |  |   |                  |  |   | 242,516           | 

| | (a) | Hunter Dickinson Inc. (HDI) and its wholly
        owned subsidiaries are private companies with certain directors in common
        that provide geological, corporate development, administrative and management
        services to, and incur third party costs on behalf of, the Company on
        a full cost recovery basis pursuant to an agreement dated December 31,
        1996.
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                                                                                                                
| | (b) | The balances receivable to HDI have resulted from advances
        against future work, services, or cost reimbursements, or from HDI providing
        periodic short-term working capital advances to the Company.                                                                                                                                                                           
| |     |                                                                                                                                                                                                                                                                                                                                                                                                
| | (c) | Mainland Exploration Limited Partnership (Mainland)
        is a limited partnership that had provided merger, acquisition, financing
        and other corporate services to the Company and invests in exploration
        properties. Certain directors of the Company were also directors of Mainlands
        general partner. Mainland received 200,000 shares of the Company in      

---

|ANOORAQ RESOURCES CORPORATION                                         
|----------------------------------------------------------------------
|Notes to Consolidated Financial Statements                            
|For the two months ended December 31, 2003 and December 31,
      2002
|(Expressed in Canadian
      Dollars)                                 

| |     | exchange for the assignment to the Company of the October
        1999 agreement to acquire Plateau Resources (Proprietary) Limited (note
        6). The Company had also advanced Mainland $201,000 to October 31, 2000
        and this amount, plus interest accrued at prime rate plus 1% compounded
        semi-annually, remained outstanding. During the year ended October 31,
        2003, the Company concluded that the amount receivable from Mainland was
        likely uncollectible. Accordingly, the amount receivable was written off
        in October 2003. During the period ended December 31, 2003, the Company
        received $256,000 as full and final settlement of this amount receivable.
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| | (d) | During the two month period ended December 31, 2003,
        the Company paid or accrued $16,559 (two month period ended December 31,
        2002  $13,194) to CEC Engineering Ltd, a private company owned by
        a director, for engineering and project management services at market
        rates.                                                                                                                                                                                                                                                                                                                                                                                                               

|9. | Income taxes
|-- | ------------

Substantially all of the difference between
  the actual income tax expense (recovery) of $nil and the expected income tax
  recovery based on statutory tax rates relates to the benefit of losses not recognized.

As at December 31, 2003 the tax effect
  of the significant components within the Companys future tax asset (liability)
  were as follows:

| |                             |   | December
      31, |   |   | December
      31, |  
| | --------------------------- | - | ------------------ | - | - | ------------------ | -
| |                             |   | 2003               |   |   | 2002               |  
| |                             |   |                    |   |   | (unaudited)        |  
| | Future income tax assets    |   |                    |   |   |                    |  
| | Mineral property interests  | $ | 1,524,000          |   | $ | 840,000            |  
| | Loss carry forwards         |   | 1,886,000          |   |   | 1,296,000          |  
| | Equipment                   |   | (4,000             | ) |   | (7,000             | )
| | Resource-related tax pools  |   | 321,000            |   |   | 150,000            |  
| | Other
      tax pools       |   | 104,000            |   |   | 32,000             |  
| | Subtotal                    |   | 3,831,000          |   |   | 2,311,000          |  
| | Valuation
      allowance   |   | (3,831,000         | ) |   | (2,311,000         | )
| | Net future income tax asset |   |                   |   |   |                   |  

The Company had losses available for
  income tax purposes in Canada totalling approximately $5.2 million, expiring
  in various periods from 2004 to 2010. The Company had capital losses available
  of $0.1 million, which, when available, can be used to offset future capital
  gains.

---

|ANOORAQ RESOURCES CORPORATION                                         
|----------------------------------------------------------------------
|Notes to Consolidated Financial Statements                            
|For the two months ended December 31, 2003 and December 31,
      2002
|(Expressed in Canadian
      Dollars)                                 

|10. | Differences between Canadian and United States Generally
        Accepted Accounting Principles
|--- | -----------------------------------------------------------------------------------------------

The consolidated financial statements
  have been prepared in accordance with Canadian generally accepted accounting
  principles (Canadian GAAP), which differ in certain material respects
  from those principles that the Company would have followed had its consolidated
  financial statements been prepared in accordance with United States generally
  accepted accounting principles (US GAAP).

Had the Company followed US GAAP, certain
  items on the statements of loss and deficit, and balance sheets would have been
  reported as follows:

| |                                                                    |   | As at       |  |   | As at       | 
| | ------------------------------------------------------------------ | - | ----------- |  | - | ----------- | 
| |                                                                    |   | December 31 |  |   | December 31 | 
| |                                                                    |   | 2003        |  |   | 2002        | 
| | Consolidated Balance
      Sheets                                  |   |             |  |   | (unaudited) | 
| |                                                                    |   |             |  |   |             | 
| | Total assets under Canadian GAAP                                   | $ | 30,990,866  |  | $ | 7,591,076   | 
| | Adjustments under
      US GAAP                                    |   |            |  |   |            | 
| | Total assets under US GAAP                                         | $ | 30,990,866  |  | $ | 7,591,076   | 
| |                                                                    |   |             |  |   |             | 
| | Total liabilities under Canadian GAAP                              | $ | 178,934     |  | $ | 320,597     | 
| | Adjustments under
      US GAAP                                    |   |            |  |   |            | 
| | Total liabilities under Canadian and US GAAP                       | $ | 178,934     |  | $ | 320,597     | 
| |                                                                    |   |             |  |   |             | 
| | Shareholders equity under Canadian and US GAAP                    | $ | 30,811,932  |  | $ | 7,270,479   | 
| |                                                                    |   |             |  |   |             | 
| |                                                                    |   | Two months  |  |   | Two months  | 
| |                                                                    |   | ended       |  |   | ended       | 
| |                                                                    |   | December 31 |  |   | December 31 | 
| | Consolidated Statements
      of Operations                        |   | 2003        |  |   | 2002        | 
| |                                                                    |   |             |  |   |             | 
| | Loss for the year under Canadian                                   |   |             |  |   |             | 
| | and US GAAP                                                        | $ | 1,226,674   |  | $ | 471,026     | 
| |                                                                    |   |             |  |   |             | 
| | Basic and diluted loss per share for the year
      under Canadian |   |             |  |   |             | 
| | and US GAAP                                                        | $ | 0.04        |  | $ | 0.01        | 

There are no material differences between
  Canadian GAAP and US GAAP in the consolidated statements of cash flows for the
  two months ended December 31, 2003, and the two months ended December 31, 2002.

| | (a) | United States Statement of Financial Accounting Standards
        No. 123 ("SFAS 123"), "Accounting for Stock-Based Compensation",
        requires that stock-based compensation be accounted for based on a fair
        value methodology, although in certain instances it allows the effects
        to be disclosed in the notes to the financial statements rather than in
        the statement of operations. SFAS 123 also allows an entity to continue
        to measure compensation costs for stock-based compensation plans using
        the intrinsic value based method of accounting as prescribed by APB Opinion
        No. 25 ("APB 25"). To October 31, 2002, the Company had elected to measure
        compensation cost for its plans using APB 25
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

---

|ANOORAQ RESOURCES CORPORATION                                         
|----------------------------------------------------------------------
|Notes to Consolidated Financial Statements                            
|For the two months ended December 31, 2003 and December 31,
      2002
|(Expressed in Canadian
      Dollars)                                 

| |     | for US GAAP purposes. As a result of changes to Canadian
        GAAP for the year ended October 31, 2003, there were no material differences
        in the treatment by the Company with respect to stock based compensation
        under US and Canadian GAAP for the year ended October 31, 2003.                                                                                                                                                                                                                                                    
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| |     | United States Statement of Financial Accounting Standards
        148 ("SFAS 148"), "Accounting for Stock-Based Compensation - Transition
        and Disclosure - an amendment of FASB Statement No. 123", permits
        a company to adopt a fair value methodology on a prospective basis. Effective
        November 1, 2003, for US GAAP purposes, the Company prospectively adopted
        the fair value method of accounting for stock-based compensation, a treatment
        consistent with the accounting treatment used for Canadian GAAP.
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| |     | For the two months ended December 31, 2003, and the
        two months ended December 31, 2002, there were no differences in stock-based
        compensation expense in respect of non- employee share options which would
        be required to be charged to operations under both Canadian and US GAAP.
        However, for US GAAP purposes, stock-based compensation would be classified
        in the consolidated statements of operations by the nature of the services
        provided and not as a separate line item.                     
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| | (b) | Pursuant to US GAAP, the Company would be considered
        an exploration stage company as the Company is devoting efforts to establishing
        commercially viable mineral properties. However, the identification of
        the Company as such for accounting purposes does not impact the measurement
        principles applied in these consolidated financial statements.                                                                                                                                                                    

|11. | Subsequent Events
|--- | -----------------

In addition to items mentioned elsewhere
  in these notes, subsequent to December 31, 2003, the Company had the following
  subsequent events:

| | (a) | Ga-Phasha Project                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| |     | In January 2004, the Company announced it had agreed
        to terms whereby the Company and Pelawan Investments (Proprietary) Limited
        ("Pelawan"), a private South African BEE company, would combine their
        respective PGM assets, comprising the Company's Northern and Western Limb
        PGM projects and Pelawan's 50% participation interest in the Ga-Phasha
        (previously known as Paschaskraal) PGM Project ("Ga-Phasha") on the Eastern
        Limb of the Bushveld Complex in South Africa. The Ga-Phasha property consists
        of four farms  Portion 1 of Paschaskraal 466KS, and the whole of
        farms Klipfontein 465KS, De Kamp 507KS and Avoca 472KS  covering
        an area of approximately 9,700 hectares.
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| |     | The mineral title relating to the Ga-Phasha Project
        is held by Micawber 277 (Proprietary) Limited ("Micawber"), a private
        South African corporation which was owned 50% by Anglo Platinum and 50%
        by Pelawan.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                

---

|ANOORAQ RESOURCES CORPORATION                                         
|----------------------------------------------------------------------
|Notes to Consolidated Financial Statements                            
|For the two months ended December 31, 2003 and December 31,
      2002
|(Expressed in Canadian
      Dollars)                                 

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

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 on September 22, 2004. Work on the
  Ga-Phasha Project is continuing toward the preparation of a bankable feasibility
  study.

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

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

Neither additional financings nor bankable
  feasibility studies for the Projects had been completed by Anooraq 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

---

|ANOORAQ RESOURCES CORPORATION                                         
|----------------------------------------------------------------------
|Notes to Consolidated Financial Statements                            
|For the two months ended December 31, 2003 and December 31,
      2002
|(Expressed in Canadian
      Dollars)                                 

price at the date of the deemed dilutive
  financing) would have been deemed to have taken place as at such date and the
  Company would have been obligated to issue to Pelawan that number of shares
  which, after notionally giving effect to the Deemed Dilutive Financings, would
  have resulted in Pelawan continuing to hold a 52% interest in the Company. In
  November 2005, Anooraq and Pelawan agreed to extend the Finalization Date to
  the earlier of:

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

None of these events have occurred.
  Accordingly, the additional common shares which would, under the original terms
  of the share exchange agreement, have become issuable to Pelawan by Anooraq
  as of September 30, 2005 were not required to be issued at that time and the
  determination of whether any additional common shares will be required to be
  issued to Pelawan in light of any actual or deemed dilutive financings will
  be made in due course on the Finalization Date, as amended. The method for determining
  whether such additional common shares will be issuable upon the Finalization
  Date remains as described above. Upon the Finalization Date, the dilutive financings
  for the purposes of calculating whether any additional common shares are issuable
  to Pelawan will be the actual dilutive financings undertaken in relation to
  the Projects to date and, to the extent that no such financings have been undertaken,
  the Deemed Dilutive Financings described above.

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

The acquisition costs were accounted
  for as follows:

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

| | (b) | The Company increased authorized share capital to an
        unlimited number of common shares without par value.                                                       
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                         
| | (c) | From January 1, 2004 to July 7, 2006, 3,010,800 common
        shares were issued pursuant to the exercise of share purchase options
        for proceeds of $2,889,370.

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