##### 



Exhibit 99.2
 Peru Copper Inc.
   December 31, 2006 and 2005




---



##### 



REPORT OF MANAGEMENT
    (Signed) Gerard Wolfe
    
    (Signed) Eric PietzChief Executive Officer
    
    Chief Financial OfficerMarch 30, 2007
    
    March 30, 2007
 AUDITORS REPORT
 To the Shareholders of  Peru Copper Inc.
    (Signed) PricewaterhouseCoopers LLP
 Chartered Accountants




---



##### 



Peru Copper Inc.
 
  December 31,
    
    
    December 31,2006
    
    
    2005$
    
    
    $AssetsCurrent assetsCash and cash equivalents
    
    
    35,649,917
    
    
    
    26,677,452Restricted cash (note 3)
    
    
    500,000
    
    
    
    2,000,000Prepaid expenses and advances
    
    
    297,713
    
    
    
    89,75336,447,630
    
    
    
    28,767,205Deposit on water treatment plant(note 3)
    
    
    14,949,666
    
    
    
    Loans receivable(note 3)
    
    
    
    
    
    
    1,377,754Property, plant and equipment net of accumulated
depreciation of $157,375 (December 31, 2005 - $79,871)
    
    
    955,035
    
    
    
    372,351Exploration properties(note 3)
    
    
    62,973,520
    
    
    
    29,989,772115,325,851
    
    
    
    60,507,082LiabilitiesCurrent liabilitiesAccounts payable and accrued liabilities
    
    
    13,757,774
    
    
    
    916,298Due to related parties (note 4)
    
    
    155,763
    
    
    
    115,41813,913,537
    
    
    
    1,031,716Shareholders EquityShare capital(note 5)Authorized : Unlimited with no par valueIssued and outstanding

119,208,624 (December 31, 2005  97,741,744) common shares
    
    
    103,422,802
    
    
    
    59,894,867Contributed surplus
    
    
    5,082,046
    
    
    
    3,323,299Deficit
    
    
    (7,092,534
    )
    
    
    (3,742,800
    )101,412,314
    
    
    
    59,475,366115,325,851
    
    
    
    60,507,082
 Contingencies  Subsequent Events
 Approved by the Board of Directors(signed) David Lowell
    
    Director
    
    
    
    (signed) Gerald Wolfe
    
    Director




---



##### 



Peru Copper Inc.
 
  DeficitaccumulatedWarrants
    
    
    
    
    
    
    
    
    
    
    during theand
    
    
    Common
    
    
    Contributed
    
    
    exploration
    
    
    TotalCommon
    
    
    agent
    
    
    stock
    
    
    surplus
    
    
    stage
    
    
    equitystock
    
    
    options
    
    
    $
    
    
    $
    
    
    $
    
    
    $Balance  December 31, 2003
    
    
    1
    
    
    
    
    
    
    
    1,187,562
    
    
    
    
    
    
    
    (43,741
    )
    
    
    1,143,821Cash call shareholder
contribution
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    200,000
    
    
    
    
    
    
    
    200,000Acquisition of Peru Copper Inc.
    
    
    50,299,999
    
    
    
    
    
    
    
    (124,747
    )
    
    
    65,810
    
    
    
    
    
    
    
    (58,937
    )Shares issued for cash
    
    
    9,428,570
    
    
    
    4,714,284
    
    
    
    12,000,000
    
    
    
    
    
    
    
    
    
    
    
    12,000,000Shares issued on the Initial
Public Offering (IPO) and over
allotment
    
    
    29,825,000
    
    
    
    14,912,500
    
    
    
    39,013,202
    
    
    
    
    
    
    
    
    
    
    
    39,013,202Over allotment of IPO
    
    
    4,473,750
    
    
    
    2,236,875
    
    
    
    5,873,830
    
    
    
    
    
    
    
    
    
    
    
    5,873,830Share issuance costs
    
    
    
    
    
    
    2,104,223
    
    
    
    (5,115,407
    )
    
    
    
    
    
    
    
    
    
    
    (5,115,407
    )Stock-based compensation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,568,345
    
    
    
    
    
    
    
    1,568,345Loss for the period
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (277,288
    )
    
    
    (277,288
    )Balance  December 31, 2004
    
    
    94,027,320
    
    
    
    23,967,882
    
    
    
    52,834,440
    
    
    
    1,834,155
    
    
    
    (321,029
    )
    
    
    54,347,566Shares issued for cash 
options exercised
    
    
    200,000
    
    
    
    (200,000
    )
    
    
    280,000
    
    
    
    
    
    
    
    
    
    
    
    280,000Fair value of options exercised
    
    
    
    
    
    
    
    
    
    
    117,410
    
    
    
    (117,410
    )
    
    
    
    
    
    
    Shares issued for cash 
Warrants exercised
    
    
    3,514,424
    
    
    
    (3,514,424
    )
    
    
    5,974,511
    
    
    
    
    
    
    
    
    
    
    
    5,974,511Warrants expired
    
    
    
    
    
    
    (1,381
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Fair value of warrants exercised
    
    
    
    
    
    
    
    
    
    
    688,506
    
    
    
    (688,506
    )
    
    
    
    
    
    
    Stock-based compensation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,295,060
    
    
    
    
    
    
    
    2,295,060Loss for the period
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (3,421,771
    )
    
    
    (3,421,771
    )Balance  December 31, 2005
    
    
    97,741,744
    
    
    
    20,252,077
    
    
    
    59,894,867
    
    
    
    3,323,299
    
    
    
    (3,742,800
    )
    
    
    59,475,366Shares issued for cash 
Options exercised
    
    
    1,353,780
    
    
    
    
    
    
    
    1,947,955
    
    
    
    
    
    
    
    
    
    
    
    1,947,955Shares issued for cash 
Warrants exercised
    
    
    20,113,100
    
    
    
    (20,113,100
    )
    
    
    40,226,200
    
    
    
    
    
    
    
    
    
    
    
    40,226,200Warrants expired
    
    
    
    
    
    
    (8,084
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Fair value of options exercised
    
    
    
    
    
    
    
    
    
    
    1,353,780
    
    
    
    (1,353,780
    )
    
    
    
    
    
    
    Stock-based compensation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,112,527
    
    
    
    
    
    
    
    3,112,527Loss for the period
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (3,349,734
    )
    
    
    (3,349,734
    )Balance  December 31, 2006
    
    
    119,208,624
    
    
    
    130,893
    
    
    
    103,422,802
    
    
    
    5,082,046
    
    
    
    (7,092,534
    )
    
    
    101,412,314




---



##### 



Peru Copper Inc.
 
  Period fromYear ended
    
    
    Year ended
    
    
    Year ended
    
    
    April 24, 2003December 31,
    
    
    December 31,
    
    
    December 31,
    
    
    to December2006
    
    
    2005
    
    
    2004
    
    
    31,2006$
    
    
    $
    
    
    $
    
    
    $Interest income
    
    
    1,780,777
    
    
    
    844,429
    
    
    
    261,441
    
    
    
    2,888,917ExpensesStock-based compensation
    
    
    2,082,545
    
    
    
    1,783,528
    
    
    
    650,775
    
    
    
    4,516,848Professional fees
    
    
    1,373,253
    
    
    
    988,993
    
    
    
    155,662
    
    
    
    2,517,908Management fees and salaries
    
    
    903,657
    
    
    
    613,820
    
    
    
    202,673
    
    
    
    1,720,150Listing and filing fees
    
    
    278,286
    
    
    
    227,827
    
    
    
    147,857
    
    
    
    655,893Office
    
    
    275,866
    
    
    
    200,831
    
    
    
    110,736
    
    
    
    595,127Shareholder information
    
    
    165,093
    
    
    
    85,347
    
    
    
    8,821
    
    
    
    259,261Travel
    
    
    235,321
    
    
    
    110,938
    
    
    
    142,229
    
    
    
    488,488Donations and Scholarships
    
    
    4,516
    
    
    
    
    
    
    
    41,337
    
    
    
    45,853Bank charges
    
    
    8,679
    
    
    
    2,258
    
    
    
    1,258
    
    
    
    12,195Depreciation
    
    
    3,528
    
    
    
    2,461
    
    
    
    1,350
    
    
    
    7,339U.S. registration
    
    
    
    
    
    
    71,981
    
    
    
    224,204
    
    
    
    296,185Exploration costs
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    36,052Foreign exchange loss (gain)
    
    
    (200,233
    )
    
    
    178,216
    
    
    
    (1,148,173
    )
    
    
    (1,169,848
    )5,130,511
    
    
    
    4,266,200
    
    
    
    538,729
    
    
    
    9,981,451Loss for the period
    
    
    (3,349,734
    )
    
    
    (3,421,771
    )
    
    
    (277,288
    )
    
    
    (7,092,534
    )Deficit  Beginning of period
    
    
    (3,742,800
    )
    
    
    (321,029
    )
    
    
    (43,741
    )
    
    
    Deficit  End of period
    
    
    (7,092,534
    )
    
    
    (3,742,800
    )
    
    
    (321,029
    )
    
    
    (7,092,534
    )Loss per share basic and diluted
    
    
    (0.03
    )
    
    
    (0.04
    )
    
    
    (0.00
    )
    
    
    Weighted average number of shares
outstanding
    
    
    114,612,727
    
    
    
    94,605,447
    
    
    
    65,730,995
    
    
    
    




---



##### 



Peru Copper Inc.
 
  Period fromYear ended
    
    
    Year ended
    
    
    Year ended
    
    
    April 24, 2003December 31,
    
    
    December 31,
    
    
    December 31,
    
    
    to December2006
    
    
    2005
    
    
    2004
    
    
    31,2006$
    
    
    $
    
    
    $
    
    
    $Cash flows from (used in) operating
activitiesLoss for the period
    
    
    (3,349,734
    )
    
    
    (3,421,771
    )
    
    
    (277,288
    )
    
    
    (7,092,534
    )Items not affecting cashDepreciation
    
    
    3,528
    
    
    
    2,461
    
    
    
    1,350
    
    
    
    7,339Stock-based compensation
    
    
    2,082,545
    
    
    
    1,783,528
    
    
    
    650,775
    
    
    
    4,516,848Change in non-cash working capital itemsPrepaid expenses and advances
    
    
    (207,960
    )
    
    
    15,313
    
    
    
    (59,328
    )
    
    
    (284,472
    )Accounts payable and accrued
liabilities
    
    
    (847,794
    )
    
    
    (807,985
    )
    
    
    46,668
    
    
    
    (1,521,679
    )(2,319,415
    )
    
    
    (2,428,454
    )
    
    
    362,177
    
    
    
    (4,374,498
    )Cash flows from (used in) financing
activitiesShare capital issued for cash  net
    
    
    42,174,155
    
    
    
    6,254,511
    
    
    
    52,689,180
    
    
    
    102,295,408Contributed Surplus
    
    
    
    
    
    
    
    
    
    
    200,000
    
    
    
    200,000Due to related parties
    
    
    40,345
    
    
    
    (188,681
    )
    
    
    41,985
    
    
    
    135,76342,214,500
    
    
    
    6,065,830
    
    
    
    52,931,165
    
    
    
    102,631,171Cash flows from (used in) investing
activitiesRestricted cash
    
    
    1,500,000
    
    
    
    
    
    
    
    (2,000,000
    )
    
    
    (500,000
    )Deposit on Water Treatment Plant
    
    
    (14,949,666
    )
    
    
    
    
    
    
    
    
    
    
    (14,949,666
    )Loans receivable
    
    
    (1,790,393
    )
    
    
    (1,377,754
    )
    
    
    
    
    
    
    (3,168,147
    )Exploration properties
    
    
    (15,045,095
    )
    
    
    (16,022,873
    )
    
    
    (10,636,430
    )
    
    
    (42,899,185
    )Purchase of property, plant and equipment
    
    
    (637,466
    )
    
    
    (266,625
    )
    
    
    (165,666
    )
    
    
    (1,089,758
    )(30,922,620
    )
    
    
    (17,667,252
    )
    
    
    (12,802,096
    )
    
    
    (62,606,756
    )Increase (decrease) in cash and
cash equivalents
    
    
    8,972,465
    
    
    
    (14,029,876
    )
    
    
    40,491,246
    
    
    
    35,649,917Cash and cash equivalents 
Beginning of period
    
    
    26,677,452
    
    
    
    40,707,328
    
    
    
    216,082
    
    
    
    Cash and cash equivalents  End of
period
    
    
    35,649,917
    
    
    
    26,677,452
    
    
    
    40,707,328
    
    
    
    35,649,917Non-cash investing and financing
activitiesShares issued for acquisition of
Peru Copper Syndicate Ltd.
    
    
    
    
    
    
    
    
    
    
    (124,747
    )
    
    
    (124,747
    )Loan receivable included in acquisition
of exploration properties
    
    
    3,168,147
    
    
    
    
    
    
    
    
    
    
    
    3,168,147Shares issued for services
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    10,000Exploration properties  Stock-based
compensation
    
    
    1,029,982
    
    
    
    511,532
    
    
    
    
    
    
    
    1,541,514Exploration properties  Depreciation
    
    
    51,254
    
    
    
    22,922
    
    
    
    
    
    
    
    74,176




---



##### 



Peru Copper Inc.
 December 31, 2006 and 2005
  1
    
    OperationsPeru Copper Inc. (the Company or PCI) was incorporated on February 24, 2004 in Canada
under the Canada Business Corporations Act.The Company is engaged in the acquisition and exploration of potentially mineable deposits of
copper in Peru. The Company through its subsidiary, Minera Peru Copper S.A. has an option to
acquire certain mining concessions within the Morococha mining district in Peru.As at December 31, 2006, the Company has no properties under development and to date has not
generated any operating revenues. Consequently, it is considered to be in the exploration
stage.2
    
    Significant accounting policiesGenerally accepted accounting principlesThese financial statements have been prepared in accordance with accounting principles
generally accepted in Canada, which differ in certain material respects from that in the United
States as set out in note 10.Basis of presentationThese consolidated financial statements include the accounts of the Company and its wholly
owned subsidiaries Peru Copper Syndicate Ltd., Minera Peru Copper S.A. and Minera Centenario
S.A.C.Use of estimatesThe preparation of financial statements in conformity with Canadian generally accepted
accounting principles requires management to make estimates and assumptions that affect the
reported amount of assets and liabilities and disclosure of contingent assets and liabilities
at the date of the financial statements and the reported amount of revenues and expenses during
the period. Financial statements items subject to significant estimates include the exploration
properties and the measurement of stock-based compensation. Actual results may differ from
those estimates.Foreign currency translationThe Companys subsidiaries are considered an integrated foreign operation. Monetary assets and
liabilities are translated at the exchange rate in effect at the balance sheet date;
non-monetary assets and liabilities are translated at historical exchange rates; revenue and
expense items are translated at the average rate for the period. Foreign exchange gains and
losses on translation are included in the statement of operations in the period in which they
occur.




---



##### 



Peru Copper Inc.
 December 31, 2006 and 2005
  Cash and cash equivalents
  Property, plant and equipment
  Estimated useful life(in years)Vehicles
    
    

    
    5Office equipment and furniture
    
    

   
    4 to 10
 Mineral properties




---



##### 



Peru Copper Inc.
 December 31, 2006 and 2005
   Asset retirement obligations
   Income taxes
  Earnings (loss) per share
  Stock-based compensation




---



##### 



Peru Copper Inc.
 December 31, 2006 and 2005
  Share capital
   3
    
    Exploration properties  Toromocho Project
 December 31,
    
    
    December 31,2006
    
    
    2005$
    
    
    $Balance  Beginning of year
    
    
    29,989,772
    
    
    
    12,756,598Costs for the year:Water treatment plant project
    
    
    198,310
    
    
    
    Supplies and general
    
    
    5,599,841
    
    
    
    2,536,686Salaries and consulting
    
    
    4,200,312
    
    
    
    3,591,827Drilling
    
    
    1,883,828
    
    
    
    6,195,624Value added tax
    
    
    1,421,321
    
    
    
    1,719,595Acquisition and lease
    
    
    17,940,622
    
    
    
    336,760Stock-based compensation
    
    
    1,029,983
    
    
    
    511,532Assay sampling and testing
    
    
    507,856
    
    
    
    1,176,398Travel
    
    
    128,436
    
    
    
    111,605Depreciation
    
    
    73,239
    
    
    
    53,147Royalty advance
    
    
    
    
    
    
    1,000,000Costs for the period
    
    
    32,983,748
    
    
    
    17,233,174Balance  End of year
    
    
    62,973,520
    
    
    
    29,989,772Deposit on water treatment plant
    
    
    15,000,000
    
    
    
    Expenditures relating to water treatment plant
    
    
    (50,334
    )
    
    
    Balance  End of year
    
    
    14,949,666
    
    
    
    




---



##### 



Peru Copper Inc.
 December 31, 2006 and 2005




---



##### 



Peru Copper Inc.
 December 31, 2006 and 2005
   Acquisition of mining concessions
       4
    
    Related party transactions
 a)
    
    During the year ended December 31, 2006, the Company received consulting and management
services from certain principal directors or companies controlled by directors in the
amount of $251,025 (December 31, 2005  $311,840).




---



##### 



Peru Copper Inc.
 December 31, 2006 and 2005
  b)
    
    During the year ended December 31, 2006, the Company received legal services from a
law firm, in which an officer of the Company is a partner in the law firm, in the amount
of $192,793. (December 31, 2005  $123,952).c)
    
    The amounts payable to related parties are non-interest bearing, due on demand and
unsecured.
 5
    
    Share capital
  Share purchase options
  WeightedaverageNumber of
    
    
    exercise priceoptions
    
    
    (in C$)
    
    
    ExpiryOptions outstanding at December 31, 2004
    
    
    5,922,100
    
    
    
    1.70Granted
    
    
    1,950,400
    
    
    
    1.53
    
    
    
    2010Cancelled
    
    
    (359,500
    )
    
    
    1.69
    
    
    
    2009Options outstanding at December 31, 2005
    
    
    7,513,000
    
    
    
    1.65Granted
    
    
    1,721,500
    
    
    
    5.06
    
    
    
    2011Exercised
    
    
    (1,353,780
    )
    
    
    1.71
    
    
    
    2009Cancelled
    
    
    (840,460
    )
    
    
    2.63
    
    
    
    2009Options outstanding at December 31, 2006
    
    
    7,040,260
    
    
    
    2.36




---



##### 



Peru Copper Inc.
 December 31, 2006 and 2005
  Exerciseprice
    
    
    Number
    
    
    NumberExpiry date
    
    $
    
    
    outstanding
    
    
    exercisableFebruary 24, 2009
    
    
    US$1.40
    
    
    
    720,000
    
    
    
    720,000June 29, 2009
    
    
    US$1.40
    
    
    
    204,800
    
    
    
    204,800October 6, 2009
    
    
    C$1.65
    
    
    
    2,718,960
    
    
    
    2,391,980November 24, 2009
    
    
    C$1.56
    
    
    
    576,000
    
    
    
    456,000February 8, 2010
    
    
    C$1.26
    
    
    
    300,000
    
    
    
    240,000May 5, 2010
    
    
    C$1.58
    
    
    
    984,000
    
    
    
    609,200February 6, 2011
    
    
    C$4.25
    
    
    
    300,000
    
    
    
    60,000May 10, 2011
    
    
    C$5.40
    
    
    
    546,500
    
    
    
    109,300August 10, 2011
    
    
    C$4.97
    
    
    
    550,000
    
    
    
    August 28, 2011
    
    
    C$5.41
    
    
    
    100,000
    
    
    
    7,040,260
    
    
    
    4,791,280




---



##### 



Peru Copper Inc.
 December 31, 2006 and 2005
   Year Ended
    
    
    Year EndedDecember
    
    
    December31, 2006
    
    
    31, 2005Risk-free interest rate
    
    
    4.12 - 4.30
    %
    
    
    3.53% - 4.26
    %Expected dividend yield
    
    
    
    
    
    
    Expected stock price volatility
    
    
    75
    %
    
    
    75
    %Expected option life in years
    
    
    5
    
    
    
    5
  Agent options
  6
    
    Income taxesIn Canada, the Company has non-capital losses for income tax purposes of approximately
$12,429,225, which expire between 2014 and 2026.There has been approximately $1.4 million of losses in Peru which can usually be applied to
reduce income in future periods.




---



##### 



Peru Copper Inc.
 December 31, 2006 and 2005
   2006
    
    
    2005$
    
    
    $Non-capital losses
    
    
    4,242,149
    
    
    
    3,279,462Unamortized share issue costs
    
    
    706,166
    
    
    
    881,633Carrying value of resource
properties and property, plant
and equipment in excess of tax
value
    
    
    (3,460,227
    )
    
    
    (1,273,565
    )1,488,088
    
    
    
    2,887,530Less: Valuation allowances
    
    
    (1,488,088
    )
    
    
    (2,887,530
    )
    
    
    
 7
    
    Segmented informationThe Company has one operating segment, which is mineral exploration. Total assets by
geographic segment are as follows:
 December 31,
    
    
    December 31,2006
    
    
    2005$
    
    
    $Canada
    
    
    34,224,529
    
    
    
    24,841,625Peru
    
    
    81,101,322
    
    
    
    35,665,457115,325,581
    
    
    
    60,507,082
  8
    
    Subsequent eventsSubsequent to December 31, 2006, 130,893 Agent options were exercised for cash proceeds of $183,250.




---



##### 



Peru Copper Inc.
 December 31, 2006 and 2005
  9
    
    United States generally accepted accounting principles (U.S. GAAP)The effect of the measurement differences between Canadian GAAP and U.S. GAAP are
summarized below.As described in note 2, Canadian GAAP allows for the deferral of exploration expenditures.
Under U.S. GAAP, the Company expenses, as incurred, costs relating to unproven mineral
properties. When proven and probable reserves are determined for a property and a feasibility
study has been prepared, then subsequent exploration and development costs of the property
would be capitalized. The capitalized cost is then assessed periodically for recoverability of
carrying values under Statement of Financial Accounting Standard (SFAS) 144.The significant changes in the consolidated financial statements relative to U.S. GAAP are as
follows:
 Period fromYear ended
    
    
    Year ended
    
    
    Year ended
    
    
    April 24, 2003December 31,
    
    
    December 31,
    
    
    December 31,
    
    
    to December2006
    
    
    2005
    
    
    2004
    
    
    31,2006$
    
    
    $
    
    
    $
    
    
    $Statements of Operations and DeficitNet loss following Canadian GAAP
    
    
    (3,349,734
    )
    
    
    (3,421,771
    )
    
    
    (277,288
    )
    
    
    (7,092,534
    )Net effect of write-down of
deferred expenditures
    
    
    (32,983,748
    )
    
    
    (17,233,174
    )
    
    
    (11,550,170
    )
    
    
    (62,973,520
    )Net loss and comprehensive loss
under U.S. GAAP
    
    
    (36,333,482
    )
    
    
    (20,654,945
    )
    
    
    (11,827,458
    )
    
    
    (70,066,054
    )Loss per share under U.S. GAAP
    
    
    (0.32
    )
    
    
    (0.22
    )
    
    
    (0.18
    )
    
    
    Weighted average number of
shares outstanding, following
U.S. GAAP
    
    
    114,612,727
    
    
    
    94,605,447
    
    
    
    65,631,543
    
    
    
    




---



##### 



Peru Copper Inc.
 December 31, 2006 and 2005
  Period fromApril 24, 2003Year ended
    
    
    Year ended
    
    
    Year ended
    
    
    to DecemberDecember 31,
    
    
    December 31,
    
    
    December 31,
    
    
    31,2006
    
    
    2005
    
    
    2004
    
    
    2006$
    
    
    $
    
    
    $
    
    
    $Statements of Cash FlowsCash flows from (used
in) operating
activities, Canadian
GAAP
    
    
    (2,319,415
    )
    
    
    (2,428,454
    )
    
    
    362,177
    
    
    
    (4,374,498
    )Deferred expenditures
    
    
    (15,045,095
    )
    
    
    (16,022,873
    )
    
    
    (10,636,430
    )
    
    
    (42,899,185
    )Cash flows used in operating activities,
U.S. GAAP
    
    
    (17,364,510
    )
    
    
    (18,451,327
    )
    
    
    (10,274,253
    )
    
    
    (47,273,683
    )Cash flows used in investing activities, Canadian GAAP
    
    
    (30,922,620
    )
    
    
    (17,667,252
    )
    
    
    (12,802,096
    )
    
    
    (62,606,756
    )Deferred expenditures
    
    
    15,045,095
    
    
    
    16,022,873
    
    
    
    10,636,430
    
    
    
    42,899,185Cash flows used in investing activities, U.S. GAAP
    
    
    (15,877,525
    )
    
    
    (1,644,379
    )
    
    
    (2,165,666
    )
    
    
    (19,707,571
    )
 December 31,
    
    
    December 31,2006
    
    
    2005$
    
    
    $Consolidated Balance SheetsTotal assets following Canadian GAAP
    
    
    115,325,851
    
    
    
    60,507,082Net effect of write-down of deferred expenditures
    
    
    (62,973,520
    )
    
    
    (29,989,772
    )Total assets under U.S. GAAP
    
    
    52,352,331
    
    
    
    30,517,310




---



##### 



Peru Copper Inc.
 December 31, 2006 and 2005
  DeficitaccumulatedCommon
    
    
    
    
    
    
    
    
    
    
    during theCommon
    
    
    Warrants
    
    
    stock
    
    
    
    
    
    
    Contributed
    
    
    developmentstock
    
    
    and agent
    
    
    amount
    
    
    Warrants
    
    
    surplus
    
    
    stageshares
    
    
    options
    
    
    $
    
    
    $
    
    
    $
    
    
    $Statements of Shareholders
Equity, U.S. GAAPShares issued for cash
    
    
    37,500,000
    
    
    
    
    
    
    
    1,177,562
    
    
    
    
    
    
    
    
    
    
    
    Shares issued for services
    
    
    12,500,000
    
    
    
    
    
    
    
    10,000
    
    
    
    
    
    
    
    
    
    
    
    Loss for the period
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,250,169
    )Balance  December 31, 2003
    
    
    50,000,000
    
    
    
    
    
    
    
    1,187,562
    
    
    
    
    
    
    
    
    
    
    
    (1,250,169
    )Cash call shareholder contribution
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    200,000
    
    
    
    Acquisition of Peru Copper Inc.
    
    
    300,000
    
    
    
    
    
    
    
    (124,747
    )
    
    
    
    
    
    
    65,810
    
    
    
    Shares issued for cash
    
    
    9,428,570
    
    
    
    4,714,284
    
    
    
    11,764,286
    
    
    
    235,714
    
    
    
    
    
    
    
    Shares issued on the Initial
Public Offering (IPO) and over
allotment
    
    
    29,825,000
    
    
    
    14,912,500
    
    
    
    38,267,577
    
    
    
    745,625
    
    
    
    
    
    
    
    Over allotment of IPO
    
    
    4,473,750
    
    
    
    2,236,875
    
    
    
    5,761,986
    
    
    
    111,844
    
    
    
    
    
    
    
    Share issuance costs
    
    
    
    
    
    
    2,104,223
    
    
    
    (5,115,407
    )
    
    
    689,037
    
    
    
    
    
    
    
    Stock-based compensation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    879,308
    
    
    
    Loss for the period
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (11,827,458
    )Balance  December 31, 2004
    
    
    94,027,320
    
    
    
    23,967,882
    
    
    
    51,741,257
    
    
    
    1,782,220
    
    
    
    1,145,118
    
    
    
    (13,077,627
    )Shares issued for cash  Agent
options exercised
    
    
    200,000
    
    
    
    (200,000
    )
    
    
    280,000
    
    
    
    
    
    
    
    
    
    
    
    Shares issued for cash  Warrants
exercised
    
    
    3,514,424
    
    
    
    (3,514,424
    )
    
    
    5,974,511
    
    
    
    
    
    
    
    
    
    
    
    Fair value of options exercised
    
    
    
    
    
    
    
    
    
    
    117,410
    
    
    
    
    
    
    
    (117,410
    )
    
    
    Fair value of warrants exercised
    
    
    
    
    
    
    
    
    
    
    688,506
    
    
    
    (688,506
    )
    
    
    
    
    
    
    Warrants expired
    
    
    
    
    
    
    (1,381
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Stock-based compensation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,295,060
    
    
    
    Loss for the period
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (20,654,945
    )Balance  December 31, 2005
    
    
    97,741,744
    
    
    
    20,252,077
    
    
    
    58,801,684
    
    
    
    1,093,714
    
    
    
    3,322,768
    
    
    
    (33,732,572
    )Shares issued for cash  Options
exercised
    
    
    1,353,780
    
    
    
    
    
    
    
    1,947,955
    
    
    
    
    
    
    
    
    
    
    
    Shares issued for cash  Warrants
exercised
    
    
    20,113,100
    
    
    
    (20,113,100
    )
    
    
    40,226,200
    
    
    
    
    
    
    
    
    
    
    
    Fair value of warrants exercised
    
    
    
    
    
    
    
    
    
    
    1,005,655
    
    
    
    (1,005,655
    )
    
    
    
    
    
    
    Fair value of options exercised
    
    
    
    
    
    
    
    
    
    
    1,353,780
    
    
    
    
    
    
    
    (1,353,780
    )
    
    
    Warrants expired
    
    
    
    
    
    
    (8,084
    )Stock-based compensation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,112,527
    
    
    
    Loss for the period
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (36,333,482
    )Balance  December 31, 2006
    
    
    119,208,624
    
    
    
    130,893
    
    
    
    103,335,274
    
    
    
    88,059
    
    
    
    5,081,515
    
    
    
    (70,066,054
    )
 Shareholders Equity




---



##### 



Peru Copper Inc.
 December 31, 2006 and 2005
   Recent U.S. accounting pronouncements
    No. 109,
 ,




---



##### 



Peru Copper Inc.
 December 31, 2006 and 2005
  Recent Canadian accounting pronouncements