---

**UNITED STATESSECURITIES AND EXCHANGE COMMISSION**
  Washington,
D.C. 20549

FORM 10-QSB

[X]Quarterly Report under Section 13 or 15(d) of the
Securities Exchange Act of 1934

For the quarterly period ended December 31,
2006

[   ]Transition Report under Section 13 or
15(d) of the Securities Exchange Act of 1934

For the transition period ________ to ________

COMMISSION FILE NUMBER**000-33189**

CANYON COPPER CORP.(Exact
name of small business issuer as specified in its charter)

|NEVADA                                                               | 88-0452792                       
|-------------------------------------------------------------------- | ---------------------------------
|(State or other jurisdiction of incorporation or
      organization) | (IRS Employer Identification No.)

Suite 408 - 1199 West Pender Street Vancouver, BC,
Canada V6E 2R1(Address of principal executive offices)

(604) 331-9326(Issuer's telephone number)

N/A(Former name, former address and former
fiscal year, if changed since last report)

Check whether the issuer (1) filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the past 12 months (or for such shorter period that the issuer was required to
file such reports), and (2) has been subject to such filing requirements for
the past 90 days: Yes [X]No [   ]

Indicate by check mark whether the registrant is a shell company
(as defined in Rule 12b-2 of the Exchange Act): Yes [   ] No
[X]

State the number of shares outstanding of each of the issuers
classes of common stock, as of the latest practicable date: As of
February 19, 2006, the Registrant had 66,880,596 shares of common stock, par
value of $0.00001 per share, issued and outstanding.

Transitional Small Business Disclosure Format (check one): Yes
[   ] No [X]

1

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PART I - FINANCIAL INFORMATION

ITEM
1.           FINANCIAL
STATEMENTS.

The accompanying unaudited financial statements have been
prepared in accordance with the instructions to Form 10-QSB and Item 310(b) of
Regulation S-B, and, therefore, do not include all information and footnotes
necessary for a complete presentation of financial position, results of
operations, cash flows, and stockholders' equity in conformity with generally
accepted accounting principles. In the opinion of management, all adjustments
considered necessary for a fair presentation of the results of operations and
financial position have been included and all such adjustments are of a normal
recurring nature. Operating results for the six months ended December 31, 2006
are not necessarily indicative of the results that can be expected for the year
ending June 30, 2007.

As used in this Quarterly Report, the terms "we, "us, "our,
and Canyon mean Canyon Copper Corp. unless otherwise indicated. All dollar
amounts in this Quarterly Report are in U.S. dollars unless otherwise
stated.

2

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Canyon Copper Corp. 
  (formerly Aberdene Mines Limited)
  (An Exploration Stage Company)

December 31, 2006



|                                        | Index
|--------------------------------------- | -----
|                                        |      
|Balance Sheets                          | F1  
|                                        |      
|Statements of Operations                | F2  
|                                        |      
|Statements of Cash Flows                | F3  
|                                        |      
|Notes to the Financial
      Statements | F4  

---

Canyon Copper Corp. 
  (formerly Aberdene Mines Limited) 
  (An Exploration Stage Company) 
  Balance Sheets 
  (Expressed in U.S. dollars)

|                                                                             |  | December 31, |   |  | June 30,    |  
|---------------------------------------------------------------------------- |  | ------------ | - |  | ----------- | -
|                                                                             |  | 2006         |   |  | 2006        |  
|                                                                             |  | $            |   |  | $           |  
|                                                                             |  | (unaudited)  |   |  |             |  
|                                                                             |  |              |   |  |             |  
|ASSETS                                                                       |  |              |   |  |             |  
|Current Assets                                                               |  |              |   |  |             |  
|Cash                                                                         |  | 240,076      |   |  | 139,750     |  
|Amounts receivable                                                           |  | 3,000        |   |  | 3,000       |  
|Investment securities                                                        |  | 296,899      |   |  | 224,053     |  
|Prepaid expenses and deposits                                                |  | 14,000       |   |  | 26,362      |  
|Total Current Assets                                                         |  | 553,975      |   |  | 393,165     |  
|Deferred Financing Costs (Note 7)                                            |  | 2,941        |   |  |            |  
|Property and Equipment
      (Note 3)                                        |  | 8,085        |   |  | 10,811      |  
|Total Assets                                                                 |  | 565,001      |   |  | 403,976     |  
|                                                                             |  |              |   |  |             |  
|LIABILITIES AND STOCKHOLDERS DEFICIT                                        |  |              |   |  |             |  
|Current Liabilities                                                          |  |              |   |  |             |  
|Accounts payable                                                             |  | 309,466      |   |  | 377,811     |  
|Accrued liabilities (Note 5)                                                 |  | 142,982      |   |  | 220,906     |  
|Due to related parties (Note 6)                                              |  | 120,426      |   |  | 9,092       |  
|Notes payable (Note 7)                                                       |  | 179,338      |   |  |            |  
|Convertible debt, less unaccreted discount
      of $64,094 and $nil         |  |              |   |  |             |  
|respectively (Note 8)                                                        |  | 720,905      |   |  | 284,999     |  
|Total Current Liabilities                                                    |  | 1,473,117    |   |  | 892,808     |  
|Commitments and Contingencies (Notes 1 and 10)                               |  |              |   |  |             |  
|Stockholders Deficit                                                        |  |              |   |  |             |  
|Preferred Stock                                                              |  |              |   |  |             |  
|Authorized: 100,000,000 shares,
      par value $0.00001;                    |  |              |   |  |             |  
|Issued and outstanding: 500,000 shares                                       |  | 5            |   |  | 5           |  
|Common Stock                                                                 |  |              |   |  |             |  
|Authorized: 500,000,000 shares, par value $0.00001;                          |  |              |   |  |             |  
|Issued and outstanding: 66,880,596 and
      65,705,596 shares, respectively |  | 669          |   |  | 658         |  
|Common Stock Subscribed (Note 9(c))                                          |  | 50,000       |   |  |            |  
|Additional Paid-in Capital                                                   |  | 13,710,974   |   |  | 13,193,195  |  
|Accumulated Comprehensive Gain (Note 2(e))                                   |  | 89,963       |   |  |             |  
|Deficit Accumulated During the Exploration Stage                             |  | (14,759,727  | ) |  | (13,682,690 | )
|Total Stockholders
      Deficit                                            |  | (908,116     | ) |  | (488,832    | )
|Total Liabilities and Stockholders Deficit                                  |  | 565,001      |   |  | 403,976     |  

The Accompanying Notes are an Integral Part of These Financial
  Statements 
  F-1

---

Canyon Copper Corp. 
  (formerly Aberdene Mines Limited) 
  (An Exploration Stage Company) 
  Statements of Operations 
  (Expressed in U.S. dollars) 
  (Unaudited)

Accumulated fromJanuary 21, 2000
      
      
      For the
      
      
      For the(Date of Inception)
      
      
      Three Months Ended
      
      
      Six Months Endedto December 31,
      
      
      December 31,
      
      
      December 31,2006
      
      
      2006
      
      
      2005
      
      
      2006
      
      
      2005$
      
      
      $
      
      
      $
      
      
      $
      
      
      $Revenue
      
      
      
      
      
      
      
      
      
      
      
      
      
      ExpensesDepreciation
      
      8,265
      
      
      1,362
      
      
      741
      
      
      2,725
      
      
      1,370Foreign exchange loss (gain)
      
      (35,052
      )
      
      (12,248
      )
      
      4,515
      
      
      (8,240
      )
      
      24,581General and administrative
      
      7,208,917
      
      
      145,885
      
      
      218,178
      
      
      376,782
      
      
      471,745Impairment of mineral property costs
      
      2,289,492
      
      
      
      
      
      597,695
      
      
      7,950
      
      
      907,813Mineral exploration costs
      
      4,061,716
      
      
      113,737
      
      
      
      
      
      464,049
      
      
      Total Operating Expenses
      
      13,533,338
      
      
      248,736
      
      
      821,129
      
      
      843,266
      
      
      1,405,509Operating Loss
      
      (13,533,338
      )
      
      (248,736
      )
      
      (821,129
      )
      
      (843,266
      )
      
      (1,405,509
      )Other ExpensesInterest on notes and
        debentures
      
      (450,396
      )
      
      (170,161
      )
      
      (6,801
      )
      
      (227,058
      )
      
      (13,206
      )Impairment loss on investmentsecurities
      
      (372,096
      )
      
      
      
      
      (333,992
      )
      
      (17,117
      )
      
      (333,992
      )Loss on sale of investment securities
      
      (411,430
      )
      
      
      
      
      
      
      
      
      
      
      (88,332
      )Gain on change in fair
        value ofconversion feature
      
      10,404
      
      
      10,404
      
      
      
      
      
      10,404
      
      
      Loss on settlement of debt
      
      (2,871
      )
      
      
      
      
      
      
      
      
      
      
      Total Other Expenses
      
      (1,226,389
      )
      
      (159,757
      )
      
      (340,793
      )
      
      (233,771
      )
      
      (435,530
      )Net Loss
      
      (14,759,727
      )
      
      (408,493
      )
      
      (1,161,922
      )
      
      (1,077,037
      )
      
      (1,841,039
      )Other Comprehensive LossUnrealized gain on investmentsecurities
      
      89,963
      
      
      89,963
      
      
      
      
      
      89,963
      
      
      Comprehensive Loss
      
      (14,669,764
      )
      
      (318,530
      )
      
      (1,161,922
      )
      
      (987,074
      )
      
      (1,841,039
      )Net Loss Per Share
         Basic and Diluted
      
      
      
      
      
      
      
      (0.02
      )
      
      (0.01
      )
      
      (0.03
      )Weighted Average SharesOutstanding
      
      
      
      
      65,932,000
      
      
      60,499,000
      
      
      65,825,000
      
      
      58,330,000


The Accompanying Notes are an Integral Part of These Financial
  Statements 
  F-2

---

Canyon Copper Corp. 
  (formerly Aberdene Mines Limited) 
  (An Exploration Stage Company) 
  Statements of Cash Flows 
  (Expressed in U.S. dollars) 
  (Unaudited)

|                                                            |  | For the          |  
|----------------------------------------------------------- |  | ---------------- | -
|                                                            |  | Six Months Ended |  
|                                                            |  | December 31,     |  
|                                                            |  | 2006             |  
|                                                            |  | $                |  
|Operating Activities                                        |  |                  |  
|                                                            |  |                  |  
|Net loss                                                    |  | (1,077,037       | )
|                                                            |  |                  |  
|Adjustments to reconcile net loss
      to net cash used in |  |                  |  
|operating activities:                                       |  |                  |  
|                                                            |  |                  |  
|Accretion of discounts on
      convertible debentures      |  | 166,150          |  
|Depreciation                                                |  | 2,725            |  
|Financing costs                                             |  | 24,534           |  
|Foreign exchange
      translation loss                     |  | (5,286           | )
|Impairment of mineral property
      costs                  |  | 7,950            |  
|Impairment
      (gain) loss on investment securities       |  | 17,117           |  
|Loss on sale of investment
      securities                 |  |                 |  
|Unrealized
      loss on investment securities              |  |                 |  
|Gain on change in fair value
      of conversion feature    |  | (10,404          | )
|Stock-based
      compensation                              |  |                 |  
|                                                            |  |                  |  
|Changes in operating assets and
      liabilities:          |  |                  |  
|                                                            |  |                  |  
|Prepaid expenses and deposits                               |  | 12,362           |  
|Accounts payable and accrued liabilities                    |  | (146,268         | )
|Due to related parties                                      |  | 111,334          |  
|                                                            |  |                  |  
|Net Cash Used in Operating Activities                       |  | (896,823         | )
|                                                            |  |                  |  
|Investing Activities                                        |  |                  |  
|                                                            |  |                  |  
|Proceeds from the sale of investment
      securities       |  |                 |  
|Purchase
      of property and equipment                    |  |                 |  
|                                                            |  |                  |  
|Net Cash Used in Investing
      Activities                 |  |                 |  
|                                                            |  |                  |  
|Financing Activities                                        |  |                  |  
|                                                            |  |                  |  
|Proceeds from issuance of convertible debentures            |  | 500,000          |  
|Proceeds from issuance of promissory
      notes            |  | 251,966          |  
|Repayment of promissory note                                |  | (67,342          | )
|Financing costs                                             |  | (27,475          | )
|Common stock subscribed                                     |  | 50,000           |  
|Issuance of common stock                                    |  | 290,000          |  
|                                                            |  |                  |  
|Net Cash Provided by Financing Activities                   |  | 997,149          |  
|                                                            |  |                  |  
|Increase in Cash                                            |  | 100,326          |  
|                                                            |  |                  |  
|Cash  Beginning of Period                                  |  | 139,750          |  
|                                                            |  |                  |  
|Cash  End of Period                                        |  | 240,076          |  
|                                                            |  |                  |  
|Non-cash Investing and Financing Activities:                |  |                  |  
|                                                            |  |                  |  
|Stock issued for mineral property acquisition
      costs   |  | 7,950            |  
|                                                            |  |                  |  
|Supplemental Disclosures:                                   |  |                  |  
|                                                            |  |                  |  
|Interest paid                                               |  | 16,708           |  
|Income
      taxes paid                                     |  |                 |  

The Accompanying Notes are an Integral Part of These Financial
  Statements 
  F-3

---

Canyon Copper Corp. 
  (formerly Aberdene Mines Limited) 
  (An Exploration Stage Company) 
  Notes to the Financial Statements 
  (Expressed in U.S. dollars) 
  (Unaudited)

|1. | Nature of Operations and Continuance of Business                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|-- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   | The Company was incorporated in the State
        of Nevada, U.S.A. on January 21, 2000 under the name Aberdene Mines Limited.
        On August 7, 2006, the Company changed its name to Canyon Copper Corp.
        The Company is an Exploration Stage Company, as defined by Statement of
        Financial Accounting Standard (SFAS) No. 7 Accounting
        and Reporting by Development Stage Enterprises. The Companys
        principal business plan is to acquire, explore and develop mineral properties
        and ultimately seek earnings by exploiting mineral claims.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   | The Company has been in the exploration stage
        since its formation in January 2000 and has not yet realized any revenues
        from its planned operations. It is primarily engaged in the acquisition,
        exploration and development of mining properties. Upon location of a commercial
        mineable reserve, the Company will actively prepare the site for extraction
        and enter a development stage. At present, management devotes most of
        its activities to raise sufficient funds to further explore and develop
        its mineral properties. Planned principal activities have not yet begun.
        The ability of the Company to emerge from the exploration stage with respect
        to any planned principal business activity is dependent upon its successful
        efforts to raise additional equity financing and/or attain profitable
        mining operations. The Company has a working capital deficit of $919,142
        as at December 31, 2006 and has accumulated losses from inception to December
        31, 2006 totalling $14,759,727. The Company also has significant mineral
        property acquisition and exploration commitments. There is no guarantee
        that the Company will be able to complete any of the above objectives.
        These factors raise substantial doubt regarding the Company’s ability
        to continue as a going concern.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   | Managements plan is to continue raising
        additional funds through future equity or debt financings.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|2. | Summary of Significant Accounting Policies                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   | a)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
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|   | b)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
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|   | c)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
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|   | d)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
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|   | e)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                

F-4

---

Canyon Copper Corp. 
  (formerly Aberdene Mines Limited) 
  (An Exploration Stage Company) 
  Notes to the Financial Statements 
  (Expressed in U.S. dollars) 
  (Unaudited)

|2. | Summary of Significant Accounting Policies
        (continued)
|-- | --------------------------------------------------------------
|   |                                                               
|   | e)                                                            
|   |                                                               
|   |                                                               
|   |                                                               
|   | f)                                                            
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|   | g)                                                            
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|   | h)                                                            
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|   | i)                                                            
|   |                                                               
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|   |                                                               
|   | j)                                                            
|   |                                                               
|   |                                                               

F-5

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Canyon Copper Corp. 
  (formerly Aberdene Mines Limited) 
  (An Exploration Stage Company) 
  Notes to the Financial Statements 
  (Expressed in U.S. dollars) 
  (Unaudited)

|2. | Summary of Significant Accounting Policies
        (continued)
|-- | --------------------------------------------------------------
|   |                                                               
|   | k)                                                            
|   |                                                               
|   |                                                               
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|   | l)                                                            
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|   | m)                                                            
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|   | n)                                                            
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|   | o)                                                            
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F-6

---

Canyon Copper Corp. 
  (formerly Aberdene Mines Limited) 
  (An Exploration Stage Company) 
  Notes to the Financial Statements 
  (Expressed in U.S. dollars) 
  (Unaudited)

|2. | Summary of Significant Accounting Policies
        (continued)
|-- | --------------------------------------------------------------
|   |                                                               
|   | n)                                                            
|   |                                                               
|   |                                                               
|   |                                                               
|   |                                                               

| |                                                            |  | Three Months Ended |   |  | Six Months Ended |  
| | ---------------------------------------------------------- |  | ------------------ | - |  | ---------------- | -
| |                                                            |  | December 31,       |   |  | December 31,     |  
| |                                                            |  | 2005               |   |  | 2005             |  
| |                                                            |  | $                  |   |  | $                |  
| |                                                            |  |                    |   |  |                  |  
| |                                                            |  |                    |   |  |                  |  
| | Net loss  as reported                                     |  | (1,077,037         | ) |  | (1,841,039       | )
| | Add: Stock-based employee compensation expense             |  |                    |   |  |                  |  
| | included in net loss 
      as reported                   |  | 9,750              |   |  | 54,859           |  
| | Deduct: Stock-based employee compensation                  |  |                    |   |  |                  |  
| | expense determined under
      fair value method           |  | (9,750             | ) |  | (54,859          | )
| |                                                            |  |                    |   |  |                  |  
| | Net loss  pro forma                                       |  | (1,077,037         | ) |  | (1,841,039       | )
| |                                                            |  |                    |   |  |                  |  
| | Net loss per share (basic and diluted) 
      as reported |  | (0.01              | ) |  | (0.03            | )
| | Net loss per share (basic and diluted)  pro forma         |  | (0.01              | ) |  | (0.03            | )

| | o) | Recent Accounting Pronouncements                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| | -- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| |    | In September 2006, the Financial Accounting Standards
        Board (FASB) issued SFAS No. 158, Employers Accounting
        for Defined Benefit Pension and Other Postretirement Plans  an amendment
        of FASB Statements No. 87, 88, 106, and 132(R). This statement requires
        employers to recognize the overfunded or underfunded status of a defined
        benefit postretirement plan (other than a multiemployer plan) as an asset
        or liability in its statement of financial position and to recognize changes
        in that funded status in the year in which the changes occur through comprehensive
        income of a business entity or changes in unrestricted net assets of a
        not-for-profit organization. This statement also requires an employer
        to measure the funded status of a plan as of the date of its year-end
        statement of financial position, with limited exceptions. The provisions
        of SFAS No. 158 are effective for employers with publicly traded equity
        securities as of the end of the fiscal year ending after December 15,
        2006. The adoption of this statement is not expected to have a material
        effect on the Company's future reported financial position or results
        of operations.
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| |    | In September 2006, the FASB issued SFAS No. 157, Fair
        Value Measurements. The objective of SFAS No. 157 is to increase
        consistency and comparability in fair value measurements and to expand
        disclosures about fair value measurements. SFAS No. 157 defines fair value,
        establishes a framework for measuring fair value in generally accepted
        accounting principles, and expands disclosures about fair value measurements.
        SFAS No. 157 applies under other accounting pronouncements that require
        or permit fair value measurements and does not require any new fair value
        measurements. The provisions of SFAS No. 157 are effective for fair value
        measurements made in fiscal years beginning after November 15, 2007. The
        adoption of this statement is not expected to have a material effect on
        the Company's future reported financial position or results of operations.                                                                                                                                                                                                                                                                                                                                             

F-7

---

Canyon Copper Corp. 
  (formerly Aberdene Mines Limited) 
  (An Exploration Stage Company) 
  Notes to the Financial Statements 
  (Expressed in U.S. dollars) 
  (Unaudited)

|2. | Summary of Significant Accounting Policies
        (continued)
|-- | --------------------------------------------------------------
|   |                                                               
|   | p)                                                            
|   |                                                               
|   |                                                               
|   |                                                               
|   |                                                               
|   |                                                               
|   |                                                               
|   |                                                               
|3. | Property and Equipment                                        

| |                    |  |        |  |  |              |  |  | December 31, |  |  | June 30,     | 
| | ------------------ |  | ------ |  |  | ------------ |  |  | ------------ |  |  | ------------ | 
| |                    |  |        |  |  |              |  |  | 2006         |  |  | 2006         | 
| |                    |  |        |  |  | Accumulated  |  |  | Net Carrying |  |  | Net Carrying | 
| |                    |  | Cost   |  |  | Depreciation |  |  | Value        |  |  | Value        | 
| |                    |  | $      |  |  | $            |  |  | $            |  |  | $            | 
| |                    |  |        |  |  |              |  |  |              |  |  |              | 
| | Computer equipment |  | 6,229  |  |  | 5,123        |  |  | 1,106        |  |  | 2,145        | 
| | Office furniture   |  | 10,122 |  |  | 3,143        |  |  | 6,979        |  |  | 8,666        | 
| |                    |  |        |  |  |              |  |  |              |  |  |              | 
| |                    |  | 16,351 |  |  | 8,266        |  |  | 8,085        |  |  | 10,811       | 

F-8

---

Canyon Copper Corp. 
  (formerly Aberdene Mines Limited) 
  (An Exploration Stage Company) 
  Notes to the Financial Statements 
  (Expressed in U.S. dollars) 
  (Unaudited)

|4. | Mineral Properties 
|-- | -------------------
|   |                    
|   | a)                 
|   |                    
|   | b)                 
|   |                    
|5. | Accrued Liabilities

| |                                                                       |  | December 31, |  |  | June 30, | 
| | --------------------------------------------------------------------- |  | ------------ |  |  | -------- | 
| |                                                                       |  | 2006         |  |  | 2006     | 
| |                                                                       |  | $            |  |  | $        | 
| |                                                                       |  |              |  |  |          | 
| | Interest accrued on convertible debentures
      and promissory notes |  | 85,165       |  |  | 37,579   | 
| | Mineral exploration expenditures                                      |  | 56,883       |  |  | 181,277  | 
| | Professional fees and other accruals                                  |  | 934          |  |  | 2,050    | 
| |                                                                       |  |              |  |  |          | 
| |                                                                       |  | 142,982      |  |  | 220,906  | 

|6. | Related Party Transactions
|-- | --------------------------
|   |                           
|   | a)                        
|   |                           
|   | b)                        
|   |                           
|   | c)                        
|   |                           
|   | d)                        

F-9

---

Canyon Copper Corp. 
  (formerly Aberdene Mines Limited) 
  (An Exploration Stage Company) 
  Notes to the Financial Statements 
  (Expressed in U.S. dollars) 
  (Unaudited)

|6. | Related Party Transactions (continued)
|-- | --------------------------------------
|   |                                       
|   | e)                                    
|   |                                       
|   | f)                                    
|   |                                       
|7. | Notes Payable                         
|   |                                       
|   | a)                                    
|   |                                       
|   |                                       
|   |                                       
|   | b)                                    
|   |                                       
|8. | Convertible Debt                      
|   |                                       
|   | a)                                    
|   |                                       
|   | b)                                    

F-10

---

Canyon Copper Corp. 
  (formerly Aberdene Mines Limited) 
  (An Exploration Stage Company) 
  Notes to the Financial Statements 
  (Expressed in U.S. dollars) 
  (Unaudited)

|8. | Convertible Debt (continued)
|-- | ----------------------------

| |  | The Company accreted interest expense of $148,077 up
        to November 27, 2006. On November 27, 2006, the Company recognized the
        difference of $44,840 between the fair value of the conversion feature
        before and after the amendment. Pursuant to EITF 00-19 the Company will
        adjust the carrying value of the conversion feature to its fair value
        at each reporting date. To December 31, 2006, the Company accreted interest
        expense of $18,074 and on December 31, 2006, recognized a gain on the
        change in the fair value of the conversion feature of $10,404 decreasing
        the carrying value of the convertible loans to $446,310. The Company will
        record further interest expense over the term of the convertible loans
        of $64,094 resulting from the fair value of the conversion feature at
        the date of issuance. The carrying value of the convertible loans will
        be accreted to the face value of $500,000 to maturity. To December 31,
        2006, accrued interest of $12,110 and has been included in accrued liabilities.
| |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| |  | Outstanding amounts under the loans may be repaid, in
        whole or in part, at any time at the option of Company without penalty.
        For so long as the loans remain outstanding the Company has agreed not
        to mortgage, pledge or otherwise encumber its interest in its minerals
        claims in the State of Nevada. Proceeds of the loans are to be used for
        working capital purposes to fund the Companys continued operations.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        

| | c) | In accordance with EITF 98-5 Accounting
        for Convertible Securities with Beneficial Conversion Features or Contingently
        Adjustable Conversion Ratios,the Company recognized the intrinsic
        value of the beneficial conversion option of $180,183 as additional paid-in
        capital and interest expense in fiscal 2005. The Company will record the
        fair value of the warrants upon conversion of the convertible debentures
        in accordance with EITF 00-27 Application of Issue No. 98-5 to
        Certain Convertible Instruments.
| | -- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| |    | i)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| |    | ii)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| |    | iii)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| |    | iv)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               

F-11

---

Canyon Copper Corp. 
  (formerly Aberdene Mines Limited) 
  (An Exploration Stage Company) 
  Notes to the Financial Statements 
  (Expressed in U.S. dollars) 
  (Unaudited)

|8. | Convertible Debt (continued)
|-- | ----------------------------

| | v) | On March 15, 2005, the Company issued a convertible
        and callable debenture for $55,000 in cash proceeds. The Company may call
        the debenture at anytime until the maturity date. The debenture matures
        on March 15, 2007, is unsecured and has a conversion price of $0.25 per
        unit. Each unit would consist of one share of common stock and one warrant
        to acquire an additional share of common stock at an exercise price of
        $0.40 per share. The holder must convert all of the principal and accrued
        interest if any is converted. The interest rate is the Bank of America
        prime rate plus 2.5% per annum. The Company must pay accrued interest
        on January 31stof each year. As of December 31, 2006, $9,664
        of interest has been accrued and is included in accrued liabilities.
| | -- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|9.  | Common Stock                 
|--- | -----------------------------
|    |                              
|    | a)                           
|    |                              
|    | b)                           
|    |                              
|    | c)                           
|    |                              
|10. | Commitments and Contingencies
|    |                              
|    | a)                           
|    |                              
|    | b)                           
|    |                              
|    | c)                           
|    |                              
|    | d)                           

F-12

---

Canyon Copper Corp. 
  (formerly Aberdene Mines Limited) 
  (An Exploration Stage Company) 
  Notes to the Financial Statements 
  (Expressed in U.S. dollars) 
  (Unaudited)

|10. | Commitments and Contingencies (continued)
|--- | -----------------------------------------
|    |                                          
|    | e)                                       
|    |                                          
|    | f)                                       
|    |                                          
|    | g)                                       
|    |                                          
|    | h)                                       
|    |                                          
|    | i)                                       
|    |                                          
|    | j)                                       
|    |                                          
|11. | Subsequent Event                         
|    |                                          
|    | a)                                       
|    |                                          
|    | b)                                       

F-13

---

ITEM
2.           MANAGEMENT'S
DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING
STATEMENTS

Certain statements contained in this Form 10-QSB constitute
"forward-looking statements. These statements, identified by words such as
plan, "anticipate, "believe, "estimate, "should, "expect" and similar
expressions include our expectations and objectives regarding our future
financial position, operating results and business strategy. These statements
reflect the current views of management with respect to future events and are
subject to risks, uncertainties and other factors that may cause our actual
results, performance or achievements, or industry results, to be materially
different from those described in the forward-looking statements. Such risks and
uncertainties include those set forth under this Item 2. "Management's
Discussion and Analysis or Plan of Operation" and elsewhere in this Quarterly
Report on Form 10-QSB. We do not intend to update the forward-looking
information to reflect actual results or changes in the factors affecting such
forward-looking information. We advise you to carefully review the reports and
documents we file from time to time with the United States Securities and
Exchange Commission (the SEC), particularly our annual reports on Form 10-KSB,
our quarterly reports on Form 10-QSB and our current reports on Form 8-K.

INTRODUCTION

We were incorporated on January 21, 2000 under the laws of the
State of Nevada. We are an exploration stage company engaged in the acquisition,
exploration and development of mineral properties. We currently own the rights
to acquire a 100% interest in two major claim blocks comprising a total of 1,003
mineral claims, representing approximately 20,560 acres located in Mineral
County, Nevada (the New York Canyon Project). We refer to the first block of
claims as the "Copper Queen Claims, and the second contiguous block of claims
as the "Longshot Ridge Claims. At present, we do not own any mineral claims
directly.

We have not earned any revenues to date and do not anticipate
earning revenues until such time as we enter into commercial production of our
mineral properties. We are presently in the exploration stage of our business
and we can provide no assurance that commercially viable mineral deposits exist
on our claims or that we will discover commercially exploitable levels of
mineral resources on our properties, or if such deposits are discovered, that we
will enter into further substantial exploration programs. Our primary
operational activities have been focused on analysis and exploratory drilling on
the New York Canyon Project over which we have an option to acquire or the right
to explore the mineral claims within the New York Canyon Project area. The
agreements pursuant to which we acquired our interests in the New York Canyon
Project provide that we must make a series of cash payments and issue certain
shares over certain time periods, expend certain minimum amounts on the
exploration of the properties or contribute our share of ongoing expenditures.
If we fail to make such payments or expenditures in a timely fashion, we may
lose our interest in those properties.

Recent Corporate Developments

Since our fiscal quarter ended September 30, 2006, we
experienced the following significant corporate developments:

|1. | On October 2, 2006, Mark A. Reynolds was appointed as a
      member of the Board of Directors of Canyon. On October 6, 2006, Mr.
      Reynolds was subsequently appointed as our Vice President of Finance. Mr.
      Reynolds has a Bachelor of Business Administration from Edith Cowan
      University of Western Australia and over twenty years of experience in
      mining and finance. Mr. Reynolds, previously a stock broker, concentrated
      on financing and development of numerous mining and oil and gas companies.
      Mr. Reynolds has developed and maintains strategic relationships with
      numerous contacts within the international institutional and brokerage
      communities. Mr. Reynolds currently receives consulting fees of $10,000
      per month under a consulting agreement dated
|-- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

3

---

|   | January 19, 2006. Mr. Reynolds will continue to receive
      the consulting fees as our Vice President of Finance.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|-- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|2. | On October 19, 2006, Cameron Reynolds resigned as a
      member of the Board of Directors of Canyon and the number of directors was
      reduced from seven to six. There was no disagreement between Mr. Reynolds
      and Canyon regarding any matter relating to Canyons operations, policies
      or practices.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|3. | On November 7, 2006, we received a loan of $21,583
      (CDN$25,000) from Kathy Huettl evidenced by a promissory note. The loan is
      unsecured and bears interest at a rate of 15% per annum. The loan matures
      on January 21, 2007. In connection with the loan we agreed to pay a $1,612
      (CDN$1,875) administration fee to the lender. Proceeds of the loan were
      used for working capital purposes to fund our continued operations. Also
      on November 7, 2006 we received a loan of $43,267 (CDN$50,000) from Terry
      Fields evidenced by a promissory note. The loan is unsecured and bears
      interest at a rate of 15% per annum. The loan matured on January 21, 2007.
      In connection with the loan we agreed to pay a $3,225 (CDN$3,750)
      administration fee to the lender. Proceeds of the loan were used for
      working capital purposes to fund our continued operations. These loans
      have been repaid.                                                                                                                                                                                                                                                                                                                                                                                                     
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|4. | On November 7, 2006, our Board of Directors approved an
      offering of up to 166,667 units at a price of $0.30 per unit to investors
      pursuant to Regulation S (Regulation S) of the United States Securities
      Act of 1933 (the Securities Act), for gross proceeds of up to $50,000.
      Each unit will consist of one share of our common stock, par value
      $0.00001 and one share purchase warrant entitling the holder to purchase
      an additional share of our common stock for a period of eighteen months
      from the date of issuance at an exercise price of $0.40 per share. On
      November 15, 2006, we accepted stock subscriptions for the issuance of
      166,667 shares of our common stock at $0.30 per share for proceeds of
      $50,000 to a subscriber pursuant to Regulation S of the Securities Act of
      1933. At December 31, 2006, the shares have not been issued.                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|5. | On November 27, 2006, we entered into amendments to our
      loan agreements with Aton Ventures Fund Ltd. (AVF) and Asset Protection
      Fund Ltd. (APF) (together the Lenders) pursuant to which the Lenders
      loaned $500,000 to Canyon. Pursuant to the terms of the amendment
      agreements with the Lenders, AVF agreed to extend the maturity date of its
      loan to April 12, 2007 and APF agreed to extend the maturity date of its
      loan to April 11, 2007. In consideration of the extension of the maturity
      date of the loan agreements, we agreed to amend the conversion terms of
      each of the loan agreements to provide that each Lender has the option at
      any time prior to the Maturity Date convert all or any portion of the
      principal outstanding on its loan at the lesser of $0.30 or the closing
      price of the shares of Canyon on the OTC Bulletin Board on the business
      day preceding the date that the Lender provides notice of conversion to us
      upon receipt of which we agreed to issue for no additional consideration,
      one half of a share purchase warrant for each conversion share issued by
      Canyon to the Lender, with each whole warrant entitling the Lender to
      purchase an additional share of our common stock at a price of $0.40 per
      share.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|6. | On December 6, 2006, we announced analysis results from a
      further ten drill holes from the 33 hole drill program completed earlier
      this year on the New York Canyon Project. See Plan of Operation - Mineral
      Exploration Activities on the New York Canyon Project during the Quarter,
      below.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|7. | On December 13, 2006, our Board of Directors approved an
      offering on a private placement basis of up to 5,000,000 Units at a price
      of $0.25 US per unit (the $0.25 Unit Offering) pursuant to Regulation S
      of the Securities Act. Each unit consists of one share of our common stock
      and one share purchase warrant, each warrant entitling the holder thereof
      to purchase an additional share of our common stock at a price of $0.30
      for a period of one year from the date of issuance. Proceeds of the $0.25
      Unit Offering are intended to be used for working capital purposes and to
      continue to fund property exploration. On December 15, 2006, we issued an
      aggregate of 1,160,000 units at a price of $0.25 per unit to two
      subscribers pursuant to the $0.25 Offering. On January 12, 2007,
  we                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  

4

---

|   | issued a further 1,000,000 units at a price of $0.25 per
      unit to a subscriber pursuant to the $0.25 Offering. These units were
      issued pursuant to the exemptions from registration contained in
      Regulation S promulgated under the Securities Act on the basis of
      representations made by the subscriber that the subscriber was not a U.S.
      person, as that term is defined under Regulation S, and that the
      subscribers were not acquiring the shares for the account or benefit of a
      U.S. person.
|-- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|8. | On December 19, 2006, we announced further analysis
      results from the remaining eight drill holes from the 33 hole drill
      program conducted on the New York Canyon Project. See Plan of Operation -
      Mineral Exploration Activities on the New York Canyon Project during the
      Quarter, below.                                                                                                                                                                                                                           

PLAN OF OPERATION

The following discussion and analysis summarizes our plan of
operation for the next twelve months, our results of operations for the six
months ended December 31, 2006 and changes in our financial condition from June
30, 2006. This discussion should be read in conjunction with the Managements
Discussion and Analysis or Plan of Operation included in our Annual Report on
Form 10-KSB for the year ended June 30, 2006.

Our plan of operation for the next twelve months is to continue
our initial exploration activities of the New York Canyon Project in Nevada.

Mineral Exploration Activities on the New York Canyon
Project during the Quarter

The current work program for New York Canyon Project comprises
drilling an initial 56 holes at Longshot Ridge to outline the mineralized zone
followed by 14 drill holes at Copper Queen to test the mineralization at depth
there. Geophysical surveys are intended to cover the main areas of interest to
develop further drill targets. The RC drill rig was mobilized to the property at
the end of March, 2006. A core rig was brought in May 8, 2006. The magnetic
survey was completed in March and the IP survey began on May 10, 2006 was
completed June 29. 2006. During June, 2006 a total of four RC holes for 1,660
feet (150 per day average) and four core holes totaling 1,402 feet (74 per day
average) were completed. The total amount of Reverse circulation drilling to
date is 8,803 feet in 25 holes. Core drilling amounts to 2,802 feet in eight
holes, for a total overall footage drilled to date of 11,605 feet in 33
holes.

On October 18, 2006, we announced that nine new targets have
been identified from the geophysical surveys completed on the New York Canyon
Project. The 2006 geophysical survey program completed on the New York Canyon
Project property consisted of a ground magnetic survey, an induced polarization
("IP") survey, compilation and review of historic geophysical surveys and
interpretation that identified additional target areas for further drilling. A
134 line kilometre ground magnetics survey was completed by Magee Geophysical
Services LLC in March, 2006. Lines were oriented N15E, spaced 100 metres apart
and extend from the western side of the Copper Queen zone six kilometres to the
east to cover the Champion and Longshot Ridge zones. A 50.4 line kilometre
dipole-dipole IP survey was completed on 17 grid lines by Zonge Geosciences Inc.
Readings were taken at N=1 to 7 separations allowing an effective depth
penetration of approximately 400 metres. The lines were generally spaced at 100
metres except over areas of low magnetic response where the spacing was
increased to 200 or 400 metres. This IP survey provides expansive coverage over
the key mineralized areas and was of sufficient density to permit 3D inversion
imagery. Jim Wright of J.L. Wright Geophysics Inc. conducted the data
processing, inversion and interpretation of the geophysical data.

In his report, Mr. Wright notes that the historic gravity data
  is important for constraining the western limits for exploration. Structures
  interpreted from the gravity indicate multiple stepped faults that down drop
  mineralized zones to the west. The magnetic survey outlines a number of possible
  intrusive centers, including those that are associated with the Champion, Copper
  Queen and Longshot Ridge mineralized zones. A substantial area measuring 1.9
  km by 1.3 km correlates well with the mapped skarn and intrusive rocks at Longshot
  Ridge. Drilling to date on this zone has covered an approximate 450 metre by
  600 metre area.

5

---

Mr. Wright notes that the mineralized zones and associated
magnetic high areas are relative chargeability lows surrounded by very large
chargeability high areas. Low resistivity has a direct correlation with all
mineralized zones and active magnetic areas. Through his compilation and
interpretation of the geophysical survey data, Mr. Wright developed target
criteria based upon geophysical characteristics. Based on these selection
criteria, nine target zones are identified that require follow up drill testing.
The targets show consistent line to line correlation with structures or magnetic
trends and are in areas that have not been previously drilled. Mr. Wright has
recommended 14 drill holes totalling 5,320 metres to test these target zones.
Drilling by Canyon has indicated that the mineralized systems have not as yet
been thoroughly evaluated and substantial drilling is required to outline the
extent of mineralization at Copper Queen, Champion and Longshot Ridge. The
geophysical surveys provide further evidence that these three key mineralized
zones may form part of the same system offset by basin and range structures and
that there are additional targets that require further evaluation.

We contracted Leroy Kay Drilling of Yerington, Nevada to
provide core drilling services at the New York Canyon Project in 2006. Mr. Kay
has provided drilling services to us for the past two years and began core
drilling operations at the New York Canyon Project in early May, 2006. Drill
core is expected to allow thorough geological modelling of both the Longshot
Ridge Claims copper oxide skarn system and the Copper Queen Claims
copper-molybdenum porphyry mineralized area. Core samples will be used for
metallurgical testing in order to identify a beneficial copper extraction
technique in the oxide mineralized zones. Equipment and crew were mobilized to
the project site at the end of March, with drilling commencing April 3, 2006.
Drilling, grid work, geophysical surveys and permitting were ongoing during
April and continued to June, 2006.

The following results have been received by Canyon since the
completion of the prior fiscal quarter from re-analyses conducted on all pulps
generated from the 2006 drill program:

Hole ID
      From(ft)
      To(ft)
      Length(ft)
      Copper(%)06-11R*
    0
    10
    10
    1.0355
    95
    40
    0.26195
    215
    20
    0.4406-13R*
    No
      Significant Results06-14R*
    No
      Significant Results06-15R*
    95
    135
    40
    0.3906-20R*
    85
    95
    10
    0.78125
    140
    15
    0.4306-21C*
    10
    125
    115
    0.54including
    105
    125
    20
    1.0306-22R*
    0
    25
    25
    0.3955
    125
    70
    0.32295
    310
    15
    0.9006-23C*
    0
    45
    45
    0.3580
    310
    230
    0.78including
    210
    270
    60
    1.7206-24R*
    30
    70
    40
    0.2995
    165
    70
    0.4106-25R*
    70
    180
    110
    0.47including
    120
    150
    30
    0.96450
    485
    35
    0.3406-26C*
    20
    115
    95
    0.29


6

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Hole ID
      From(ft)
      To(ft)
      Length(ft)
      Copper(%)06-27R*
    0
    70
    70
    0.16including
    55
    70
    15
    0.37290
    330
    40
    0.2306-28R*
    0
    185
    185
    0.53including
    35
    85
    50
    1.0806-29C*
    10
    45
    35
    0.2806-30R*
    0
    50
    50
    0.23120
    225
    105
    0.28including
    120
    170
    50
    0.4506-31R*
    0
    130
    130
    0.32190
    380
    190
    0.87including
    285
    375
    90
    1.0606-32C*
    65
    148
    83
    0.66including
    110
    148
    38
    1.0906-33C*
    10
    200
    190
    0.52including
    60
    95
    35
    0.84175
    195
    20
    1.50


Notes*
      Reverse Circulation holes are designated R
          and diamond drill core holes are designated C.


The analyses of total copper content reported were completed by
ALS Chemex using their AA62 atomic absorption procedure. A thorough quality
assurance/quality control protocol of certified standard reference materials,
duplicates and blanks was conducted during the analytical process.

Core hole 06-23C returned an average of 0.78% copper over a 230
foot interval starting from 80 feet. Included in this interval is a 60 foot
section that averaged 1.72% copper from 210 to 270 feet. An upper interval from
surface to 45 feet intersected 0.35% copper. RC drill 06-11R was drilled
vertically to a depth of 265 feet. As shown in the table above, three
mineralized horizons were encountered starting from surface to a depth of 215
feet within skarn altered siltstone varying from 0.26% copper over 40 feet to
1.03% copper over 10 feet. Drill holes 06-13R and 06-14R were both drilled
vertically to depths of 365 feet and 350 feet respectively. These holes are
located in the south-western area of Longshot Ridge within variably skarn
altered siltstone. These holes, spaced approximately 120 feet apart, did not
return any significant copper mineralization and may define the near surface
limit of mineralization in this direction.

Hole 06-15R, located in the south central area of Longshot
Ridge, returned an average of 0.39% copper over a 35 foot interval from 95 to
130 feet. Hole 06-20R was drilled in the south central portion of Longshot
Ridge. This vertical hole returned an average of 0.80% copper over a 10 foot
interval from 85 to 95 feet from within skarn altered marble and a 15 foot
interval from 125 feet that averaged 0.43% copper in altered siltstone. Core
hole 06-21C is located in the northwest area of Longshot Ridge. This vertical
drill hole returned 0.54% copper over a 115 foot interval starting at 10 feet,
including 1.03% copper over 20 feet from 105 to 125 feet. Hole 06-22R is located
in the central portion of Longshot Ridge and intersected three mineralized
horizons as shown in the table above, including 0.90% copper over 15 feet
starting at 295 feet. Hole 06-24R is located in the south central portion of the
Longshot Ridge deposit and returned an average of 0.29% copper over 40 feet
starting at 30 feet depth and a 70 foot interval averaging 0.41% copper starting
at 95 feet.

Hole 06-25R was drilled from the same setup as 06-24R and
oriented towards the northwest at a 60 degree angle to a depth of 600 feet. The
hole returned 0.47% copper over a 110 foot interval starting at 70 feet,
including a 30 foot interval from 120 feet that averaged 0.96% copper. A further
35 foot interval from 450 feet returned an average of 0.34% copper. Drill hole
06-26C is located in the north east portion of Longshot Ridge and was drilled
vertically to a depth of 534 feet. Drilling intersected weak skarn alteration

7

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in siltstone and limestone of the Gabbs Formation overlying
Luning Formation limestone. The hole intersected weak to moderate copper
mineralization from the start of sampling at 20 feet to 115 feet and averaged
0.29% Cu over this 95 foot distance. Copper mineralization in nearby outcrop
indicates that the mineralization extends from surface.

06-27R is located in the central west edge of the tested limit
of Longshot Ridge and was drilled vertically to a depth of 335 feet.
Mineralization is hosted within variable skarn alteration in siltstone and
limestone. Sampling returned a 15 foot interval from 55 to 70 feet that averaged
0.37% Cu and a 40 foot interval further down the hole from 290 to 330 feet that
averaged 0.23% Cu. 06-28R is located 300 feet northwest of 06-27R within a zone
of strong skarn alteration of siltstone and limestone within the Gabbs Fm. The
hole was drilled vertically to a depth of 345 feet and is the most westerly
located hole drilled to date on Longshot Ridge. Surface workings indicate that
mineralization extends at least 300 feet further west. Hole 06-28R returned a
broad zone of copper mineralization extending from surface to 185 feet that
averaged 0.53% Cu and included a strong zone of mineralization extending from 35
feet to 85 feet that averaged 1.08% Cu.

06-29C is located in the northern end of Longshot Ridge and was
drilled vertically to a depth of 500 feet. The hole intersected the Luning
Formation limestone unit that was non to weakly altered. An interval from the
start of sampling at 10 feet to 45 feet averaged 0.28% Cu. 06-30R is located 260
feet southwest of 06-29C and was drilled vertically to a depth of 225 feet.
Copper mineralization is hosted within calc-silicate and skarn altered limestone
adjacent to quartz monzonite sills. An interval from surface to 50 feet averaged
0.23% Cu and a second interval from 120 to 225 feet averaged 0.28% Cu. The
mineralization remains open to the north, west and at depth.

06-31R is located in the west central area of Longshot Ridge.
The hole was angled to the northwest at a dip of 600 to a depth of
545 feet. The hole intersected moderate skarn alteration within siltstone and
limestone of the Gabbs Fm. Mineralization extends from surface to 380 feet with
an upper 130 foot zone averaging 0.32% Cu and a lower 190 foot zone starting at
190 feet that averages 0.87% Cu. Included within this interval is a 90 foot zone
extending from 285 feet that averages 1.06% Cu. 06-32C is located at the
northern portion of Longshot Ridge. The hole was drilled northwest across
stratigraphy at an angle of 700 to a depth of 284 feet. An 83 foot
interval starting at 65 feet returned an average of 0.66% Cu.

06-33C is located in north central Longshot Ridge,
approximately 350 feet south of 06-32C. The hole was drilled towards the
northwest at an angle of 70° to a depth of 345 feet. A 190 foot zone
from the start of sampling at 10 feet to 200 feet averaged 0.52% Cu, with a 20
foot zone from 175 to 195 feet averaging 1.50% Cu.

Drilling to date at the Longshot Ridge copper deposit has
confirmed and expanded on the known extent of the copper oxide mineralization,
which is exposed at surface and has been tested to depths up to 400 feet. With
the exception of holes 06-13R and 06-14R, all drill holes completed in 2006 have
indicated the consistent and wide spread nature of the copper mineralization at
Longshot Ridge. The recent data is being incorporated into the overall New York
Canyon project database in order to develop a resource estimate of the copper
content at Longshot Ridge.

Mineral Exploration Activities on the Jaycor Claims during
the Quarter

On July 21, 2004, we entered into a lease agreement with Jaycor
Mining, Inc. (Jaycor). Under the terms of the lease, we were granted rights to
explore and develop eighteen patented mineral claims to the full extent
permitted by applicable mining regulations. These rights were granted as a lease
for an initial term of 15 years, and are renewable for a further 15 years. The
claims cover a geographic area of approximately 361 acres, located within the
vicinity of our New York Canyon Project. As consideration for the Lease, we are
required to pay Jaycor the following amounts prior to the commencement of any
future production activities: (i) $25,000 on execution of the Lease (amounts
have been paid); (ii) $1,000 monthly commencing on July 21, 2005, (amounts have
been paid as of the date of this quarterly report); $2,000

8

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monthly commencing on July 21, 2006; and $3,000 monthly
commencing on July 21, 2007, and continuing for as long as the Lease is in
effect.

All of these payments are considered to be minimum advance
royalty payments. Should production commence in the future, of which there can
be no assurance, these minimum payments would be credited against any actual
future royalty payments. If actual royalties payable from production exceed
$9,000 per quarter, these minimum payments would cease. If actual royalty
payments are less than $9,000 quarterly, we would be required to pay the
difference between the actual and the minimum payments. In addition to the
minimum payments, we issued 10,000 shares of our common stock to Jaycor in 2005
and have issued a further 15,000 common shares to Jaycor in 2006 pursuant to the
terms of the agreement.

The claims under the lease are subject to an overriding Royalty
Deed granted to a third party by Jaycor. Upon commencement of production, we are
required to pay the third party a net smelter returns royalty of 1.75%, up to a
maximum of $2,000,000. In addition, we have also agreed to pay the private
company a net smelter return royalty of 0.5% until such time as the third party
has been paid $2,000,000, at which time the royalty payable to the private
company will then increase to 1.5% . The 1.5% rate payable to subject to a
maximum of $2,000,000, at which time the ongoing royalty will be reduced to 0.5%
for as long as the lease is in effect.

Since entering into the Lease Agreement with Jaycor, we have
completed two work programs on the Mayflower claim that forms part of the lease.
In 2004, a single drill core labelled 04-3 was completed to a depth of 433 feet.
In 2005, 10 reverse circulation drill holes were completed for a total of 3,710
feet. Additional work on the patent claims includes geological mapping and
surface sampling. Proposed work on the Jaycor patented claims for 2006 includes
approximately 5,000 feet of RC drilling in 10 holes and 2,000 feet of core
drilling in 5 holes.

Cash Requirements Over The Next Twelve Months

ITEM AND ACTIVITY
      Budget To June 30, 2007
      12 Month Total BudgetLAND STATUS2006 - 2007 claim maintenance fees
    $125,000
    $175,000Monthly Payments - Patents
    30,000
    45,000PERMITTINGRoad and drill site work
    45,000
    50,000Archeological and biological surveys
    20,000
    20,000Water quality monitoring
    10,000
    20,000Drill Permitting & Bonding, POO in fall
    35,000
    100,000Reclamation
    -
    20,000DRILL PROGRAM (includes
      assays & supervision)Compile data for engineering evaluation
    25,000
    60,000Drilling RC
    550,000
    900,000Drilling Core
    350,000
    600,000


9

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METALLURGICAL PROGRAMInvestigation into acid costs, sites,
      transport, etc.Preliminary metallurgical work
    55,000
    105,000Preliminary alternative leach studies
    75,000
    150,000ENGINEERING & REPORTINGEngineering 43-101 Report
    15,000
    20,000Modeling, Scoping study
    -
    50,000GEOPHYSICAL SURVEYSInduced polarization
    70,000
    70,000Airborne radiometric survey
    40,000
    65,000GEOLOGICAL MAPPING AND INVESTIGATIONSMapping and sampling
    30,000
    50,000Contingency 10%
    150,000
    250,000Management fee 5%
    75,000
    125,000TOTAL
    $1,700,000
    $2,875,000


As at December 31, 2006, being the date of our most recently
completed financial statements, we had cash of $240,076. As such, we currently
do not have sufficient cash resources to meet budgeted expenditures of
approximately $2,875,000 and general operating expenses of $500,000 for the next
twelve months. Our existing cash balances are not sufficient to fund our
exploration program and carry out our normal operations into the next fiscal
year, and we will require additional financing. We anticipate that, to the
extent that we require additional funds to support our operations or the
expansion of our business, we may sell additional equity or issue debt. Any sale
of additional equity securities will result in dilution to our stockholders.
There can be no assurance that additional financing, if required, will be
available to us or on acceptable terms.

We have not had revenues since inception. We are currently in
the process of identifying sources of additional financing. However, there is no
assurance we will be successful in raising the necessary funding or on terms
that are acceptable to us. Since inception, we have been dependent on investment
capital and debt financing from third parties as our primary source of
liquidity. We anticipate continuing to rely on equity sales of shares of our
common stock and loans in order to continue to fund our business operations.
Issuances of additional shares will result in further dilution of our existing
shareholders. See Future Financings, below.

10

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RESULTS OF OPERATIONS

Second Quarter and Six Months Summary

Second
        Quarter Ended
      
      Six Months
        EndedDecember 31
      Percentage
      December 31
      PercentageIncrease /
      
      
      Increase /2006
      2005
      (Decrease)
      2006
      2005
      (Decrease)Revenue
      $-
      $-
      n/a
      $-
      $-
      n/aExpenses
      248,736
      821,129
      (70%)
      843,266
      1,405,509
      (40%)Other Expenses
      159,757
      340,793
      (53%)
      233,771
      435,530
      (46%)Net Loss
      $408,493
      $1,161,922
      (64.8%)
      $1,077,037
      $1,841,039
      (41.5%)


Revenues

We have not earned any revenues to date and do not anticipate
earning revenues until such time as we enter into commercial production of our
mineral properties. There can be no assurance that we will be successful in
discovering commercial quantities or that we can commercially produce metals or
minerals. We are presently an exploration stage company engaged in the search
for mineral reserves. We can provide no assurances that we will be able to
discover any commercially exploitable levels of mineral resources on our
property, or, even if such resources are discovered, that we will be able to
enter into commercial production of our mineral property.

Expenses

We incurred the following expenses during the six month period
ended December 31, 2006:

Second
        Quarter Ended
      
      Six Months
        EndedDecember 31
      Percentage
      December 31
      PercentageInc. /
      
      
      Inc. /2006
      2005
      (Dec.)
      2006
      2005
      (Dec.)Operating Expenses:Depreciation
      $1,362
      $741
      84%
      $2,725
      $1,370
      99%Foreign exchange loss
      (12,248)
      4,515
      (371%)
      (8,240)
      24,581
      (134%)(gain)General and administrative
      145,885
      218,178
      (33%)
      376,782
      471,745
      (20%)Mineral property costs
      113,737
      -
      n/a
      464,049
      -
      n/aImpairment of mineral
      -
      597,695
      (100%)
      7,950
      907,813
      (99%)property costsOther Expenses:Gain on change in fair value
      10,404
      -
      n/a
      10,404
      -
      n/aof conversion featureInterest
      (170,161)
      (6,801)
      2,402%
      (227,058)
      (13,206)
      1,619%Loss on sale of investment
      -
      -
      n/a
      -
      (88,332)
      (100%)securitiesImpairment loss on
      -
      (333,992)
      (100%)
      (17,117)
      (333,992)
      (95%)investment securitiesTotal Expenses
      $408,493
      $1,161,922
      (64.8%)
      $1,077,037
      $1,841,039
      (41.5%)


The decrease in operating expenditures for the six months ended
December 31, 2006 as compared with the comparative period in 2005 is primarily
attributable to the decrease in impairment of mineral property

11

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costs of $899,863. We anticipate that the expenses will
continue to increase due to our ongoing planned exploration activities,
specifically our 2007 exploratory drilling program in the New York Canyon
Project.

During the quarter ended December 31, 2006, we sold no Langley
  Park Investment Trust PLC shares, and at December 31, 2006 had a balance of
  1,027,974 Langley Park shares worth $296,899. In addition, during the fiscal
  quarter ended December 31, 2006, we recognized interest on convertible debentures
  in the amount of $170,161, compared to $6,801 during the comparable period in
  2005. We recognized accretion of discounts on convertible debt in the amount
  of $166,150 compared to none in the comparable period in 2005. We anticipate
  that we will continue to incur significant losses for the next several years
  due to our planned exploration activities.

LIQUIDITY AND CAPITAL RESOURCES

|Working Capital           |                      |                  |                      
|------------------------- | -------------------- | ---------------- | ---------------------
|                          |                      |                  | Percentage           
|                          | At December 31, 2006 | At June 30, 2006 | Increase / (Decrease)
|Current Assets            | $553,975             | $393,165         | 41%                  
|Current Liabilities       | (1,473,117)          | (892,808)        | 65%                  
|Working Capital (Deficit) | $(919,142)           | $(500,357)       | 84%                  

|Cash Flows                                           |                   |                  
|---------------------------------------------------- | ----------------- | -----------------
|                                                     | Six Months Ended  | Six Months Ended 
|                                                     | December 31, 2006 | December 31, 2005
|Cash Flows used in Operating
      Activities        | $(896,823)        | $(1,244,116)     
|Cash Flows provided by Financing Activities          | 997,149           | 1,566,432        
|Cash Flows from (used in)
      Investing Activities | -                 | 42,783           
|Net Increase (decrease) in Cash During Period        | $100,326          | $365,099         

The increase in our working capital deficit of $418,785 as at
  December 31, 2006 from a working capital deficit of $500,357 as at June 30,
  2006 was primarily a result of increased exploration expenditures and general
  and administrative expenses.

At December 31, 2006, there were $284,999 of unsecured convertible
  debentures outstanding. The debentures are convertible at the option of the
  holder during a two year period from the date of issuance into our units, which
  consist of one common share and one share purchase warrant. The holder must
  convert all of the principal and accrued interest on the debentures. The interest
  rate is the Bank of America prime rate plus 2.5% per annum. As of December 31,
  2006, $53,023 of interest has been accrued and is included in accrued liabilities.
  We are required to pay accrued interest annually on January 31st.

On August 16, 2006, the Company received loans totalling an aggregate
  of $187,661 (Cdn$209,000) from five individuals as evidenced by unsecured promissory
  notes. Each note bears interest at a rate of 15% per annum and is due on October
  30, 2006. The Company is also required to pay a 7.5% administration fee on the
  principal amount of each of the notes.

On October 31, 2006 the Company repaid $67,342 (Cdn$75,000)
  of the loans and renewed $114,983 (Cdn$134,000) of the loans. The remaining
  notes continue to bear interest at a rate of 15% per annum and are due on January
  14, 2006. Pursuant to the renewal, the Company is also required to pay a 7.5%
  administration fee on the principal amount of each of the notes. As at December
  31, 2006, $13,776 in interest and finance charges has been accrued.

On November 7, 2006, the Company received loans totalling an
  aggregate of $64,355 (Cdn$75,000) from 2 individuals as evidenced by unsecured
  promissory notes. Each note bears interest at a rate of 15% per annum and is
  due on January 21, 2006. The Company is also required to pay a 7.5% administration
  fee on the principal amount of each of the notes. As at December 31, 2006, $6,255
  of interest and finance charges has been accrued. Subsequent to the period ended
  December 31, 2006, we repaid $157,890 (CDN$184,000) of the promissory notes
  payable.

12

---

On November 27, 2006, we entered into amendments to our loan
  agreements with Aton Ventures Fund Ltd. (“AVF”) and Asset Protection
  Fund Ltd. (“APF”) (together the “Lenders”) pursuant
  to which the Lenders loaned $500,000 to Canyon. Pursuant to the terms of the
  amendment agreements with the Lenders, AVF agreed to extend the maturity date
  of its loan to April 12, 2007 and APF agreed to extend the maturity date of
  its loan to April 11, 2007. In consideration of the extension of the maturity
  date of the loan agreements, we agreed to amend the conversion terms of each
  of the loan agreements to provide that each Lender has the option at any time
  prior to the Maturity Date convert all or any portion of the principal outstanding
  on its loan at the lesser of $0.30 or the closing price of the shares of Canyon
  on the OTC Bulletin Board on the business day preceding the date that the Lender
  provides notice of conversion to us upon receipt of which we agreed to issue
  for no additional consideration, one half of a share purchase warrant for each
  conversion share issued by Canyon to the Lender, with each whole warrant entitling
  the Lender to purchase an additional share of our common stock at a price of
  $0.40 per share. To December 31, 2006, we accreted interest expense of $18,074
  and on December 31, 2006, recognized a gain on the change in the fair value
  of the conversion feature of $10,404 decreasing the carrying value of the Convertible
  Debentures to $446,310.

As at December 31, 2006, we were indebted to: (i) the former
  Chief Financial Officer of Canyon in the amount of $5,360 (June 30, 2006 - $4,970),
  (ii) the Vice President of Finance for $60,000 (June 30, 2006 - $Nil) in respect
  of management fees, and (iii) the President of Canyon for $30,835 of consulting
  fees and $24,231 for travel expenses (June 30, 2006 - $Nil). These amounts due
  are non-interest bearing, unsecured and due on demand.

During the six month period ended December 31, 2006, we paid
consulting fees of $34,980 (2005 - $Nil) to the Chief Financial Officer,
consulting fees of $60,000 (2005 - $Nil) to the Vice President of Finance, and
$24,415 (2005 - $Nil) to the President of Canyon. As at December 31, 2006,
Canyon was indebted to its former President and a company controlled by the
former President in the amount of $nil (June 30, 2006 - $1,828). This amount is
non-interest bearing, unsecured and due on demand. The former Vice President of
Canyon owns a 22.5% interest in the mineral property optioned to Canyon.

Future Financings

Our plan of operation calls for significant expenses in
connection with the exploration of the New York Canyon Project and requires us
to obtain additional financing. We recorded a net operating loss before income
taxes of $1,077,037 for the six months ended December 31, 2006 and have an
accumulated deficit of $14,759,727 since inception. As at the date of this
Quarterly Report we had cash of $240,076 and, for the next twelve months,
management anticipates that the minimum cash requirements to fund our proposed
exploration program and our continued operations will be $2,875,000. Accordingly
we do not have sufficient funds to meet our planned expenditures over the next
twelve months and will need to seek additional financing to meet our planned
expenditures.

On December 13, 2006, we approved an offering on a private
placement basis of up to 5,000,000 Units at a price of $0.25 per unit pursuant
to Regulation S of the Securities Act. Each unit consists of one share of our
common stock and one share purchase warrant, each warrant entitling the holder
thereof to purchase an additional share of our common stock at a price of $0.30
for a period of one year from the date of issuance. As at January 12, 2007, we
have issued an aggregate of 2,160,000 units at a price of $0.25 per unit to
three subscribers. The balance of the $0.25 Unit Offering has not been closed
and there is no assurance that the remaining Units will be sold.

Obtaining additional financing would be subject to a number of
factors, including the market prices for the mineral property and gold. These
factors may make the timing, amount, terms or conditions of additional financing
unavailable to us. Since our inception, we have used our common stock to raise
money for our operations and for our property acquisitions. We have not attained
profitable operations and are dependent upon obtaining financing to pursue our
plan of operation. For these reasons, our independent auditors believe there
exists a substantial doubt about our ability to continue as a going concern.

OFF-BALANCE SHEET ARRANGEMENTS

None.

13

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CRITICAL ACCOUNTING POLICIES

We have identified certain accounting policies, described
below, that are the most important to the portrayal of our current financial
condition and results of operations.

Use of Estimates

The preparation of financial statements in conformity with
accounting principles generally accepted in the United States requires
management to make estimates and assumptions that affect the reported amounts of
assets and liabilities and 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. Actual results could differ from those
estimates.

Investment Securities

We report investments in debt and marketable equity securities
at fair value based on quoted market prices or, if quoted prices are not
available, discounted expected cash flows using market rates commensurate with
credit quality and maturity of the investment. All investment securities are
designated as available for sale with unrealized gains and losses included in
stockholders' equity. We regularly review investment securities for impairment
based on criteria that include the extent to which the investment's carrying
value exceeds its related market value, the duration of the market decline, our
ability to hold to recovery and the financial strength and specific prospects of
the issuer of the security. Unrealized losses that are other than temporary are
recognized in earnings. Realized gains and losses are accounted for on the
specific identification method.

We periodically review these investments for
other-than-temporary declines in fair value based on the specific identification
method and writes down investments to their fair value when an
other-than-temporary decline has occurred. When determining whether a decline is
other-than-temporary, we examine (i) the length of time and the extent to which
the fair value of an investment has been lower than its carrying value: (ii) the
financial condition and near-term prospects of the investee, including any
specific events that may influence the operations of the investee such as
changes in technology that may impair the earnings potential of the investee:
and (iii) our intent and ability to retain its investment in the investee for a
sufficient period of time to allow for any anticipated recovery in market value.
We generally believe that an other-than-temporary decline has occurred when the
fair value of the investment is below the carrying value for one year, absent of
evidence to the contrary.

Mineral Property Costs

Canyon has been in the exploration stage since its inception on
January 21, 2000, and has not yet realized any revenues from its planned
operations. It is primarily engaged in the acquisition and exploration of mining
properties. Mineral property exploration costs are expensed as incurred. Mineral
property acquisition costs are initially capitalized when incurred using the
guidance in EITF 04-02, Whether Mineral Rights Are Tangible or Intangible
Assets. We assess the carrying costs for impairment under SFAS 144,
Accounting for Impairment or Disposal of Long Lived Assets at each fiscal
quarter end. When it has been determined that a mineral property can be
economically developed as a result of establishing proven and probable reserves,
the costs then incurred to develop such property, are capitalized. Such costs
will be amortized using the units-of-production method over the estimated life
of the probable reserve. If mineral properties are subsequently abandoned or
impaired, any capitalized costs will be charged to operations.

Stock-Based Compensation

Prior to January 1, 2006, we accounted for stock-based awards
under the recognition and measurement provisions of Accounting Principles Board
Opinion (APB) No. 25, Accounting for Stock Issued to Employees using the
intrinsic value method of accounting, under which compensation expense was only

14

---

recognized if the exercise price of our employee stock options
was less than the market price of the underlying common stock on the date of
grant. Effective January 1, 2006, we adopted the fair value recognition
provisions of SFAS No. 123R Share Based Payments, using the modified
prospective transition method. Under that transition method, compensation cost
is recognized for all share-based payments granted prior to, but not yet vested
as of January 1, 2006, based on the grant date fair value estimated in
accordance with the original provisions of SFAS No. 123, and compensation cost
for all share-based payments granted subsequent to January 1, 2006, based on the
grant-date fair value estimated in accordance with the provisions of SFAS 123R.
Results for prior periods have not been restated. There was no effect on our
loss from operations, cash flows or loss per share as a result of adopting SFAS
No. 123R.

All transactions in which goods or services are the
consideration received for the issuance of equity instruments are accounted for
based on the fair value of the consideration received or the fair value of the
equity instrument issued, whichever is more reliably measurable. Equity
instruments issued to employees and the cost of the services received as
consideration are measured and recognized based on the fair value of the equity
instruments issued.

RISKS AND UNCERTAINTIES

If we do not obtain additional financing, our business will
fail.

Our current operating funds are inadequate to complete our
planned exploration of the New York Canyon Project. Our business plan calls for
significant expenses in connection with the exploration and development of those
mineral claims. As a result, we will require additional financing to complete
our exploration and development plans. We will also require additional financing
if the costs of exploration are greater than anticipated and to sustain our
business operations if we are not successful in earning revenues once
exploration is complete. Obtaining additional financing would be subject to a
number of factors, the known material factors being market prices for gold and
silver, investor acceptance of our mineral claims, and investor sentiment. These
factors may make the timing, amount, terms or conditions of additional financing
unavailable to us.

If we complete a financing through the sale of additional
shares of our common stock, shareholders will experience dilution.

The most likely source of future financing presently available
to us is through the issuance of our common stock. Any sale of share capital
will result in dilution to existing shareholders. The only other anticipated
alternative for the financing of further exploration would be the offering by us
of an interest in our properties to be earned by another party or parties
carrying out further exploration thereof, which is not presently
contemplated.

In order to maintain our rights to the New York Canyon
Project, we will be required to make annual filings with federal and state
regulatory agencies and/or be required to complete assessment work on the New
York Canyon Project.

In order to maintain our rights to the New York Canyon Project,
we will be required to make annual filings with federal and state regulatory
authorities. Currently the amount of these fees is nominal; however, these
maintenance fees are subject to adjustment. In addition, we may be required by
federal and/or state legislation or regulations to complete minimum annual
amounts of mineral exploration work on the New York Canyon Project. A failure by
us to meet the annual maintenance requirements under federal and state laws
could cause our rights to the New York Canyon Project to lapse.

We lack an operating history and have losses which we expect
to continue into the future. As a result, we may have to suspend or cease
exploration activities and if we do not obtain additional financing, our
business will fail.

15

---

We were incorporated on January 21, 2000 and to date have been
involved primarily in organizational activities, the acquisition of mineral
claims and the exploration and development on these claims. We have no
exploration history upon which an evaluation of our future success or failure
can be made. Our ability to achieve and maintain profitability and positive cash
flow is dependent upon:

| | (i)  | our ability to locate a profitable mineral property;
      and
| | ---- | --------------------------------------------------------------
| |      |                                                               
| | (ii) | our ability to generate revenues.                             

Our plan of operation calls for significant expenses in connection
  with the exploration of the New York Canyon Project, which will require us to
  obtain additional financing. We recorded a net operating loss of $1,077,037
  for the six months ended December 31, 2006 and have an accumulated deficit of
  $14,759,727 since inception. As at the date of this Quarterly Report, we had
  cash of $240,076 and for the next twelve months, management anticipates that
  the minimum cash requirements to fund our proposed exploration program and our
  continued operations will be $2,875,000. Accordingly we do not have sufficient
  funds to meet our planned expenditures over the next twelve months and will
  need to seek additional financing to meet our planned expenditures.

Obtaining additional financing would be subject to a number of
factors, including the market prices for the mineral property and base and
precious metals. These factors may make the timing, amount, terms or conditions
of additional financing unavailable to us. Since our inception, we have used our
common stock to raise money for our operations and for our property
acquisitions. We have not attained profitable operations and are dependent upon
obtaining financing to pursue our plan of operation. For these reasons, our
independent auditors believe there exists a substantial doubt about our ability
to continue as a going concern.

Because we have not commenced business operations, we face a
high risk of business failure.

We have not earned any revenues as of the date of this
Quarterly Report. Potential investors should be aware of the difficulties
normally encountered by new mineral exploration companies and the high rate of
failure of such enterprises. The likelihood of success must be considered in
light of the problems, expenses, difficulties, complications and delays
encountered in connection with the exploration of the mineral properties that we
plan to undertake. These potential problems include, but are not limited to,
unanticipated problems relating to exploration, and additional costs and
expenses that may exceed current estimates.

We have no known mineral reserves and if we cannot find any,
we will have to cease operations.

We have no mineral reserves. Mineral exploration is highly
speculative. It involves many risks and is often non-productive. Even if we are
able to find mineral reserves on our property our production capability is
subject to further risks including:

|- | Costs of bringing the property into production including
      exploration work, preparation of production feasibility studies, and
      construction of production facilities, all of which we have not budgeted
      for;
|- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|- | Availability and costs of
      financing;                                                                                                                                                                                   
|- | Ongoing costs of production; and                                                                                                                                                                                             
|- | Environmental compliance
      regulations and restraints.                                                                                                                                                                   

The marketability of any minerals acquired or discovered may be
affected by numerous factors which are beyond our control and which cannot be
accurately predicted, such as market fluctuations, the lack of milling
facilities and processing equipment near the New York Canyon Project and such
other factors as government regulations, including regulations relating to
allowable production, exporting of minerals, and environmental protection. If we
do not find a mineral reserve or define a mineral inventory containing gold,
silver, copper, zinc or iron or if we cannot explore the mineral reserve, either
because we do not have the money to do it or because it will not be economically
feasible to do it, we will have to cease operations.

16

---

Because we anticipate our operating expenses will increase
prior to our earning revenues, we may never achieve profitability.

Prior to completion of our exploration stage, we anticipate
that we will incur increased operating expenses without realizing any revenues.
We therefore expect to incur significant losses into the foreseeable future. We
recognize that if we are unable to generate significant revenues from the
exploration of our mineral claims and the production of minerals thereon, if
any, we will not be able to earn profits or continue operations. There is no
history upon which to base any assumption as to the likelihood that we will
prove successful, and we may not be able to ever generate any operating revenues
or achieve profitable operations. If we are unsuccessful in addressing these
risks, our business will most likely fail.

Because of the inherent dangers involved in mineral
exploration, there is a risk that we may incur liability or damages if and when
we conduct mineral exploration activities.

The search for valuable minerals involves numerous hazards. As
a result, if and when we conduct exploration activities we may become subject to
liability for such hazards, including pollution, cave-ins and other hazards
against which we cannot insure or against which we may elect not to insure. The
payment of such liabilities may have a material adverse effect on our financial
position.

If the price of base and precious metals declines, our
financial condition and ability to obtain future financings will be
impaired.

The price of base and precious metals is affected by numerous
factors, all of which are beyond our control. Factors that tend to cause the
price of base and precious metals to decrease include the following:

| | (a) | Sales or leasing of base and precious metals by
      governments and central banks;                                                                                                                                      
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                           
| | (b) | A low rate of inflation and a strong US dollar;                                                                                                                                                                           
| |     |                                                                                                                                                                                                                           
| | (c) | Speculative trading;                                                                                                                                                                                                      
| |     |                                                                                                                                                                                                                           
| | (d) | Decreased demand for base and precious metals industrial,
      jewelry and investment uses;                                                                                                                              
| |     |                                                                                                                                                                                                                           
| | (e) | High supply of base and precious metals from production,
      disinvestment, scrap and hedging;                                                                                                                          
| |     |                                                                                                                                                                                                                           
| | (f) | Sales by base and precious metals producers and foreign
      transactions and other hedging transactions; and                                                                                                            
| |     |                                                                                                                                                                                                                           
| | (g) | Devaluing local currencies (relative to base and precious
      metals price in US dollars) leading to lower production costs and higher
      production in certain major base and precious metals producing
    regions.

Our business is dependent on the price of base and precious
metals. We have not undertaken hedging transactions in order to protect us from
a decline in the price of base and precious metals. A decline in the price of
base and precious metals may also decrease our ability to obtain future
financings to fund our planned development and exploration programs.

Because we are an exploration stage company, our business
has a high risk of failure.

As noted in the financial statements that are included with
this Quarterly Report, we are an exploration stage company that has incurred net
losses since inception, we have not attained profitable operations and we are
dependent upon obtaining adequate financing to complete our exploration
activities. These conditions, as indicated in our audit report on our annual
report on Form 10-KSB, raise substantial doubt as to our ability to continue as
a going concern. The success of our business operations will depend upon our

17

---

ability to obtain further financing to complete our planned
exploration program and to attain profitable operations. If we are not able to
complete a successful exploration program and attain sustainable profitable
operations, then our business will fail.

If we are unable to hire and retain key personnel, we may
not be able to implement our business plan.

Our success is dependent upon the performance of key personnel
working full-time in management, supervisory and administrative capacities or as
consultants. This is particularly true in highly technical businesses such as
mineral exploration. These individuals are in high demand and we may not be able
to attract the personnel we need. The loss of the services of senior management
or key personnel could have a material and adverse effect on us, our business
and results of operations. Failure to hire key personnel when needed, or on
acceptable terms, would have a significant negative effect on our business.

As we undertake exploration of our mineral claims, we will
be subject to compliance with government regulation that may increase the
anticipated cost of our exploration program.

There are several governmental regulations that materially
restrict mineral exploration. We are required to obtain work permits, post bonds
and perform remediation work for any physical disturbance to the land in order
to comply with these laws. If we enter the production phase, the cost of
complying with permit and regulatory environment laws will be greater because
the impact on the project area is greater. Permits and regulations will control
all aspects of the production program if the project continues to that stage.
Examples of regulatory requirements include:

| | (a) | Water discharge will have to meet drinking water
      standards;                                                                               
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                 
| | (b) | Dust generation will have to be minimal or otherwise
      re-mediated;                                                                         
| |     |                                                                                                                                                 
| | (c) | Dumping of material on the surface will have to be
      re-contoured and re-vegetated with natural vegetation;                                 
| |     |                                                                                                                                                 
| | (d) | An assessment of all material to be left on the surface
      will need to be environmentally benign;                                           
| |     |                                                                                                                                                 
| | (e) | Ground water will have to be monitored for any potential
      contaminants;                                                                    
| |     |                                                                                                                                                 
| | (f) | The socio-economic impact of the project will have to be
      evaluated and if deemed negative, will have to be re-mediated;
  and             
| |     |                                                                                                                                                 
| | (g) | There will have to be an impact report of the work on the
      local fauna and flora including a study of potentially endangered
      species.

There is a risk that new regulations could increase our costs
of doing business and prevent us from carrying out our exploration program. We
will also have to sustain the cost of reclamation and environmental remediation
for all exploration work undertaken. Both reclamation and environmental
remediation refer to putting disturbed ground back as close to its original
state as possible. Other potential pollution or damage must be cleaned-up and
renewed along standard guidelines outlined in the usual permits. Reclamation is
the process of bringing the land back to its natural state after completion of
exploration activities. Environmental remediation refers to the physical
activity of taking steps to remediate, or remedy, any environmental damage
caused. The amount of these costs is not known at this time as we do not know
the extent of the exploration program that will be undertaken beyond completion
of the recommended work program. If remediation costs exceed our cash reserves
we may be unable to complete our exploration program and have to abandon our
operations.

18

---

If we become subject to increased environmental laws and
regulation, our operating expenses may increase.

Our development and production operations are regulated by both
US Federal and Nevada state environmental laws that relate to the protection of
air and water quality, hazardous waste management and mine reclamation. These
regulations will impose operating costs on us. If the regulatory environment for
our operations changes in a manner that increases costs of compliance and
reclamation, then our operating expenses would increase with the result that our
financial condition and operating results could be adversely affected.

We may conduct further offerings in the future in which case
your shareholdings will be diluted.

Since our inception we have relied on such equity sales of our
common stock to fund our operations. We may conduct further equity offerings in
the future to finance our current projects or to finance subsequent projects
that we decide to undertake. If common stock is issued in return for additional
funds, the price per share could be lower than that paid by our current
stockholders. We anticipate continuing to rely on equity sales of our common
stock in order to fund our business operations. If we issue additional stock,
stockholders percentage interest in us will be lower. This condition is often
referred to as "dilution. The result of this could reduce the value of our
stockholders stock.

Because our stock is a penny stock, stockholders will be
more limited in their ability to sell their stock.

The SEC has adopted rules that regulate broker-dealer practices
in connection with transactions in penny stocks. Penny stocks are generally
equity securities with a price of less than $5.00, other than securities
registered on certain national securities exchanges or quoted on the Nasdaq
system, provided that current price and volume information with respect to
transactions in such securities is provided by the exchange or quotation system.

Because our securities constitute "penny stocks" within the
meaning of the rules, the rules apply to us and to our securities. The rules may
further affect the ability of owners of shares to sell our securities in any
market that might develop for them. As long as the trading price of our common
stock is less than $5.00 per share, the common stock will be subject to Rule
15g-9 under the Exchange Act. The penny stock rules require a broker-dealer,
prior to a transaction in a penny stock, to deliver a standardized risk
disclosure document prepared by the SEC, that:

|1. | contains a description of the nature and level of risk in
      the market for penny stocks in both public offerings and secondary
      trading;                                                                                        
|-- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                          
|2. | contains a description of the broker's or dealer's duties
      to the customer and of the rights and remedies available to the customer
      with respect to a violation to such duties or other requirements of
      securities laws;
|   |                                                                                                                                                                                                                                          
|3. | contains a brief, clear, narrative description of a
      dealer market, including bid and ask prices for penny stocks and the
      significance of the spread between the bid and ask price;                                           
|   |                                                                                                                                                                                                                                          
|4. | contains a toll-free telephone number for inquiries on
      disciplinary actions;                                                                                                                                                       
|   |                                                                                                                                                                                                                                          
|5. | defines significant terms in the disclosure document or
      in the conduct of trading in penny stocks; and                                                                                                                             
|   |                                                                                                                                                                                                                                          
|6. | contains such other information and is in such form,
      including language, type, size and format, as the SEC shall require by
      rule or regulation.                                                                              

19

---

The broker-dealer also must provide, prior to effecting any
transaction in a penny stock, the customer with: (a) bid and offer quotations
for the penny stock; (b) the compensation of the broker-dealer and its
salesperson in the transaction; (c) the number of shares to which such bid and
ask prices apply, or other comparable information relating to the depth and
liquidity of the market for such stock; and (d) a monthly account statements
showing the market value of each penny stock held in the customer's account. In
addition, the penny stock rules require that, prior to a transaction in a penny
stock not otherwise exempt from those rules, the broker-dealer must make a
special written determination that the penny stock is a suitable investment for
the purchaser and receive the purchaser's written acknowledgment of the receipt
of a risk disclosure statement, a written agreement to transactions involving
penny stocks, and a signed and dated copy of a written suitability statement.
These disclosure requirements may have the effect of reducing the trading
activity in the secondary market for our stock.

ITEM
3.           CONTROLS AND
PROCEDURES.

Under the supervision and with the participation of our
management, including the Chief Executive Officer and Chief Financial Officer,
we have evaluated the effectiveness of our disclosure controls and procedures as
required by Exchange Act Rule 13a-15(b) as of the end of the period covered by
this report. Based on that evaluation, the Chief Executive Officer and Chief
Financial Officer have concluded that these disclosure controls and procedures
are effective.

There were no changes in our internal control over financial
reporting during the quarter ended December 31, 2006 that have materially
affected, or are reasonably likely to materially affect, our internal control
over financial reporting.

20

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PART II - OTHER INFORMATION

ITEM
1.           LEGAL
PROCEEDINGS.

On May 25, 2005, the United States Securities and Exchange
Commission (the SEC) issued a formal order of private investigation to us. In
connection with the investigation order, we received subpoenas from the SEC
requesting the production of certain of our documents from several of our former
directors and officers, relating to, among other things, our transactions with
Langley Park Investment Trust PLC and the principals of Langley Park, certain of
our news releases and certain materials sent to our stockholders. We have since
received additional document production orders from the SEC. We have complied
with all document requests and are voluntarily complying with the investigation.
We are also responding to the SECs informal requests for information.

On December 20, 2005, the British Columbia Securities
Commission (the BCSC) issued a formal investigation order to us and certain of
our officers pursuant to the Securities Act of British Columbia in connection
with certain news releases and materials sent to our stockholders in 2004. We
are cooperating fully with the BCSC inquiry and have submitted all requested
documents in connection with the investigation to date.

On January 29, 2007, we received a statement of claim filed in
the Ontario Superior Court of Justice from a company claiming unpaid investor
relations fees of $25,916 and requesting the balance of an alleged retainer of
$84,000. Canyon is vigorously disputing this claim and believes this action is
without merit.

ITEM
2.           UNREGISTERED
SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.

During the second quarter ended December 31, 2006, other than
as described below, we did not complete any sales of securities that were not
registered pursuant to the Securities Act of 1933 (the Securities Act):

|1. | On September 12, 2006, we entered into a loan agreement
      with Aton Ventures Fund Ltd. (Aton) pursuant to which we received a loan
      of $250,000 from Aton. On September 11, 2006 we entered into a loan
      agreement with Asset Protection Fund Ltd. (APF) pursuant to which we
      received a loan of $250,000 from APF. Each of the loans is evidenced by
      convertible promissory notes. The Aton loan bears interest at a rate of 8%
      per annum and matures on December 12, 2006. The APF loan bears interest at
      a rate of 8% per annum and matures on December 11, 2006. Each of the loans
      is convertible at the option of the lender at any time prior to maturity
      into shares of common stock of Canyon at a price of $0.30 per share.
      Proceeds of the loans were used for working capital purposes to fund our
      continued operations.                               
|-- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|2. | On November 7, 2006, our Board of Directors approved an
      offering of up to 166,667 units at a price of $0.30 per unit to investors
      pursuant to Regulation S (Regulation S) of the United States Securities
      Act of 1933 (the Securities Act), for gross proceeds of up to $50,000.
      Each unit will consist of one share of our common stock, par value
      $0.00001 and one share purchase warrant entitling the holder to purchase
      an additional share of our common stock for a period of eighteen months
      from the date of issuance at an exercise price of $0.40 per share. On
      November 15, 2006, we accepted stock subscriptions for the issuance of
      166,667 shares of our common stock at $0.30 per share for proceeds of
      $50,000 to a subscriber pursuant to Regulation S of the Securities Act of
      1933. At December 31, 2006, the shares have not been issued.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|3. | On December 13, 2006, we approved an offering on a
      private placement basis of up to 5,000,000 Units at a price of $0.25 US
      per unit (the $0.25 Unit Offering) pursuant to Regulation S of the
      Securities Act. Each unit consists of one share of our common stock and
      one share purchase warrant, each warrant entitling the holder thereof to
      purchase an additional share of our common stock at a price of $0.30 for a
      period of one year from the date of issuance. As at January
  12,                                                                                                                                                                                                                                                                                                                                                                                                   

21

---

2007, we have issued an aggregate of 2,160,000 units at a price
of $0.25 per unit to three subscribers. These units were issued pursuant to the
exemptions from registration contained in Regulation S promulgated under the
Securities Act on the basis of representations made by the subscribers that the
subscribers were not U.S. persons, as that term is defined under Regulation S,
and that the subscribers were not acquiring the shares for the account or
benefit of a U.S. person. Proceeds of the offering were used for working capital
purposes to fund our continued operations.

ITEM
3.           DEFAULTS UPON
SENIOR SECURITIES.

None.

ITEM
4.           SUBMISSION OF
MATTERS TO A VOTE OF SECURITY HOLDERS.

None.

ITEM
5.           OTHER
INFORMATION.

None.

ITEM
6.           EXHIBITS.

The following exhibits are either provided with this Quarterly
Report on Form 10-QSB or are incorporated herein by reference.

|Exhibit |                                                                                                                                        
|------- | ---------------------------------------------------------------------------------------------------------------------------------------
|Number  | Description of
      Exhibit                                                                                                           
|        |                                                                                                                                        
|3.1     | Amended and Restated Articles of
      Incorporation.(19)                                                                              
|        |                                                                                                                                        
|3.2     | Bylaws.(1)                                                                                                                             
|        |                                                                                                                                        
|4.1     | Specimen Stock Certificate.(19)                                                                                                        
|        |                                                                                                                                        
|10.1    | 2004 Nonqualified Stock Option Plan.(7)                                                                                                
|        |                                                                                                                                        
|10.2    | 2006 Stock Incentive Plan dated April 5,
      2006.(15)                                                                               
|        |                                                                                                                                        
|10.3    | Convertible Preferred Stock Purchase Agreement dated July
      29, 2004 between the Company and Langley Park Investments
      PLC.(8)
|        |                                                                                                                                        
|10.4    | Debenture Purchase Agreement dated March 9, 2004 between
      the Company and Astra Star Limited.(9)                                  
|        |                                                                                                                                        
|10.5    | Convertible, Callable, Subordinated Debenture dated March
      9, 2004 between the Company and Astra Start Limited.(9)                
|        |                                                                                                                                        
|10.6    | Debenture Purchase Agreement dated March 15, 2004 between
      the Company and Norad Limited.(9)                                      
|        |                                                                                                                                        
|10.7    | Convertible, Callable, Subordinated Debenture dated March
      15, 2004 between the Company and Norad Limited.(9)                     
|        |                                                                                                                                        
|10.8    | Debenture Purchase Agreement dated May 15, 2004 between
      the Company and Norad Limited.(10)                                       
|        |                                                                                                                                        
|10.9    | Convertible, Callable, Subordinated Debenture dated May
      15, 2004 between the Company and Norad Limited.(10)                      

22

---

|Exhibit |                                                                                                                                                                                  
|------- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Number  | Description of
      Exhibit                                                                                                                                                     
|        |                                                                                                                                                                                  
|10.10   | Debenture Purchase Agreement dated September 22, 2004
      between the Company and Norad Limited.(11)                                                                           
|        |                                                                                                                                                                                  
|10.11   | Convertible, Callable, Subordinated Debenture dated
      September 22, 2004 between the Company and Norad Limited.(11)                                                          
|        |                                                                                                                                                                                  
|10.12   | Debenture Purchase Agreement dated November 19, 2004
      between the Company and Glenkirk International.(11)                                                                   
|        |                                                                                                                                                                                  
|10.13   | Convertible, Callable, Subordinated Debenture dated
      November 19, 2004 between the Company and Glenkirk
      International.(11)                                            
|        |                                                                                                                                                                                  
|10.14   | Debenture Purchase Agreement dated February 10, 2005,
      effective December 14, 2004 between the Company and Riannon
      Limited.(12)                                       
|        |                                                                                                                                                                                  
|10.15   | Convertible, Callable, Subordinated Debenture dated
      February 10, 2005, effective December 14, 2004 between the Company and
      Riannon Limited.(12)                      
|        |                                                                                                                                                                                  
|10.16   | Debenture Purchase Agreement dated February 10, 2005
      between the Company and Riannon Limited.(12)                                                                          
|        |                                                                                                                                                                                  
|10.17   | Convertible, Callable, Subordinated Debenture dated
      February 10, 2005 between the Company and Riannon Limited.(12)                                                         
|        |                                                                                                                                                                                  
|10.18   | Debenture Purchase Agreement dated March 15, 2005 between
      the Company and Riannon Limited.(12)                                                                             
|        |                                                                                                                                                                                  
|10.19   | Convertible, Callable, Subordinated Debenture dated March
      15, 2005 between the Company and Riannon Limited.(12)                                                            
|        |                                                                                                                                                                                  
|10.20   | Property Option Agreement dated March 18, 2004 among the
      Company, Robert & Sharon Weicker, Kurt & Tami Schendel, and Nevada
      Sunrise LLC (New York Canyon Project).(4)
|        |                                                                                                                                                                                  
|10.21   | Property Option Agreement dated April 8, 2004 between the
      Company and Consolidated Global Minerals Ltd. (Tuscarora Gold
      Project).(8)                                 
|        |                                                                                                                                                                                  
|10.22   | Letter of Intent dated February 18, 2004 between the
      Company and MMTC Development Corp. (Tuscarora Gold Project).(4)                                                       
|        |                                                                                                                                                                                  
|10.23   | Property Option Agreement dated April 15, 2004 between
      the Company and Consolidated Global Minerals Ltd. (Cornucopia
      Project).(9)                                    
|        |                                                                                                                                                                                  
|10.24   | Letter of Intent dated April 16, 2004 between the Company
      and Consolidated Global Minerals Ltd. (Slide Mine and Horsefal
      projects).(9)                               
|        |                                                                                                                                                                                  
|10.25   | Publicity Agreement dated February 23, 2004 between the
      Company and Capital Financial Media, Inc.(9)                                                                       
|        |                                                                                                                                                                                  
|10.26   | Lease Agreement dated July 21, 2004 between the Company
      and Jaycor Mining, Inc.(9)                                                                                         
|        |                                                                                                                                                                                  
|10.27   | Consulting Agreement dated June 1, 2004 between the
      Company and Kirin Venture Capital Corp.(9)                                                                             
|        |                                                                                                                                                                                  
|10.28   | Consulting Agreement dated April 5, 2005 between the
      Company and Anthony (Tony) R. Harvey.(12)                                                                             
|        |                                                                                                                                                                                  
|10.29   | Consulting Agreement dated August 5, 2005 between the
      Company and Chris Broili.(13)                                                                                        
|        |                                                                                                                                                                                  
|10.30   | Consulting Agreement dated August 10, 2005 between the
      Company and Mel Klohn.(13)                                                                                          
|        |                                                                                                                                                                                  
|10.31   | Consulting Agreement dated August 22, 2005 between the
      Company and Carlo Civelli.(13)                                                                                      
|        |                                                                                                                                                                                  
|10.32   | Consulting Agreement dated September 20, 2005 between the
      Company and Richard Dixon.(13)                                                                                   

23

---

|Exhibit |                                                                                                                                                   
|------- | --------------------------------------------------------------------------------------------------------------------------------------------------
|Number  | Description of
      Exhibit                                                                                                                      
|        |                                                                                                                                                   
|10.33   | Consulting Agreement dated September 20, 2005 between the
      Company and Richard Kehmeier.(13)                                                 
|        |                                                                                                                                                   
|10.34   | Consulting Agreement dated January 6, 2006 between the
      Company and Kurt Bordian.(14)                                                        
|        |                                                                                                                                                   
|10.35   | Consulting Agreement dated January 19, 2006 between the
      Company and Mark A. Reynolds.(13)                                                   
|        |                                                                                                                                                   
|10.36   | Consulting Agreement dated February 1, 2006 between the
      Company and Linda Erdman.(13)                                                       
|        |                                                                                                                                                   
|10.37   | Consulting Agreement dated February 1, 2006 between the
      Company and Geoffrey Goodall.(13)                                                   
|        |                                                                                                                                                   
|10.38   | Consulting Agreement dated February 1, 2006 between the
      Company and Robert Young.(13)                                                       
|        |                                                                                                                                                   
|10.39   | Consulting Agreement dated June 1, 2004 between the
      Company and Kirin Venture Capital Corp. (13)                                            
|        |                                                                                                                                                   
|10.40   | Debt Settlement Agreement dated April 8, 2005 between the
      Company and Cameron Reynolds. (13)                                                
|        |                                                                                                                                                   
|10.41   | Debt Settlement Agreement dated November 8, 2005 between
      the Company and Cameron Reynolds. (13)                                             
|        |                                                                                                                                                   
|10.42   | Mineral Processing Research Agreement dated March 22,
      2006 among the Company, Nevada Sunrise, LLC and INTOR Resources
      Corporation.(13)
|        |                                                                                                                                                   
|10.43   | Loan Agreement dated September 12, 2006 between the
      Company and Aton Ventures Fund Ltd.(17)                                                 
|        |                                                                                                                                                   
|10.44   | Loan Agreement dated September 11, 2006 between the
      Company and Asset Protection Fund Ltd.(17)                                              
|        |                                                                                                                                                   
|10.45   | Convertible Promissory Note dated September 12, 2006
      between the Company and Aton Ventures Fund Ltd.(17)                                    
|        |                                                                                                                                                   
|10.46   | Convertible Promissory Note dated September 11, 2006
      between the Company and Asset Protection Fund Ltd.(17)                                 
|        |                                                                                                                                                   
|10.47   | Promissory Note dated August 16, 2006 between the Company
      and Susan Hand.(18)                                                               
|        |                                                                                                                                                   
|10.48   | Promissory Note dated August 16, 2006 between the Company
      and Walter Kondrosky.(18)                                                         
|        |                                                                                                                                                   
|10.49   | Promissory Note dated August 16, 2006 between the Company
      and Anthony Harvey.(18)                                                           
|        |                                                                                                                                                   
|10.50   | Promissory Note dated August 16, 2006 between the Company
      and Kathy Huettl.(18)                                                             
|        |                                                                                                                                                   
|10.51   | Promissory Note dated August 16, 2006 between the Company
      and Bob Gibb.(18)                                                                 
|        |                                                                                                                                                   
|10.52   | Promissory Note dated November 7, 2006 between the
      Company and Kathy Huettl.(20)                                                            
|        |                                                                                                                                                   
|10.53   | Promissory Note dated November 7, 2006 between the
      Company and Terry Fields.(20)                                                            
|        |                                                                                                                                                   
|10.54   | First Amendment Loan Agreement dated November 27, 2006
      between the Company and Aton Ventures Fund Ltd.(21)                                  
|        |                                                                                                                                                   
|10.55   | First Amendment to Loan Agreement dated November 27, 2006
      between the Company and Asset Protection Fund Ltd.(21)                            
|        |                                                                                                                                                   
|10.56   | Convertible Promissory Note dated November 27, 2006
      between the Company and Aton Ventures Fund Ltd.(21)                                     
|        |                                                                                                                                                   
|10.57   | Convertible Promissory Note dated November 27, 2006
      between the Company and Asset Protection Fund Ltd.(21)                                  
|        |                                                                                                                                                   
|14.1    | Code of Ethics.(3)                                                                                                                                

24

---

|Exhibit |                                                                                                                                                                       
|------- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Number  | Description of Exhibit                                                                                                                                                
|        |                                                                                                                                                                       
|31.1    | Certification
        of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley
        Act of 2002.                                               
|        |                                                                                                                                                                       
|31.2    | Certification
        of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley
        Act of 2002.                                               
|        |                                                                                                                                                                       
|32.1    | Certification
        of Principal Executive Officer pursuant to 18 U.S.C. Section 1350, as
        adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|        |                                                                                                                                                                       
|32.2    | Certification
        of Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as
        adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|        |                                                                                                                                                                       
|99.1    | Audit Committee Charter.(3)                                                                                                                                           
|        |                                                                                                                                                                       
|99.2    | Disclosure Committee Charter.(3)                                                                                                                                      

|(1)  | Filed with the SEC as an exhibit to our Registration
      Statement on Form SB-2 originally filed on April 26, 2000.
|---- | ---------------------------------------------------------------------------------------------------------------------
|(2)  | Filed with the SEC as an exhibit to our Current Report on
      Form 8-K filed on November 5, 2002.                  
|(3)  | Filed with the SEC as an exhibit to our Annual Report on
      Form 10-KSB filed on August 26, 2003.                 
|(4)  | Field with the SEC as an exhibit to our Current Report on
      Form 8-K filed on February 10, 2004.                 
|(5)  | Filed with the SEC as an exhibit to our Current Report on
      Form 8-K filed on February 20, 2004.                 
|(6)  | Filed with the SEC as an exhibit to our Current Report on
      Form 8-K filed on April 8, 2004.                     
|(7)  | Filed with the SEC as an exhibit to our Registration
      Statement on Form S-8 filed on June 17, 2004.             
|(8)  | Filed with the SEC as an exhibit to our Current Report on
      Form 8-K filed on August 20, 2004.                   
|(9)  | Filed with the SEC as an exhibit to our Annual Report on
      Form 10-KSB filed on October 8, 2004.                 
|(10) | Filed with the SEC as an exhibit to our Quarterly Report
      on Form 10-QSB filed November 22, 2004.               
|(11) | Filed with the SEC as an exhibit to our Quarterly Report
      on Form 10-QSB filed on February 22, 2005.            
|(12) | Filed with the SEC as an exhibit to our Quarterly Report
      on Form 10-QSB filed on May 23, 2005.                 
|(13) | Filed with the SEC as an exhibit to our Current Report on
      Form 8-K filed on February 7, 2006.                  
|(14) | Filed with the SEC as an exhibit to our Current Report on
      Form 8-K filed on February 16, 2006.                 
|(15) | Filed with the SEC as an exhibit to our Current Report on
      Form 8-K filed on April 10, 2006.                    
|(16) | Filed with the SEC as an exhibit to our Quarterly Report
      on Form 10-QSB filed on May 22, 2006.                 
|(17) | Filed with the SEC as an exhibit to our Current Report on
      Form 8-K filed on September 15, 2006.                
|(18) | Filed with the SEC as an exhibit to our Current Report on
      Form 8-K filed on September 7, 2006.                 
|(19) | Filed with the SEC as an exhibit to our Annual Report on
      Form 10-KSB filed on October 13, 2006.                
|(20) | Filed with the SEC as an exhibit to our Quarterly Report
      on Form 10-QSB filed on November 20, 2006.            
|(21) | Filed with the SEC as an exhibit to our Current Report on
      Form 8-K filed on December 13, 2006.                 

25

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SIGNATURES

In accordance with Section 13 or 15(d) of the Exchange Act, the
registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.

|                         |     | CANYON COPPER CORP.                       
|------------------------ | --- | ------------------------------------------
|                         |     |                                           
|                         |     |                                           
|Dated: February 20, 2007 | By: |                                           
|                         |     | */s/ Anthony R. Harvey*                   
|                         |     | ANTHONY R. HARVEY                         
|                         |     | Chairman and Chief Financial
      Officer
|                         |     | (Principal Executive Officer)             
|                         |     |                                           
|                         |     |                                           
|                         |     |                                           
|                         |     |                                           
|Dated: February 20, 2007 | By: |                                           
|                         |     | */s/ Kurt Bordian*                        
|                         |     | KURT BORDIAN                              
|                         |     | Chief Financial Officer                   
|                         |     | (Principal Accounting Officer)            

---