---



CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED MAY 31, 2006, 2005 and 2004

(Expressed in Canadian Dollars)

---

DAVIDSON & COMPANY
        LLP
    
    Chartered Accountants
    A Partnership of Incorporated Professionals


INDEPENDENT AUDITORS REPORT

To the Shareholders of Rockwell Ventures Inc.

We have audited the consolidated balance sheets of Rockwell
Ventures Inc. as at May 31, 2006 and 2005 and the consolidated statements of
operations and deficit, cash flows and the consolidated schedules of exploration
expenses for the years ended May 31, 2006, 2005 and 2004. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

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

In our opinion, these consolidated financial statements present
fairly, in all material respects, the financial position of the Company as at
May 31, 2006 and 2005 and the results of its operations and cash flows for the
years ended May 31, 2006, 2005 and 2004 in accordance with Canadian generally
accepted accounting principles.

|                  | DAVIDSON & COMPANY LLP
|----------------- | ------------------------
|                  |                         
|Vancouver, Canada | Chartered Accountants   
|                  |                         
|September 8, 2006 |                         

COMMENTS BY AUDITORS FOR U.S. READERS ON CANADA  U.S.
REPORTING DIFFERENCE

In the United States, reporting standards for auditors require
the addition of an explanatory paragraph (following the opinion paragraph) when
the financial statements are affected by conditions and events that cast
substantial doubt on the Company's ability to continue as a going concern, such
as those described in Note 1 to the financial statements. Our report to the
shareholders dated September 8, 2006 is expressed in accordance with Canadian
reporting standards which do not permit a reference to such events and
conditions in the auditors' report when these are adequately disclosed in the
financial statements.

|                  | DAVIDSON & COMPANY LLP
|----------------- | ------------------------
|                  |                         
|Vancouver, Canada | Chartered Accountants   
|                  |                         
|September 8, 2006 |                         

A Member of SCINTERNATIONAL

1200 - 609 Granville Street, P.O. Box 10372, Pacific Centre,
Vancouver, BC, Canada, V7Y 1G6 Telephone (604) 687-0947 Fax (604) 687-6172

---

ROCKWELL VENTURES
INC.Consolidated Balance Sheets(Expressed in
Canadian Dollars)

|                                               |   | As at May 31 |  
|---------------------------------------------- | - | ------------ | -
|                                               |   | 2006         |  
|ASSETS                                         |   |              |  
|                                               |   |              |  
|Current assets                                 |   |              |  
|Cash and equivalents                           | $ | 192,031      |  
|Marketable securities (note 4)                 |   | 1            |  
|Amounts receivable                             |   | 30,776       |  
|Prepaid expenses                               |   | 33,648       |  
|Due from
      related parties (note 7)        |   |             |  
|                                               |   | 256,456      |  
|                                               |   |              |  
|Security deposit(note 5)                       |   | 32,190       |  
|Mineral
      property interests(note 5)       |   | 1            |  
|                                               |   |              |  
|                                               | $ | 288,647      |  
|                                               |   |              |  
|LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT) |   |              |  
|                                               |   |              |  
|Current liabilities                            |   |              |  
|Accounts payable and accrued
      liabilities | $ | 167,600      |  
|Due to
      related parties (note 7)          |   | 978,470      |  
|                                               |   | 1,146,070    |  
|                                               |   |              |  
|Shareholders' equity (deficit)                 |   |              |  
|Share capital (note 6)                         |   | 11,857,649   |  
|Contributed surplus (note 6)                   |   | 523,420      |  
|Deficit                                        |   | (13,238,492  | )
|                                               |   | (857,423     | )
|Nature and continuance of operations (note 1)  |   |              |  
|Subsequent events (note 10)                    |   |              |  
|                                               |   |              |  
|                                               |   |              |  
|                                               | $ | 288,647      |  

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

Approved by the Board of Directors



|/s/ Ronald W. Thiessen | /s/ Jeffrey R. Mason
|---------------------- | --------------------
|                       |                     
|Ronald W. Thiessen     | Jeffrey R. Mason    
|Director               | Director            

---

ROCKWELL VENTURES
INC.Consolidated Statements of Operations and
Deficit(Expressed in Canadian Dollars)

|                                                         |   | Years ended May 31 |  
|-------------------------------------------------------- | - | ------------------ | -
|                                                         |   | 2006               |  
|                                                         |   |                    |  
|Expenses                                                 |   |                    |  
|Exploration (schedule)                                   | $ | 307,390            |  
|Foreign exchange loss (gain)                             |   | (46,881            | )
|Legal, accounting and audit                              |   | 175,782            |  
|Office and administration                                |   | 489,014            |  
|Property investigation                                   |   | 399,006            |  
|Shareholder communications                               |   | 32,129             |  
|Stock-based compensation - exploration (note
      6)    |   | 36,415             |  
|Stock-based compensation - administration
      (note 6) |   | 47,101             |  
|Travel and conferences                                   |   | 132,647            |  
|Transfer agent filings                                   |   | 20,843             |  
|                                                         |   | 1,593,446          |  
|                                                         |   |                    |  
|Other items                                              |   |                    |  
|Gain on sale of marketable securities                    |   | (56,585            | )
|Interest income                                          |   | (2,172             | )
|Write-down of marketable securities                      |   | 19,128             |  
|Write-down of mineral property interests (note 5)        |   | 46,856             |  
|                                                         |   | 7,227              |  
|                                                         |   |                    |  
|                                                         |   |                    |  
|Loss for the year                                        |   | (1,600,673         | )
|                                                         |   |                    |  
|Deficit, beginning of year                               |   | (11,637,819        | )
|                                                         |   |                    |  
|Deficit, end of year                                     | $ | (13,238,492        | )
|                                                         |   |                    |  
|Basic and diluted loss per common share                  | $ | (0.07              | )
|                                                         |   |                    |  
|Weighted average number of                               |   |                    |  
|common shares outstanding                                |   | 23,640,123         |  

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

---

ROCKWELL VENTURES
INC.Consolidated Statements of Cash Flows(Expressed in
Canadian Dollars)

|                                                                              |   | Years ended May 31 |  
|----------------------------------------------------------------------------- | - | ------------------ | -
|Cash provided by (used in)                                                    |   | 2006               |  
|                                                                              |   |                    |  
|Operating activities                                                          |   |                    |  
|Loss for the year                                                             | $ | (1,600,673         | )
|Items not affecting cash                                                      |   |                    |  
|Gain on sale of marketable securities                                         |   | (56,585            | )
|Disposition of Gibraltar
      exploration property interest                  |   |                   |  
|Write-down of marketable securities                                           |   | 19,128             |  
|Write-down of mineral
      property interests                                |   | 46,856             |  
|Stock-based compensation                                                      |   | 83,516             |  
|Changes in non-cash working capital
      items                               |   |                    |  
|Amounts receivable and prepaids                                               |   | (23,244            | )
|Accounts payable and accrued liabilities                                      |   | 137,624            |  
|Cash used in operating activities                                             |   | (1,393,378         | )
|                                                                              |   |                    |  
|Investing activities                                                          |   |                    |  
|Purchase of marketable securities                                             |   |                   |  
|Proceeds from sale of marketable securities                                   |   | 146,970            |  
|Reclamation deposit                                                           |   |                   |  
|Security deposit                                                              |   |                   |  
|Cash provided by investing activities                                         |   | 146,970            |  
|                                                                              |   |                    |  
|Financing activities                                                          |   |                    |  
|Issuance of share capital                                                     |   | 30,133             |  
|Share issue costs                                                             |   |                   |  
|Amounts due from (payable to) related parties                                 |   | 1,055,629          |  
|Cash provided by financing activities                                         |   | 1,085,762          |  
|                                                                              |   |                    |  
|Increase (decrease) in cash and equivalents
      during the year             |   | (160,646           | )
|Cash and equivalents,
      beginning of year                                 |   | 352,677            |  
|                                                                              |   |                    |  
|Cash and equivalents, end of year                                             | $ | 192,031            |  
|                                                                              |   |                    |  
|Cash and equivalents is comprised of:                                         |   |                    |  
|Cash                                                                          | $ | 192,031            |  
|Cash equivalent                                                               |   | -                  |  
|                                                                              | $ | 192,031            |  
|                                                                              |   |                    |  
|                                                                              |   |                    |  
|Interest paid during the year                                                 | $ |                   |  
|Income taxes paid during the year                                             | $ |                   |  
|                                                                              |   |                    |  
|Supplemental disclosure of non-cash investing
      and financing activities: |   |                    |  
|Marketable securities received pursuant to 2003                               |   |                    |  
|farmout
      agreement with Taseko Mines Limited (note 5 (c))                | $ |                   |  
|Fair value of stock options allocated to shares issued                        |   |                    |  
|upon exercise                                                                 | $ | 11,724             |  

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

---

ROCKWELL VENTURES
INC.Consolidated Schedules of Exploration
Expenses(Expressed in Canadian Dollars)

British
    
    
    
    
    
    Year
      endedRoyce
    
    
    Ricardo
    
    
    Columbia
    
    
    
    
    
    May 31,Property
    
    
    Property
    
    
    Properties
    
    
    Other
    
    
    2006Geological
    $
    
    
    $
    6,675
    
    $
    
    
    $
    
    
    $
    6,675Property fees and assessments
    
    
    
    
    138,520
    
    
    
    
    
    
    
    
    138,520Site activities
    
    
    
    
    161,692
    
    
    
    
    
    
    
    
    161,692Travel and accommodation
    
    
    
    
    503
    
    
    
    
    
    
    
    
    503Subtotal
    
    
    
    
    307,390
    
    
    
    
    
    
    
    
    307,390Stock-based compensation (note 6)
    
    
    
    
    
    
    
    
    
    
    36,415
    
    
    36,415Incurred during the year
    
    
    
    
    307,390
    
    
    
    
    
    36,415
    
    
    343,805Cumulative expenses, beginning of year
    
    881,784
    
    
    2,080,458
    
    
    600,000
    
    
    3,991,449
    
    
    7,553,691Cumulative expenses, end of year
    $
    881,784
    
    $
    2,387,848
    
    $
    600,000
    
    $
    4,027,864
    
    $
    7,897,496


British
    
    
    
    
    
    Year
      endedRoyce
    
    
    Ricardo
    
    
    Columbia
    
    
    
    
    
    May 31,Property
    
    
    Property
    
    
    Properties
    
    
    Other
    
    
    2005Drilling
    $
    
    
    $
    
    
    $
    205,922
    
    $
    
    
    $
    205,922Freight
    
    
    
    
    
    
    
    2,859
    
    
    
    
    
    2,859Geological
    
    31,011
    
    
    7,065
    
    
    238,706
    
    
    1,886
    
    
    278,668Graphics
    
    
    
    
    
    
    
    3,186
    
    
    
    
    
    3,186Helicopter
    
    
    
    
    
    
    
    16,125
    
    
    
    
    
    16,125Property fees and assessments
    
    
    
    
    115,705
    
    
    210
    
    
    
    
    
    115,915Site activities
    
    7,667
    
    
    154,892
    
    
    101,494
    
    
    
    
    
    264,053Staking
    
    
    
    
    
    
    
    14,931
    
    
    
    
    
    14,931Travel and accommodation
    
    1,038
    
    
    1,638
    
    
    16,567
    
    
    
    
    
    19,243Subtotal
    $
    39,716
    
    $
    279,300
    
    $
    600,000
    
    $
    1,886
    
    $
    920,902Stock-based compensation (note 6)
    
    620
    
    
    4,359
    
    
    
    
    
    
    
    
    4,979Incurred during the year
    $
    40,336
    
    $
    283,659
    
    $
    600,000
    
    $
    1,886
    
    $
    925,881Cumulative expenses, beginning of year
    
    841,448
    
    
    1,796,799
    
    
    
    
    
    3,989,563
    
    
    6,627,810Cumulative expenses, end of year
    $
    881,784
    
    $
    2,080,458
    
    $
    600,000
    
    $
    3,991,449
    
    $
    7,553,691


British
    
    
    
    
    
    Year
      endedRoyce
    
    
    Ricardo
    
    
    Columbia
    
    
    
    
    
    May 31,Property
    
    
    Property
    
    
    Properties
    
    
    Other
    
    
    2004Assay and analysis
    $
    2,950
    
    $
    236
    
    $
    
    
    $
    
    
    $
    3,186Drilling
    
    202,056
    
    
    
    
    
    
    
    
    200,000
    
    
    402,056Freight
    
    10,161
    
    
    
    
    
    
    
    
    
    
    
    10,161Geological
    
    182,316
    
    
    19,160
    
    
    
    
    
    
    
    
    201,476Graphics
    
    2,717
    
    
    1,252
    
    
    
    
    
    
    
    
    3,969Helicopter
    
    151,524
    
    
    
    
    
    
    
    
    
    
    
    151,524Property fees/assessment
    
    50,000
    
    
    39,672
    
    
    
    
    
    
    
    
    89,672Recoveries
    
    
    
    
    
    
    
    
    
    
    (700,500
    )
    
    (700,500
    )Site activities
    
    140,788
    
    
    207,816
    
    
    
    
    
    752
    
    
    349,356Travel and accommodation
    
    10,385
    
    
    4,334
    
    
    
    
    
    
    
    
    14,719Subtotal
    $
    752,897
    
    $
    272,470
    
    $
    
    
    $
    (499,748
    )
    $
    525,619Stock-based compensation (note 6)
    
    88,551
    
    
    32,046
    
    
    
    
    
    23,611
    
    
    144,208Incurred during the year
    $
    841,448
    
    $
    304,516
    
    $
    
    
    $
    (476,137
    )
    $
    669,827Cumulative expenses, beginning of year
    
    
    
    
    1,492,283
    
    
    
    
    
    4,465,700
    
    
    5,957,983Cumulative expenses, end of year
    $
    841,448
    
    $
    1,796,799
    
    $
    
    
    $
    3,989,563
    
    $
    6,627,810


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

---

|ROCKWELL VENTURES INC.                          
|------------------------------------------------
|Notes to the Consolidated Financial Statements  
|For the years ended May 31, 2006, 2005, and 2004
|(Expressed in
      Canadian Dollars)           

|1.    | NATURE AND CONTINUANCE OF OPERATIONS                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|----- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|      | Rockwell Ventures Inc. (the Company) is incorporated
      under the British Columbia Business Corporations Act(formerly the
      Company Actof British Columbia), and its principal business
      activity is the exploration of mineral properties. The Companys principal
      mineral property interests are located in Chile and Canada.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|      | During the year, shareholders approved a capital
      reorganization of the Company, which included the creation of a class of
      preferred shares, and a consolidation of the Companys common shares on a
      four-old-shares-for-one-new basis. Regulatory approval of this capital
      reorganization was received on January 27, 2006. All references to number
      of common shares and per common shares amounts have been retroactively
      restated to reflect this common share consolidation.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|      | These consolidated financial statements are prepared on
      the basis that the Company will continue as a going concern. At May 31,
      2006, the Company has a working capital deficiency of approximately
      $889,000 (2005  working capital of $551,000) and has incurred operating
      losses since its inception. Management recognizes that the Company will
      need to generate additional financial resources in order to discharge
      current liabilities and meet its planned business objectives. However,
      there can be no assurances that the Company will continue to obtain
      additional financial resources and/or achieve profitability or positive
      cash flows. If the Company is unable to obtain adequate additional
      financing, the Company will be required to curtail operations and
      exploration activities. Furthermore, failure to continue as a going
      concern would require that the Companys assets and liabilities be
      restated on a liquidation basis which would differ significantly from the
      going concern basis.
|      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|      | These financial statements do not include adjustments to
      amounts and classifications of assets and liabilities that might be
      necessary should the Company be unable to continue operations.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|2.    | BASIS OF PRESENTATION AND PRINCIPLES OF
      CONSOLIDATION                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|      | These consolidated financial statements have been
      prepared in accordance with Canadian generally accepted accounting
      principles. These consolidated financial statements include the accounts
      of the Company and its wholly-owned subsidiaries. All significant
      intercompany balances and transactions have been eliminated upon
      consolidation.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|3.    | SIGNIFICANT ACCOUNTING POLICIES                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|*(a)* | Cash and equivalents                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|      | Cash and equivalents consist of cash and highly liquid
      investments, having maturity dates of three months or less from the date
      of purchase, that are readily convertible to known amounts of cash and
      which are subject to an insignificant risk of change in
  value.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   

---

|ROCKWELL VENTURES INC.                          
|------------------------------------------------
|Notes to the Consolidated Financial Statements  
|For the years ended May 31, 2006, 2005, and 2004
|(Expressed in Canadian
      Dollars)           

|(b) | Allowance for amounts receivable                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|    | The Company establishes an allowance for uncollectible
      amounts receivable on a specific account basis. No allowances for amounts
      receivable were recorded by the Company as at May 31, 2006 and
  2005.                                                                                                                                                                                                                                                                                                                                                                                                                                               
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|(c) | Marketable securities                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|    | Marketable securities are recorded at the lower of (i)
      cost less accumulated write downs, and (ii) estimated market
  value.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|(d) | Reclamation and security deposits                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|    | Reclamation and security deposits are recorded at
      cost.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|(e) | Mineral property interests                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|    | The acquisition costs of mineral properties are deferred
      until the property is placed into production, sold, or abandoned, or when
      management has determined that there has been an impairment in value.
      Acquisition costs which have been deferred will be amortized on a unit-of-
      production basis, over the estimated useful life of the related property
      following the commencement of production, or written off if the property
      is sold, allowed to lapse or abandoned, or written down to fair value when
      an impairment has been determined to have occurred.                                                    
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|    | Mineral property acquisition costs include the cash
      consideration and the fair market value of common shares, based on the
      trading price of the shares, on the date of issue or as otherwise provided
      under the agreed terms for the mineral property interest.                                                                                                                                                                                                                                                                                                                                                                                 
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|    | Exploration costs are expensed in the period
    incurred.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|    | Administrative expenditures are expensed in the period
      incurred.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|    | The Company reviews its long-lived assets for impairment
      whenever events or changes in circumstances indicate that the carrying
      value of an asset may not be recoverable.                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|(f) | Financial instruments                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|    | The Company's financial instruments consist of cash and
      equivalents, marketable securities, amounts receivable, accounts payable
      and accrued liabilities and balances receivable from or due to related
      parties. It is management's opinion the Company is not exposed to
      significant interest, currency or credit risk arising from these financial
      instruments. The fair values of these financial instruments approximate
      their carrying values, unless otherwise noted.                                                                                                                                                   
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|(g) | Asset retirement obligations                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|    | The Company recognizes statutory, contractual or other
      legal obligations related to the retirement of tangible long-lived assets
      when such obligations are incurred, if a reasonable estimate of fair value
      can be made. These obligations are measured initially at fair value and
      the resulting costs capitalized to the carrying value of the related
      asset. In subsequent periods, the liability is adjusted for any changes in
      the amount or timing and for the discounting of the underlying future cash
      flows. The capitalized asset retirement cost is amortized to operations
      over the life of the asset.

---

|ROCKWELL VENTURES INC.                          
|------------------------------------------------
|Notes to the Consolidated Financial Statements  
|For the years ended May 31, 2006, 2005, and 2004
|(Expressed in Canadian
      Dollars)           

|(h) | Foreign currency translation                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|    | All of the Companys foreign operations are considered
      integrated.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|    | Monetary assets and liabilities of the Company and its
      integrated foreign operations are translated into Canadian dollars at
      exchange rates in effect at the balance sheet date. Non-monetary assets
      and liabilities are translated at historical exchange rates unless such
      items are carried at market, in which case they are translated at the
      exchange rates in effect on the balance sheet date. Revenues and expenses,
      except amortization, are translated at the average exchange rates for the
      period. Amortization is translated at the same exchange rate as the assets
      to which it relates. Gains or losses on translation are recorded in the
      statement of operations.
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|(i) | Share capital                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|    | Common shares issued for mineral property interests are
      recorded at the fair market value based upon the trading price of the
      shares on the TSX Venture Exchange (TSX-V) on the date of issue or as
      otherwise provided under the terms of the agreement to issue the shares.
      Share issue costs are deducted from share capital.                                                                                                                                                                                                                                                                                                                                                                                
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|    | Canadian tax legislation permits a company to issue
      flow-through shares whereby the deduction for tax purposes relating to
      qualified resource expenditures is claimed by the investors rather than
      the Company. Recording these expenditures for accounting purposes gives
      rise to taxable temporary differences.                                                                                                                                                                                                                                                                                                                                                                                                
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|    | Effective March 19, 2004, the Emerging Issue Committee of
      the CICA requires that, when flow- through expenditures are renounced, a
      portion of the future income tax assets that were not recognized in
      previous years, due to the recording of a valuation allowance, will be
      recognized as a recovery of income taxes in the statement of
      operations.                                                                                                                                                                                                                                                                                                                                                     
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|(j) | Stock-based compensation                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|    | The Company has a share option plan which is described in
      note 6(c). The Company records all stock-based payments granted using the
      fair value method.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|    | Under the fair value method, stock-based payments are
      measured at the fair value of the consideration received or the fair value
      of the equity instruments issued, whichever is more reliably measurable,
      and are charged to operations over the vesting period, with an offsetting
      amount to contributed surplus. Consideration received on the exercise of
      stock options is recorded as share capital and the related contributed
      surplus is transferred to share capital.                                                                                                                                                                                                                         
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|(k) | Future income taxes                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|    | The Company uses the asset and liability method of
      accounting for income taxes. Under this method, future income tax assets
      and liabilities are computed based on differences between the carrying
      amount of the assets and liabilities on the balance sheet and their
      corresponding tax values, generally using the enacted or substantively
      enacted income tax rates expected to apply to taxable income in the years
      in which those temporary differences are expected to be recovered or
      settled.                                                                                                                                                                                          
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|    | Future tax assets are recognized to the extent that they
      are considered more likely than not to be realized. The valuation of
      future income tax assets is adjusted, if necessary, by the use of a
      valuation allowance to reflect the estimated realizable
  amount.                                                                                                                                                                                                                                                                                                                                                                                                                                                    

---

|ROCKWELL VENTURES INC.                          
|------------------------------------------------
|Notes to the Consolidated Financial Statements  
|For the years ended May 31, 2006, 2005, and 2004
|(Expressed in Canadian
      Dollars)           

|(l) | Loss per share                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|    | Basic loss per share is calculated by dividing the loss
      for the period by the weighted average number of common shares outstanding
      during the period.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|    | Diluted loss per share is calculated using the treasury
      stock method. Under the treasury stock method, the weighted average number
      of common shares outstanding used for the calculation of diluted loss per
      share assumes that the proceeds receivable upon exercise of dilutive share
      purchase options and warrants are used to repurchase common shares at the
      average market price during the period.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|    | Diluted loss per share has not been presented separately
      as the effect of outstanding options and warrants would be
      anti-dilutive.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|(m) | Use of estimates                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|    | The preparation of consolidated financial statements in
      conformity with Canadian generally accepted accounting principles requires
      management to make estimates and assumptions that affect the reported
      amounts of assets and liabilities and the disclosure of contingent assets
      and liabilities as at the balance sheet date, and the reported amounts of
      revenues and expenses during the reporting period. Significant areas
      requiring the use of management estimates relate to the impairment of
      mineral property interests, determination of reclamation obligations and
      the assumptions used in determining stock-based compensation expense.
      Actual results could differ from those estimates.                                                                                                                                                               
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|(n) | Variable interest entities                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|    | Effective June 1, 2005, the Company adopted the Canadian
      Institute of Chartered Accountants (CICA) Accounting Guideline 15,
      "Consolidation of Variable Interest Entities" ("AcG15") on a prospective
      basis. AcG15 prescribes the application of consolidation principles for
      entities that meet the definition of a variable interest entity (VIE).
      An enterprise holding other than a voting interest in a VIE could, subject
      to certain conditions, be required to consolidate the VIE if it is
      considered its primary beneficiary whereby it would absorb the majority of
      the VIEs expected losses, receive the majority of its expected residual
      returns, or both. The adoption of this new standard had no effect on the
      consolidated financial statements as management has determined the Company
      does not have any variable interest entities.
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|(o) | Comparative figures                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|    | Certain of the prior years comparative figures have been
      reclassified to conform to the financial statement presentation adopted
      for the current year.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          

---

|ROCKWELL VENTURES INC.                          
|------------------------------------------------
|Notes to the Consolidated Financial Statements  
|For the years ended May 31, 2006, 2005, and 2004
|(Expressed in Canadian
      Dollars)           

|4. | MARKETABLE SECURITIES                          
|-- | -----------------------------------------------
|   |                                                
|   | Marketable securities comprise the
  following:

| |                                                                                       |   | As at May 31 | 
| | ------------------------------------------------------------------------------------- | - | ------------ | 
| |                                                                                       |   | 2006         | 
| | ComWest Enterprise Corp. (formerly
      Chatworth Resources Inc.)                    |   |              | 
| | Nil class A non-voting
      restricted common shares, Nil class B voting common  |   |              | 
| | shares.
      (May 31, 2005  83,333 common shares with a market value of $15,833)    | $ |             | 
| | ComWest Enterprise Corp. (formerly Chatworth Resources
      Inc.)                    |   |              | 
| | 62,133
      warrants exercisable at $0.804 until June 4, 2006 (May 31, 2005  83,333 |   |              | 
| | warrants with a market
      value of $3,000)                                         |   | 1            | 
| | Taseko Mines Limited (note 5(c))                                                      |   |              | 
| | Nil common shares (May
      31, 2005  78,853 common shares with a market value      |   |              | 
| | of $90,681)                                                                           |   |             | 
| |                                                                                       | $ | 1            | 

|   | In November 2005, Chatworth Resources Inc. (Chatworth)
      amalgamated with ComWest Capital Corp. to form ComWest Enterprise Corp.
      (ComWest). Under the amalgamation agreement, the Companys 83,333
      Chatworth common shares were exchanged for 32,383 Class A non-voting
      restricted common shares and 32,383 Class B voting common shares of
      ComWest. The Companys 83,333 Chatworth warrants were exchanged for 62,133
      ComWest warrants. Each ComWest warrant entitles the Company to acquire one
      additional ComWest Class B voting common share at $0.804 per share until
      June 4, 2006. These warrants expired unexercised subsequent to May 31,
      2006.
|-- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   | The Companys 32,383 Class A non-voting restricted
      common shares and 32,383 Class B voting common shares of ComWest were
      sold during the quarter ended February 28, 2006 for proceeds of
      $10,371.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   | The Companys 78,853 Taseko common shares were sold
      during the year ended May 31, 2006 for proceeds of $136,599                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|5. | MINERAL PROPERTY
INTERESTS                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           

| | Acquisition Costs |   | As at May 31 | 
| | ----------------- | - | ------------ | 
| |                   |   | 2006         | 
| | Royce Property    | $ |             | 
| | Ricardo Property  |   | 1            | 
| |                   | $ | 1            | 

|    | Title to mining properties involves certain inherent
      risks due to the difficulties in determining the validity of certain
      claims as well as the potential for problems arising from the often
      complicated conveyancing history characteristic of many mining properties.
      The Company does not have title insurance but has investigated title to
      its Ricardo mineral property and, to the best of its knowledge and belief,
      title to its property is in good standing.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|(a) | Ricardo Property, Chile                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|    | The Company holds a 100% interest in certain mineral
      exploration and exploitation concessions in the Calama Mining District in
      Chile. The Corporación Nacional del Cobre de
Chile                                                                                                                                                                                                                                                                                                             

---

|ROCKWELL VENTURES INC.                          
|------------------------------------------------
|Notes to the Consolidated Financial Statements  
|For the years ended May 31, 2006, 2005, and 2004
|(Expressed in Canadian
      Dollars)           

|    | ("Codelco"), the Chilean national copper company, is
      erecting housing and other infrastructure in certain areas of the Ricardo
      Property, as part of a relocation project of its workers at its
      Chuquicamata mine. The Company believes this construction usurps the
      Company's constitutional mining rights. Accordingly, in order to preserve
      access to its mineral concessions, the Company applied for several
      easements on its Ricardo Property to the law courts of Chile in November
      2002. On June 28, 2006, the application for the easements was denied by
      the Supreme Court of Chile. Pursuant to the terms of the easement
      application, a refundable deposit of 15 million Chilean pesos (May 31,
      2006 and 2005  $32,190) lodged with the Chilean authorities is refundable
      to the Company.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|    | On January 30, 2004, Ricardo signed a Letter of
      Understanding with Rio Tinto Mining and Exploration Ltd. ("Rio Tinto"),
      whereby Rio Tinto could acquire a 100% interest in a majority of the
      claims which make up the Ricardo property. In January 2005, Rio Tinto
      terminated this option.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|    | The Company continues to maintain the Ricardo Property in
      good standing.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|(b) | Royce Diamond Property, Northwest Territories,
      Canada                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|    | In February 2004, the Company received approval from the
      TSX-V for a property option agreement with Chatworth, a TSX-V listed
      company, to acquire up to a 60% interest in the Royce Diamond Claims (the
      Royce Claims), which are located within the Slave Geological Province,
      near Yellowknife, Northwest Territories.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|    | In June 2004, the Company completed the exploration
      program on the property and subsequently terminated its option to earn an
      interest in the Royce Claims.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|(c) | Taseko agreement - Gibraltar exploration properties,
      British Columbia, Canada                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|    | In December 2003, the Company entered into an agreement
      (the "2003 Taseko agreement") with Taseko Mines Limited ("Taseko"), a
      public company with certain directors in common with the Company. Under
      the terms of the 2003 Taseko agreement, Taseko granted to the Company
      rights to earn joint venture working interests, subject to a maximum of
      $200,000, on certain exploration properties located in the vicinity of the
      Gibraltar mine property.                                                                                                                                                                                                                                                                                                                                                                            
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|    | In December 2003, the Company earned an interest in these
      properties to the extent of $200,000.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|    | During the Companys fiscal year ended May 31, 2004,
      Taseko exercised its right to purchase the Company's interest, and on June
      15, 2004, Taseko issued 78,853 of its common shares for total
      consideration of $220,000.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|(d) | Amarc agreement - British Columbia exploration
      properties, Canada                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|    | In November 2004, the Company entered into an agreement
      (the "2004 Amarc agreement") with Amarc Resources Ltd. ("Amarc"), a public
      company with certain directors in common with the Company. Under the terms
      of the 2004 Amarc agreement, Amarc granted to the Company rights to earn
      joint venture working interests of 50%, subject to a maximum of $600,000
      in exploration                                                                                                                                                                                                                                                                                                                                                                                                                                                           

---

|ROCKWELL VENTURES INC.                          
|------------------------------------------------
|Notes to the Consolidated Financial Statements  
|For the years ended May 31, 2006, 2005, and 2004
|(Expressed in Canadian
      Dollars)           

|   | costs to be spent on certain mineral properties located
      in British Columbia. In December 2004, the Company had earned its 50%
      interest in these properties.                                                              
|-- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                      
|   | For a period of 180 days after the Company had earned its
      working interest, Amarc had the exclusive right to purchase, at its
      option, the Company's earned interest for Amarc common shares or the cash
      equivalent.
|   |                                                                                                                                                                                                                                      
|   | Amarc did not exercise its option to reacquire the
      Companys interest on any of the properties within the permitted 180 days.
      Consequently, Amarcs right of call expired.                                               
|   |                                                                                                                                                                                                                                      
|6. | SHARE CAPITAL                                                                                                                                                                                                                        

|(a) | Authorized share capital                                                                                                                                                                                                                                                                                                                                                            
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                     
|    | The Companys authorized share capital consists of an
      unlimited number of common shares, without par value, and an unlimited
      number of preferred shares without par value.                                                                                                                                                                                              
|    |                                                                                                                                                                                                                                                                                                                                                                                     
|    | At the Companys Annual and Extraordinary General Meeting
      held on November 28, 2005, the Companys shareholders approved the
      creation of a class of preferred shares and the consolidation of the
      Companys common shares on a four old shares for one new basis. Regulatory
      approval of this capital reorganization was received on January 27,
      2006.
|    |                                                                                                                                                                                                                                                                                                                                                                                     
|(b) | Issued and outstanding common
  shares                                                                                                                                                                                                                                                                                                                                              

| |                                                                |   |       |  |  | Number          |  |   |            | 
| | -------------------------------------------------------------- | - | ----- |  |  | --------------- |  | - | ---------- | 
| | Common shares
      issued                                     |   | Price |  |  | of
      shares |  |   | Amount     | 
| | Balance, May 31, 2003                                          |   |       |  |  | 13,799,818      |  | $ | 8,697,652  | 
| | Warrants exercised                                             | $ | 0.88  |  |  | 24,125          |  |   | 21,230     | 
| | Private placement December 2003 (net
      of issue costs)(i)  |   | 0.32  |  |  | 9,375,000       |  |   | 2,925,255  | 
| | Options exercised                                              |   | 0.40  |  |  | 3,750           |  |   | 1,500      | 
| | Options exercised                                              |   | 0.60  |  |  | 3,750           |  |   | 2,250      | 
| | Balance, May 31, 2004                                          |   |       |  |  | 23,206,443      |  |   | 11,647,887 | 
| | Warrants exercised                                             |   | 0.40  |  |  | 400,000         |  |   | 160,000    | 
| | Options exercised                                              |   | 0.40  |  |  | 7,500           |  |   | 3,000      | 
| | Contributed surplus allocated to
      common shares issued on |   |       |  |  |                 |  |   |            | 
| | options exercised                                              |   |       |  |  |                |  |   | 4,905      | 
| | Balance, May 31, 2005                                          |   |       |  |  | 23,613,943      |  |   | 11,815,792 | 
| | Warrants exercised                                             |   | 0.40  |  |  | 50,000          |  |   | 20,000     | 
| | Options exercised                                              |   | 0.33  |  |  | 30,833          |  |   | 10,133     | 
| | Contributed surplus allocated to common shares issued
      on |   |       |  |  |                 |  |   |            | 
| | options exercised                                              |   |       |  |  |                |  |   | 11,724     | 
| | Balance, May
      31, 2006                                    |   |       |  |  | 23,694,776      |  | $ | 11,857,649 | 

|    | (i)                                                                                                                                                                                                                                                                                                             | On December 31, 2003, the Company completed a private
      placement of 9,375,000 units for gross proceeds of $3,000,000. Of these,
      4,312,500 were flow-through units. Each unit consisted of one common share
      and one share purchase warrant exercisable to purchase an additional
      common share at a price of $0.40 until December 31, 2005. On December 31,
      2005, the outstanding share purchase warrants expired
  unexercised.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                 |                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|(c) | Share purchase options                                                                                                                                                                                                                                                                                         
|    |                                                                                                                                                                                                                                                                                                                 |                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|    | The Company has a share purchase option compensation plan
      approved by the shareholders that allows the Company to grant options up
      to 10% of the issued and outstanding shares of the Company at any one
      time, typically vesting over two years, to its directors, employees,
      officers,

---

|ROCKWELL VENTURES INC.                          
|------------------------------------------------
|Notes to the Consolidated Financial Statements  
|For the years ended May 31, 2006, 2005, and 2004
|(Expressed in Canadian
      Dollars)           

and consultants. The exercise price of
each option can be set equal to or greater than the closing market price of the
common shares on the TSX Venture Exchange on the day prior to the date of the
grant of the option, less any allowable discounts. Options have a maximum term
of five years and typically terminate 30 days following the termination of the
optionees employment, except in the case of retirement or death.

The continuity of share purchase
options for the year ended May 31, 2006 is:

Exercise
      May
        31
      
      
      Expired/
      May
        31Expiry date
      price
      2005
      Granted
      Exercised
      cancelled
      2006May 19, 2006
      $ 0.32
      27,500
      
      27,500
      
      September 28, 2007
      $ 0.40
      
      126,250
      3,333
      7,500
      115,417February 29, 2008
      $ 0.42
      
      210,000
      
      
      210,000March 28, 2008
      $ 0.50
      
      150,000
      
      
      150,00027,500
      486,250
      30,833
      7,500
      475,417Weighted average exercise price
      
      $ 0.32
      $ 0.44
      $ 0.33
      $ 0.40
      $ 0.44Weighted average fair value of options granted during the year
      $ 0.50


As at May 31, 2006, 38,750 of the
options outstanding with a weighted average exercise price of $0.40 per share
had vested with grantees. Subsequent to May 31, 2006, 833 options were exercised
and 1,667 options were cancelled.

The continuity of share purchase
options for the year ended May 31, 2005 is:

Exercise
      May
        31
      
      
      Expired/
      May
        31Expiry date
      price
      2004
      Granted
      Exercised
      cancelled
      2005April 6, 2005
      $0.64
      12,500
      
      
      12,500
      May 20, 2005 (i)
      $0.40
      11,250
      
      
      11,250
      May 20, 2005
      $0.48
      6,375
      
      
      6,375
      May 20, 2005
      $0.60
      1,236,250
      
      
      1,236,250
      May 20, 2005
      $0.64
      11,250
      
      
      11,250
      July 29, 2005
      $0.40
      7,500
      
      7,500
      
      May 19, 2006
      $0.32
      
      30,000
      
      2,500
      27,5001,285,125
      30,000
      7,500
      1,280,125
      27,500Weighted average exercise price
      
      $ 0.60
      $ 0.32
      $ 0.40
      $ 0.60
      $ 0.32Weighted average fair value of options granted during the year
      $ 0.40


| | (i) | The Company extended the expiry from the original date of
      December 20, 2004 to May 20, 2005.
| | --- | --------------------------------------------------------------------------------------------------

As at May 31, 2005, all of the options
outstanding had vested with grantees.

---

|ROCKWELL VENTURES INC.                          
|------------------------------------------------
|Notes to the Consolidated Financial Statements  
|For the years ended May 31, 2006, 2005, and 2004
|(Expressed in Canadian
      Dollars)           

The continuity of share purchase options for the year ended May 31, 2004 is:

Exercise
      May
        31,
      
      
      Cancelled/
      May
        31,Expiry date
      price
      2003
      Granted
      Exercised
      expired
      2004June 11, 2003
      $0.64
      6,750
      
      
      (6,750)
      November 21, 2003
      $0.64
      25,000
      
      
      (25,000)
      April 6, 2005
      $0.64
      12,500
      
      
      
      12,500May 9, 2005
      $0.40
      3,750
      
      (3,750)
      
      May 20, 2005 (i)
      $0.40
      11,250
      
      
      
      11,250May 20, 2005
      $0.48
      
      6,375
      
      
      6,375May 20, 2005
      $0.60
      
      1,241,250
      (3,750)
      (1,250)
      1,236,250May 20, 2005
      $0.64
      
      11,250
      
      
      11,250July 29, 2005
      $0.40
      
      7,500
      
      
      7,50059,250
      1,266,375
      (7,500)
      (33,000)
      1,285,125Weighted average exercise price
      
      $ 0.58
      $ 0.60
      $ 0.50
      $ 0.64
      $ 0.60Weighted average fair value of options granted
        during the year
      $ 0.40


| | (i) | The Company extended the expiry from the original date of
      December 20, 2004 to May 20, 2005.
| | --- | --------------------------------------------------------------------------------------------------

As at May 31, 2004, 1,263,813 of these
options had vested with grantees.

Using a Black-Scholes option pricing
model with the assumptions noted below, the fair values of stock options granted
have been reflected in the statement of operations as follows:

| |                                                       |   | Year
      ended May 31 | 
| | ----------------------------------------------------- | - | ----------------------- | 
| |                                                       |   | 2006                    | 
| | Exploration and engineering                           | $ | 36,415                  | 
| | Operations and administration                         |   | 47,101                  | 
| | Total compensation cost expensed to operations,       |   |                         | 
| | with the offset credited to contributed
      surplus | $ | 83,516                  | 

The weighted-average assumptions used
to estimate the fair value of options granted are as follows:

2006
    2005
    2004Risk free interest rate
    4%
    3%
    3%Expected life
    2.0 years
    1.9 years
    1.5 yearsExpected volatility
    124%
    162%
    163%Expected dividends
    nil
    nil
    nil


---

|ROCKWELL VENTURES INC.                          
|------------------------------------------------
|Notes to the Consolidated Financial Statements  
|For the years ended May 31, 2006, 2005, and 2004
|(Expressed in Canadian
      Dollars)           

|(d) | Share purchase warrants                                                                                                                 
|--- | ----------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                         
|    | The continuity of share purchase warrants (each warrant
      exercisable into one common share) for the year ended May 31, 2006
    is:

| |                                  |   | Exercise |  |   | May 31    |  |   |        |  |   |           |  |   |           |  |   | May 31 | 
| | -------------------------------- | - | -------- |  | - | --------- |  | - | ------ |  | - | --------- |  | - | --------- |  | - | ------ | 
| | Expiry date                      |   | price    |  |   | 2005      |  |   | Issued |  |   | Exercised |  |   | Expired   |  |   | 2006   | 
| | December 31, 2005 (note 6(b)(i)) | $ | 0.40     |  |   | 8,975,000 |  |   |       |  |   | 50,000    |  |   | 8,925,000 |  |   |       | 
| |                                  |   |          |  |   |           |  |   |        |  |   |           |  |   |           |  |   |        | 
| | Weighted average exercise price  |   |          |  | $ | 0.40      |  | $ |       |  | $ | 0.40      |  | $ |          |  | $ |       | 

The continuity of share purchase
warrants (each warrant exercisable into one common share) for the year ended May
31, 2005 is:

| |                                  |   | Exercise |  |   | May 31    |  |   |        |  |   |           |  |   |         |  |   | May 31    | 
| | -------------------------------- | - | -------- |  | - | --------- |  | - | ------ |  | - | --------- |  | - | ------- |  | - | --------- | 
| | Expiry                           |   | price    |  |   | 2004      |  |   | Issued |  |   | Exercised |  |   | Expired |  |   | 2005      | 
| | December 31, 2005 (note 6(b)(i)) | $ | 0.40     |  |   | 9,375,000 |  |   |       |  |   | 400,000   |  |   |        |  |   | 8,975,000 | 
| |                                  |   |          |  |   |           |  |   |        |  |   |           |  |   |         |  |   |           | 
| | Weighted average exercise price  |   |          |  | $ | 0.40      |  | $ |       |  | $ | 0.40      |  | $ |        |  | $ | 0.40      | 

The continuity of share purchase
warrants (each warrant exercisable into one common share) for the year ended May
31, 2004 is:

| |                                 |   | Exercise |  |   | May
      31, |  |   |           |  |   |           |   |   |          |   |   | May
      31, | 
| | ------------------------------- | - | -------- |  | - | ------------- |  | - | --------- |  | - | --------- | - | - | -------- | - | - | ------------- | 
| | Expiry date                     |   | price    |  |   | 2003          |  |   | Issued    |  |   | Exercised |   |   | Expired  |   |   | 2004          | 
| | July 4, 2003                    | $ | 0.64     |  |   | 36,875        |  |   |          |  |   |          |   |   | (36,875  | ) |   |              | 
| | October 19, 2003                | $ | 0.64     |  |   | 625,000       |  |   |          |  |   |          |   |   | (625,000 | ) |   |              | 
| | December 27, 2003               | $ | 0.88     |  |   | 259,281       |  |   |          |  |   | (24,125   | ) |   | (235,156 | ) |   |              | 
| | December 31, 2005 7(b)(i)       | $ | 0.40     |  |   |              |  |   | 9,375,000 |  |   |          |   |   |         |   |   | 9,375,000     | 
| |                                 |   |          |  |   | 921,156       |  |   | 9,375,000 |  |   | (24,125   | ) |   | (897,031 | ) |   | 9,375,000     | 
| |                                 |   |          |  |   |               |  |   |           |  |   |           |   |   |          |   |   |               | 
| | Weighted average exercise price |   |          |  | $ | 0.72          |  | $ | 0.40      |  | $ | 0.88      |   | $ | 0.72     |   | $ | 0.40          | 

|(e) | Contributed surplus
|--- | -------------------

| | Balance, May 31, 2003                                             | $ |        |  
| | ----------------------------------------------------------------- | - | ------- | -
| | Changes during 2004                                               |   |         |  
| | Non-cash stock-based compensation                                 |   | 445,020 |  
| | Balance, May 31, 2004                                             |   | 445,020 |  
| | Changes during 2005                                               |   |         |  
| | Non-cash stock-based compensation (note 6(c))                     |   | 11,513  |  
| | Share purchase options exercised, credited to share
      capital |   | (4,905  | )
| | Balance, May 31, 2005                                             |   | 451,628 |  
| | Changes during 2006                                               |   |         |  
| | Non-cash stock-based compensation (note 6(c))                     |   | 83,516  |  
| | Share purchase options exercised, credited to share
      capital |   | (11,724 | )
| | Balance, May
      31, 2006                                       | $ | 523,420 |  

The components of contributed surplus
are:

| |                                                                   |   | May 31, 2006 |   |   | May 31, 2005 |  
| | ----------------------------------------------------------------- | - | ------------ | - | - | ------------ | -
| | Accumulated stock-based compensation                              | $ | 540,049      |   | $ | 456,533      |  
| | Share purchase
      options exercised, credited to share capital |   | (16,629      | ) |   | (4,905       | )
| | Total contributed surplus                                         | $ | 523,420      |   | $ | 451,628      |  

---

|ROCKWELL VENTURES INC.                          
|------------------------------------------------
|Notes to the Consolidated Financial Statements  
|For the years ended May 31, 2006, 2005, and 2004
|(Expressed in Canadian
      Dollars)           

|7. | RELATED PARTY BALANCES AND
  TRANSACTIONS
|-- | -----------------------------------------

| | Balances (payable)
      receivable         |   | As
      at  |   |   | As
      at  | 
| | ------------------------------------------- | - | ------------ | - | - | ------------ | 
| |                                             |   | May 31, 2006 |   |   | May 31, 2005 | 
| | Hunter Dickinson Inc.
      (a)             | $ | (853,733     | ) | $ | 77,159       | 
| | Plateau Resources (Proprietary) Limited (d) |   | (124,737     | ) |   |             | 
| |                                             | $ | (978,470     | ) | $ | 77,159       | 

| |                                                   |   | Year
      ended |  |   | Year
      ended | 
| | ------------------------------------------------- | - | ---------------- |  | - | ---------------- | 
| | Transactions                                      |   | May 31, 2006     |  |   | May 31, 2005     | 
| | Services rendered and expenses reimbursed         |   |                  |  |   |                  | 
| | Hunter Dickinson Inc. (a)                         | $ | 578,134          |  | $ | 163,317          | 
| | Euro-American Capital
      Corporation (b)       |   | 18,630           |  |   | 16,164           | 
| | Gordon J. Fretwell Law Corporation (c)            |   |                 |  |   | 1,060            | 
| | Plateau Resources (Proprietary)
      Limited (d) |   | 124,737          |  |   |                 | 

| | (a) | Hunter Dickinson Inc. ("HDI") is a private company with
      certain directors in common with the Company that provides geological,
      technical, corporate development, administrative and management services
      to, and incurs third party costs on behalf of, the Company on a full cost
      recovery basis pursuant to an agreement dated January 1, 2001.
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                                                                                         
| |     | Exploration advances to and from HDI have arisen in the
      normal course, due to in- progress and near-term planned exploration work,
      primarily on the Companys exploration properties and for other operating
      expenses. There are no specific terms of repayment.                                                                                      
| |     |                                                                                                                                                                                                                                                                                                                                                                         
| | (b) | Euro-American Capital Corporation is a private company
      controlled by a director that provides management services to the Company
      based on the fair market value of those services.                                                                                                                                                                          
| |     |                                                                                                                                                                                                                                                                                                                                                                         
| | (c) | Gordon J. Fretwell Law Corporation is a private company
      controlled by a director that provides legal services to the Company based
      on the fair market value of those services.                                                                                                                                                                              
| |     |                                                                                                                                                                                                                                                                                                                                                                         
| | (d) | Plateau Resources (Proprietary) Limited (Plateau) is a
      wholly-owned subsidiary of Anooraq Resources Corporation, a Canadian
      company which has certain directors in common with the Company. Plateau
      shares certain premises and other facilities with the Company pursuant to
      a cost-sharing arrangement with no profit element
  involved.   

---

|ROCKWELL VENTURES INC.                          
|------------------------------------------------
|Notes to the Consolidated Financial Statements  
|For the years ended May 31, 2006, 2005, and 2004
|(Expressed in Canadian
      Dollars)           

|8. | INCOME TAXES                                                                                  
|-- | ----------------------------------------------------------------------------------------------
|   |                                                                                               
|   | A reconciliation of income taxes calculated at applicable
      statutory rates is as follows:

| |                                              |   | Years ended May 31 |  
| | -------------------------------------------- | - | ------------------ | -
| |                                              |   | 2006               |  
| |                                              |   |                    |  
| | Loss for the year                            | $ | (1,600,673         | )
| |                                              |   |                    |  
| | Expected income tax recovery                 | $ | (555,322           | )
| | Difference in foreign tax rates              |   | 7,171              |  
| | Non-deductible amounts                       |   | 374,980            |  
| | Deductible expenses                          |   | (35,132            | )
| | Unrecognized benefit of net operating losses |   |                    |  
| | carried forward                              |   | 208,303            |  
| |                                              |   |                    |  
| | Net income tax recovery                      | $ |                   |  

The significant components of the
Companys future tax assets are as follows:

| |                                                 |   | As at May 31 |  
| | ----------------------------------------------- | - | ------------ | -
| |                                                 |   | 2006         |  
| |                                                 |   |              |  
| | Net operating loss carry forwards               | $ | 1,155,000    |  
| | Cumulative exploration and development expenses |   | 2,136,000    |  
| | Other                                           |   | 150,000      |  
| |                                                 |   | 3,441,000    |  
| | Less: valuation allowance                       |   | (3,441,000   | )
| |                                                 |   |              |  
| | Net future tax assets                           | $ |             |  

At May 31, 2006, the Company had
available for deduction against future taxable income non-capital losses of
approximately $3,727,000 (2005  $3,610,000; 2004 - $3,300,000). These losses,
if not utilized, will expire in various years ranging from 2007 to 2026. Subject
to certain restrictions, the Company also had Canadian resource expenditures of
approximately $4,503,000 (2005  $3,300,000; 2004 - $4,450,000), which are
available to reduce taxable income in future years.

---

|ROCKWELL VENTURES INC.                          
|------------------------------------------------
|Notes to the Consolidated Financial Statements  
|For the years ended May 31, 2006, 2005, and 2004
|(Expressed in Canadian
      Dollars)           

|9. | SEGMENTED INFORMATION                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|-- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   | Operating segments are defined as components of an
      enterprise about which separate financial information is available that is
      evaluated regularly by the chief operation decision maker, or
      decision-making group, in deciding how to allocate resources and in
      assessing performance. All of the Company's operations are within the
      mineral exploration sector. The Company's mining operations are
      centralized whereby the Company's head office is responsible for the
      exploration results and for providing support in addressing local and
      regional issues. The Company's resource properties are located in Canada
      and in Chile.

| |                     |   | 2006       |   |   | 2005       |   |   | 2004       |  
| | ------------------- | - | ---------- | - | - | ---------- | - | - | ---------- | -
| |                     |   |            |   |   |            |   |   |            |  
| | Loss for the year   |   |            |   |   |            |   |   |            |  
| | Canada              | $ | (1,340,385 | ) | $ | (1,239,140 | ) | $ | (1,157,753 | )
| | Chile               |   | (260,288   | ) |   | (246,554   | ) |   | (238,265   | )
| |                     | $ | (1,600,673 | ) | $ | (1,485,694 | ) | $ | (1,396,018 | )
| |                     |   |            |   |   |            |   |   |            |  
| | Identifiable assets |   |            |   |   |            |   |   |            |  
| | Canada              | $ | 228,560    |   | $ | 558,951    |   | $ | 1,870,357  |  
| | Chile               |   | 60,087     |   |   | 100,626    |   |   | 103,831    |  
| |                     | $ | 288,647    |   | $ | 659,577    |   | $ | 1,974,188  |  

|10. | SUBSEQUENT EVENTS                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|    | (a)      Acquisition of
      Durnpike Investments (Pty) Limited                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|    | On June 30, 2006, the Company entered into an
      Agreement-in-Principle to acquire interests and/or rights in four alluvial
      diamond properties in South Africa and the Democratic Republic of Congo.
      These four properties include the: Holpan/Klipdam Property in South
      Africa, Wouterspan Property in South Africa, Kwango River Project in the
      Democratic Republic of Congo and Galputs Minerale Project in South
      Africa.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|    | The Company will acquire all of the shares and loans in
      Durnpike Investments (Pty) Limited (Durnpike), a private South African
      company, from eight individuals (the Vendors) for consideration set
      forth below, payable in common shares of the Company (Common Shares)
      related to the closing price of the Common Shares on the TSX Venture
      Exchange on the specified dates described below. Durnpike holds or is in
      the process of acquiring an interest and/or rights in the four alluvial
      diamond properties.                                                                                                                                                                                                                                                                                                                                                                                                                                                
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|    | The Holpan/Klipdam Property and the Wouterspan Property
      are indirectly owned by the H.C. Van Wyk Diamante Trust (Van Wyk Trust),
      a business trust registered in South Africa. Van Wyk Trust holds 99% of HC
      Van Wyk Diamonds (Pty) Ltd (HCVW), a private South African company, and
      99% of Klipdam Mining Company Limited (Klipdam), a private South African
      company. HCVW and Klipdam, are collectively referred to as The Van Wyk
      Diamond Group of companies (VWDG). Durnpike has committed to complete
      the acquisition of an initial 49% of the issued and outstanding shares of
      HCVW and 51% of the issued and outstanding shares of Klipdam (The
      Acquisition Interest). To acquire the Acquisition Interest, Durnpike paid
      the Van Wyk Trust ZAR50 million (US$6.8 million) on July 7, 2006 and will
      pay ZAR30 million (US$ 4.1 million) on July 7, 2007. Durnpike has an
      option to increase its shareholding in HCVW to
a

---

|ROCKWELL VENTURES INC.                          
|------------------------------------------------
|Notes to the Consolidated Financial Statements  
|For the years ended May 31, 2006, 2005, and 2004
|(Expressed in Canadian
      Dollars)           

51% control interest, upon obtaining
necessary regulatory and corporate approvals, by subscribing for additional
shares in HCVW in an amount of ZAR1 million (US$0.14 million) and obtaining the
requisite corporate approvals for the introduction of a ZAR24 million (US$3.3
million) working capital loan into VWDG.

The Company will also enter into an
Exchange agreement with the Van Wyk Trust in terms by which it will be granted a
call option, and grant a corresponding put option to the Van Wyk Trust, to
acquire an additional 23% of VWDG for ZAR60 million (US$8.2 million), payable in
Common Shares. The Exchange shall become effective upon Rockwell having
completed a listing of the Companys common shares on the Johannesburg Stock
Exchange (JSE Listing).

Pursuant to the Agreement-in-Principle
to acquire Durnpike, the Company will:

| | • | acquire from the Vendors all of their shares and loans in
      Durnpike for ZAR34 million (US$4.6 million), payable in common shares of
      the Company on the earlier of (i) the date of the JSE listing; and (ii)
      within 9 months from signature of the Agreement-in-Principle, and thereby
      acquire Durnpikes interests in the four alluvial diamond properties in
      South Africa and the Democratic Republic of Congo.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| | • | spend US$7 million on a feasibility study on the Kwango
      River Project by August 31, 2007. This deadline may be extended to
      February 29, 2008 at no cost and be further extended to December 31, 2008
      by payment of US$1 million in Common Shares. If the Company wishes to
      retain the Kwango River Project following completion of the feasibility
      study, the Company must (i) pay to the Vendors an amount equal to 60% of
      the net present value of the Kwango River Project Valuation (as determined
      in terms of the feasibility study and subject to a minimum acquisition
      cost of US$13 million and a maximum acquisition cost of US$26 million),
      which payment shall be effected by the issuance of common shares and (ii)
      commit to incur an additional amount of up to US$6 million in expenditures
      for development of the Kwango River Project within 16 months from the date
      of completion of the feasibility study; and
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| | • | acquire the Galputs Minerale Project for ZAR9 million
      (US$1.2 million), payable to the Vendors in Common Shares on the earlier
      of (i) the date of the JSE listing; and (ii) within 9 months from
      signature of the Agreement-in-Principle.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              

All of the common shares issued to the
Vendors pursuant to the acquisition, other than the common shares issued to
extend the feasibility study deadline, will be held in escrow for at least 12
months from the date of issuance, provided that a limited portion of those
escrowed Common Shares may be released to enable the Vendors to meet specified
obligations.

The Agreement-in-Principle is subject
to provisions relating to due diligence, confidentiality, costs, public
disclosure and the execution of a definitive agreement. The closing of the
acquisition is subject to certain conditions precedent, including completion of
Durnpike's acquisition of certain of the diamond properties and obtaining the
necessary regulatory approvals.

(b)$6.0 million
credit facility

On September 5, 2006, the Company
reached an agreement with Quest Capital Corp. (Quest) for a $6.0 million
credit facility (the Facility). The Facility is payable out of the proceeds of
any

---

|ROCKWELL VENTURES INC.                          
|------------------------------------------------
|Notes to the Consolidated Financial Statements  
|For the years ended May 31, 2006, 2005, and 2004
|(Expressed in Canadian
      Dollars)           

|    | future debt or equity financing or disposition of any of
      the assets of the Company, other than in the ordinary course of business,
      and bears interest from March 1, 2007 at the rate of 18% per annum,
      calculated daily and compounded monthly, payable on the last business day
      of each month. The Facility, if not earlier converted, must be repaid on
      or before May 31, 2007. The Facility is secured by a first charge over all
      of the assets of the Company. In consideration for the Facility, Quest
      received 385,714 common shares of the Company. In addition, should the
      Facility remain outstanding on November 30, 2006, Quest will receive an
      additional number of common shares equal to 4.5% of the principal amount
      then outstanding divided by the average closing price of the common shares
      of the Company on the TSX Venture Exchange for the 10 trading days
      immediately preceding November 30, 2006. The facility may be repaid at any
      time, without penalty. Quest has the right to convert the facility to
      common shares if the Company completes an equity financing for $5.0
      million or greater, at the greater of the price at which the financing is
      conducted less a 3% discount, subject to a minimum conversion price of
      $0.65 per share.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|    | (c)      $9.5 million private
      placement of convertible promissory notes                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|    | In July 2006, the Company entered into agreements to
      complete a $9.5 million private placement of subordinated secured
      convertible promissory notes (the Notes). The Notes must be repaid on or
      before March 31, 2007 and have similar terms and conditions to the credit
      facility in note 10(b), including conversion rights. The Notes are
      subordinated to the Facility, and are secured by a charge over all of the
      assets of the Company. As consideration for the Notes, the noteholders
      received 678,571 common shares of the Company, or equal to five percent of
      the outstanding balance owed on the Notes divided by the average closing
      price of the Company's common shares on the Exchange for the five trading
      days immediately preceding such issue, less a 10% discount. In addition,
      should the Notes remain outstanding on each of September 30, 2006 and
      March 31, 2007, noteholders will receive an additional number of common
      shares on the same terms.                                                                                                                                                                                                                                                                                                                  
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|    | The proceeds of the Facility and Notes will be used to
      facilitate the acquisition of Durnpike and the funding of Durnpikes
      obligations in connection with the acquisition of 51% of the outstanding
      shares of Klipdam and HCVW (of which US $6.8million has been
    advanced).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|11. | DIFFERENCES BETWEEN CANADIAN AND UNITED STATES
      GENERALLY ACCEPTED ACCOUNTING PRINCIPLES                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|    | These consolidated financial statements have been
      prepared in accordance with Canadian generally accepted accounting
      principles ("Canadian GAAP"). Material variations in the accounting
      measurement principles, practices and methods used in preparing these
      financial statements from measurement principles, practices and methods
      accepted in the United States (US GAAP) are described and quantified
      below.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|    | Mineral properties and deferred exploration
      costs                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|    | Under Canadian GAAP, the Company accounts for mineral
      properties as described in note 3(e).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|    | In March 2004, the Emerging Issues Task Forces (EITF)
      reached a consensus that mineral interests covered by leases should be
      considered tangible assets. On April 30, 2004, the
FASB                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            

---

|ROCKWELL VENTURES INC.                          
|------------------------------------------------
|Notes to the Consolidated Financial Statements  
|For the years ended May 31, 2006, 2005, and 2004
|(Expressed in Canadian
      Dollars)           

issued a FASB Staff Position (FSP)
amending SFAS 141 and SFAS 142, Goodwill and Other Intangible Assets, to
provide that certain mineral use rights are considered tangible assets and that
mineral use rights should be accounted based on their substance. The FSP is
effective for the first reporting period beginning after April 29, 2005, with
early adoption permitted.

In March 2004, in its report on Mining
Assets: Impairment and Business Combinations the EITF reached a consensus that
an entity should include the cash flows associated with value beyond proven and
probable reserves in estimates of future cash flows (both undiscounted and
discounted) used for determining whether a mining asset is impaired under
Statement No. 144, Accounting for the Impairment or Disposal of Long-Lived
Assets.

Under U.S. GAAP, the recoverability of
capitalized mineral properties exploration expenditures are generally considered
insupportable until a commercially mineable deposit is determined; therefore,
all mineral properties exploration expenditures are expenses as incurred. As the
Company does not have reports on proven and probable reserves on any of its
mineral properties, all exploration expenditures incurred, other than its
acquisition costs, and its other mineral properties have been expensed as
incurred.

Asset retirement obligations

Under United States GAAP, Statement of
Financial Accounting Standards No. 143, "Accounting for Asset Retirement
Obligations" ("SFAS 143") requires companies to record the fair value of the
liability for closure and removal costs associated with the legal obligation
upon retirement or removal of any tangible longlived asset, effective for years
beginning on or after January 1, 2003. Under this standard, the initial
recognition of the liability is capitalized as part of the asset cost and
depreciated over its estimated useful life. The Company has determined that
there were no asset retirement obligations as at May 31, 2006.

For Canadian GAAP purposes, effective
June 1, 2004, the Company adopted the provisions of CICA Handbook Section 3110
(HB3110). HB3110 requires essentially the same accounting treatment of asset
retirement obligations as SFAS 143. Consequently, the Company believes there is
no difference in asset retirement obligations under United States GAAP and
Canadian GAAP for the Company upon the adoption of this standard, and there is
no effect on amounts previously reported.

Marketable securities

Under Canadian GAAP, short-term marketable
  securities are carried at the lower of aggregate cost or current market value,
  with any unrealized loss included in the statements of operations. Long-term
  investments are carried on the cost or equity basis and are only written down
  when there is evidence of a decline in value that is other than temporary.

Under US GAAP, Statement of Financial
  Accounting Standard No. 115, Accounting for Certain Investments in
  Debt and Equity Securities (SFAS 115) requires that certain
  equity investments must be classified into available-for-sale or trading securities
  and carried at fair market value. Any unrealized holding gains or losses are
  reported as a separate component of shareholders equity until realized
  for available-for-sale securities, and included in earnings for trading securities.
  Under SFAS 115, for the years ended May 31, 2006, 2005 and 2004 the Companys
  investments in marketable securities would be classified as trading securities
  and there is no difference between Canadian GAAP and US GAAP.

---

|ROCKWELL VENTURES INC.                          
|------------------------------------------------
|Notes to the Consolidated Financial Statements  
|For the years ended May 31, 2006, 2005, and 2004
|(Expressed in Canadian
      Dollars)           

The impact of the differences between
Canadian GAAP and US GAAP on the consolidated balance sheets would be as
follows:

2006
    
    
    
    
    
    
    
    
    2005Balance,
    
    
    
    
    
    Balance,
    
    
    Balance,
    
    
    
    
    
    Balance,Canadian
    
    
    
    
    
    US
    
    
    Canadian
    
    
    
    
    
    USGAAP
    
    
    Adjustments
    
    
    GAAP
    
    
    GAAP
    
    
    Adjustments
    
    
    GAAPCurrent assets
    $
    256,456
    
    $
    
    
    $
    256,456
    
    $
    580,530
    
    $
    
    
    $
    580,530Security deposit
    
    32,190
    
    
    
    
    
    32,190
    
    
    32,190
    
    
    
    
    
    32,190Mineral property
    
    1
    
    
    (1
    )
    
    
    
    
    46,857
    
    
    (46,857
    )
    
    $
    288,647
    
    $
    (1
    )
    $
    288,646
    
    $
    659,577
    
    $
    (46,857
    )
    $
    612,720Current liabilities
    $
    1,146,070
    
    $
    
    
    $
    1,146,070
    
    $
    29,976
    
    $
    
    
    $
    29,976Stockholders'equity
    
    (857,423
    )
    
    (1
    )
    
    (857,424
    )
    
    629,601
    
    
    (46,857
    )
    
    582,744$
    288,647
    
    $
    (1
    )
    $
    288,646
    
    $
    659,577
    
    $
    (46,857
    )
    $
    612,720


The impact of the differences between
Canadian GAAP and US GAAP on the statements of operations and deficit would be
as follows:

| |                                                             |   | 2006       |   |   | 2005       |   |   | 2004       |  
| | ----------------------------------------------------------- | - | ---------- | - | - | ---------- | - | - | ---------- | -
| |                                                             |   |            |   |   |            |   |   |            |  
| | Loss for the year, Canadian
      GAAP                      | $ | (1,600,673 | ) | $ | (1,485,694 | ) | $ | (1,396,018 | )
| |                                                             |   |            |   |   |            |   |   |            |  
| | Write-down of mineral
      property interests              |   | 46,856     |   |   |           |   |   |           |  
| | Unrealized gain in marketable securities                    |   |           |   |   |           |   |   | 4,650      |  
| |                                                             |   |            |   |   |            |   |   |            |  
| | Loss for the year, US GAAP                                  | $ | (1,553,817 | ) | $ | (1,485,694 | ) | $ | (1,391,368 | )
| |                                                             |   |            |   |   |            |   |   |            |  
| | Basic and diluted loss per share, US GAAP                   | $ | (0.07      | ) | $ | (0.06      | ) | $ | (0.08      | )
| |                                                             |   |            |   |   |            |   |   |            |  
| | Weighted average number of common shares
      outstanding, |   |            |   |   |            |   |   |            |  
| | US GAAP                                                     |   | 23,640,123 |   |   | 23,376,122 |   |   | 17,744,545 |  

The impact of the differences between
Canadian GAAP and US GAAP on the consolidated statements of cash flows would be
as follows:

| |                                                                   |   | 2006       |   |   | 2005       |   |   | 2004       |  
| | ----------------------------------------------------------------- | - | ---------- | - | - | ---------- | - | - | ---------- | -
| | Cash used in operating
      activities, Canadian GAAP            | $ | (1,393,378 | ) | $ | (1,322,916 | ) | $ | (1,175,033 | )
| | Purchase of marketable securities                                 |   |           |   |   |           |   |   | (50,000    | )
| | Proceeds from sale of
      marketable securities                 |   | 146,970    |   |   | 11,563     |   |   | 12,620     |  
| | Cash used in operating activities, US GAAP                        |   | (1,246,408 | ) |   | (1,311,353 | ) |   | (1,212,413 | )
| |                                                                   |   |            |   |   |            |   |   |            |  
| | Cash provided by investing activities,
      Canadian GAAP        |   | 146,970    |   |   | 11,563     |   |   | 29,365     |  
| | Purchase of marketable
      securities                           |   |           |   |   |           |   |   | 50,000     |  
| | Proceeds from sale of marketable securities                       |   | (146,970   | ) |   | (11,563    | ) |   | (12,620    | )
| | Cash provided by investing
      activities, US GAAP              |   |           |   |   |           |   |   | 66,745     |  
| |                                                                   |   |            |   |   |            |   |   |            |  
| | Cash provided by financing
      activities, Canadian GAAP and US |   |            |   |   |            |   |   |            |  
| | GAAP                                                              |   | 1,085,762  |   |   | 128,391    |   |   | 2,662,771  |  
| | Increase (decrease) in cash
      and equivalents during the year |   | (160,646   | ) |   | (1,182,962 | ) |   | 1,517,103  |  
| | Cash and equivalents, beginning of year                           |   | 352,677    |   |   | 1,535,639  |   |   | 18,536     |  
| |                                                                   |   | 192,031    |   |   | 352,677    |   |   | 1,535,639  |  

---

|ROCKWELL VENTURES INC.                          
|------------------------------------------------
|Notes to the Consolidated Financial Statements  
|For the years ended May 31, 2006, 2005, and 2004
|(Expressed in Canadian
      Dollars)           

Impact of recent United States accounting pronouncements:

| | (i)   | In March 2005, the EITF issued EITF 04-6, "Accounting
      for Stripping Costs in the Mining Industry". The consensus indicated
      that costs of removing overburden and waste materials ("stripping costs")
      after production begins, represent variable production costs and should be
      considered a component of mineral inventory cost subject to the guidance
      in Chapter 4 of Accounting Research Bulletin No. 43, "Restatement and
      Revision of Accounting Research Bulletins". EITF 04-6 is effective for
      fiscal years beginning after December 15, 2005 and upon adoption, can be
      applied by either retroactively restating prior periods or using a
      cumulative catch-up adjustment. The Company believes this Statement will
      have no impact on the financial statements of the Company once
    adopted.                                                                                                                                                                                                                                                                                                                                                                                                                             
| | ----- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| | (ii)  | In May 2005, the FASB issued SFAS 154, Accounting
      Changes and Error Corrections  a replacement of APB Opinion No. 20 and
      FASB Statement No. 3. SFAS 154 replaces APB Opinion No. 20, Accounting
      Changes, and SFAS 3, Reporting Accounting Changes in Interim Financial
      Statements and changes the requirements for the accounting for and
      reporting of a change in accounting principle. This statement applies to
      all voluntary changes in accounting principle. It also applies to changes
      required by an accounting pronouncement in the unusual instance that the
      pronouncement does not include specific transition provisions. When a
      pronouncement includes specific transition provisions, those provisions
      should be followed. SFAS 154 is effective for accounting changes and
      corrections of errors made in fiscal years beginning after December 31,
      2005. The Company does not believe the adoption of SFAS 154 will have a
      material effect on its consolidated financial position, results of
      operations or cash flows.                                                                                                                                                               
| |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| | (iii) | In November 2005, the FASB issued FASB Staff Position No.
      SFAS 115-1 and SFAS 124-1 (FSP SFAS 115-1 and 124-1), which addresses
      the determination as to when an investment is considered impaired, whether
      that impairment is other than temporary, and the measurement of an
      impairment loss. FSP SFAS 115-1 and 124-1 also includes accounting
      considerations subsequent to the recognition of an other-than-temporary
      impairment and requires certain disclosures about unrealized losses that
      have not been recognized as other-than-temporary impairments. The guidance
      in FSP SFAS 115-1 and 124-1 amends FASB Statements No. 115, Accounting
      for Certain Investments in Debt and Equity Securities, and No. 124,
      Accounting for Certain Investments Held by Not- for-Profit
      Organizations, and APB Opinion No. 18, The Equity Method of Accounting
      for Investments in Common Stock. The guidance in FSP SFAS 115-1 and 124-1
      shall be applied to the first reporting period beginning after December
      15, 2005. The adoption of FSP SFAS 115-1 and 124-1 has not had a
      significant impact on the Companys consolidated financial position,
      results of operations and cash flows.
| |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| | (iv)  | In February 2006, the FASB issued FASB Staff Position
      (FSP) FAS 123R-4 Classification of Options and Similar Instruments
      Issued as Employee Compensation That Allow for Cash Settlement upon the
      Occurrence of a Contingent Event. FSP FAS 123(R)-4 addresses the
      classification of options and similar instruments issued as employee
      compensation that allow for cash settlement upon the occurrence of a
      contingent event and amends paragraphs 32 and A229 of SFAS 123(R). The
      Company is required to apply the guidance in FSP FAS123(R)-4 in the
      quarterly period ending                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             

---

|ROCKWELL VENTURES INC.                          
|------------------------------------------------
|Notes to the Consolidated Financial Statements  
|For the years ended May 31, 2006, 2005, and 2004
|(Expressed in Canadian
      Dollars)           

| |        | April 30, 2006. The adoption of FSP FAS123(R)-4 has not
      had a significant impact on the Companys consolidated financial position
      or results of operations.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| | ------ | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| | (v)    | In February 2006, the FASB issued SFAS 155 Accounting
      for Certain Hybrid Financial Instruments, an amendment of FASB Statements
      No. 133 and 140. This Statement amends FASB 133, Accounting for
      Derivative Instruments and Hedging Activities, and SFAS 140, Accounting
      for Transfers and Servicing of Financial Assets and Extinguishments of
      Liabilities. SFAS 155 resolves issues addressed in Statement 133
      Implementation Issue No. D1, Application of Statement 133 to Beneficial
      Interests in Securitized Financial Assets. SFAS 155 permits fair value
      remeasurement for any hybrid financial instrument that contains an
      embedded derivative that otherwise would require bifurcation, clarifies
      which interest-only strips and principal-only strips are not subject to
      the requirements of SFAS 133, establishes a requirement to evaluate
      interests in securitized financial assets to identify interests that are
      freestanding derivatives or that are hybrid financial instruments that
      contain an embedded derivative requiring bifurcation, clarifies that
      concentrations of credit risk in the form of subordination are not
      embedded derivatives and amends SFAS 140 to eliminate the prohibition on a
      qualifying special-purpose entity from holding a derivative financial
      instrument that pertains to a beneficial interest other than another
      derivative financial instrument. SFAS 155 is effective for all financial
      instruments acquired or issued after the beginning of the Companys first
      fiscal year that begins after September 15, 2006, with earlier adoption
      permitted. The Company is currently evaluating the impact of SFAS 155 on
      its consolidated financial position, results of operations and cash
      flows.
| |        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| | (vi)   | In March 2006, the FASB issued SFAS No. 156 (FAS 156),
      Accounting for Servicing of Financial AssetsAn Amendment of FASB
      Statement No. 140. Among other requirements, FAS 156 requires a company
      to recognize a servicing asset or servicing liability when it undertakes
      an obligation to service a financial asset by entering into a servicing
      contract under certain situations. Under FAS 156 an election can also be
      made for subsequent fair value measurement of servicing assets and
      servicing liabilities by class, thus simplifying the accounting and
      provide for income statement recognition of potential offsetting changes
      in the fair value of servicing assets, servicing liabilities and related
      derivative instruments. FAS 156 is effective for fiscal years beginning
      after September 15, 2006. The Company does not expect the adoption of FAS
      156 will have a material impact on its financial position or results of
      operations.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| |        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| | (vii)  | In July 2006, the FASB issued Financial Interpretation
      No. 48, Accounting for Uncertainty in Income Taxes-an interpretation of
      FASB Statement No. 109 (FIN 48), which is a change in accounting for
      income taxes. FIN 48 specifies how tax benefits for uncertain tax
      positions are to be recognized, measured, and derecognized in financial
      statements; requires certain disclosures of uncertain tax matters;
      specifies how reserves for uncertain tax positions should be classified on
      the balance sheet; and provides transition and interim period guidance,
      among other provisions. FIN 48 is effective for fiscal years beginning
      after December 15, 2006. The Company does not expect the adoption of FIN
      48 will have a material impact on its financial position or results of
      operations.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| |        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| | (viii) | In September 2006, the FASB issued SFAS No. 157 (FAS
      157), Fair Value Measurements. Among other requirements, FAS 157
      defines fair value and establishes                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                

---

|ROCKWELL VENTURES INC.                          
|------------------------------------------------
|Notes to the Consolidated Financial Statements  
|For the years ended May 31, 2006, 2005, and 2004
|(Expressed in Canadian
      Dollars)           

| |      | a framework for measuring fair value and also expands
      disclosure about the use of fair value to measure assets and liabilities.
      FAS 157 is effective beginning the first fiscal year that begins after
      November 15, 2007. The Company is currently evaluating the impact of FAS
      157 on its financial position and results of operations.                                                                                                                                                                                                                                                                                                   
| | ---- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| | (ix) | In September 2006, the Securities and Exchange Commission
      issued Staff Accounting Bulletin No. 108, Considering the Effects of
      Prior Year Misstatements When Quantifying Misstatements in Current Year
      Financial Statements (SAB 108), which provides interpretive guidance on
      how the effects of the carryover or reversal of prior year misstatements
      should be considered in quantifying a current year misstatement. The
      guidance is applicable for fiscal years ending after November 15, 2006.
      The Company does not believe SAB 108 will have a material impact on its
      consolidated financial statements.

---