---

Exhibit 99.2



(An Exploration Stage Company)

CONSOLIDATED FINANCIAL STATEMENTS

(Expressed in Canadian Dollars)

JUNE 30, 2006

---

|DAVIDSON
      & COMPANY LLP | Chartered Accountants | A Partnership of Incorporated
      Professionals
|---------------------------- | --------------------- | -------------------------------------------------



INDEPENDENT AUDITORS' REPORT

To the Shareholders ofEnergy Metals Corporation

We have audited the consolidated balance sheets of Energy
Metals Corporation as at June 30, 2006 and 2005 and the consolidated statements
of operations and deficit and cash flows for the years ended June 30, 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
June 30, 2006 and 2005, and the results of its operations and its cash flows for
the years ended June 30, 2006, 2005 and 2004 in accordance with Canadian
generally accepted accounting principles.

"DAVIDSON & COMPANY LLP"

|Vancouver, Canada | Chartered Accountants
|----------------- | ---------------------
|                  |                      
|August 23, 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 consolidated 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 consolidated financial statements. Our
report to shareholders dated August 23, 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
|----------------- | ---------------------
|                  |                      
|August 23, 2006   |                      

A Member of SCINTERNATIONAL

1200 - 609 Granville Street, P.O. Box 10372, Pacific Centre,
Vancouver, BC, Canada, V7Y 1G6Telephone (604) 687-0947 Fax (604) 687-6172

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|ENERGY METALS CORPORATION      
|-------------------------------
|(An Exploration Stage Company) 
|CONSOLIDATED BALANCE SHEETS    
|(Expressed in Canadian Dollars)
|AS AT JUNE 30                  
|                               

|                                                                            |  | 2006        |   |  | 2005        |  
|--------------------------------------------------------------------------- |  | ----------- | - |  | ----------- | -
|                                                                            |  | $           |   |  | $           |  
|ASSETS                                                                      |  |             |   |  |             |  
|Current                                                                     |  |             |   |  |             |  
|Cash and
      cash equivalents                                             |  | 25,947,294  |   |  | 19,701,747  |  
|Short-term investments (Note
      4)                                       |  | 53,826,750  |   |  | 651,250     |  
|Receivables                                                                 |  | 115,612     |   |  | 88,759      |  
|Prepaid expenses and deposits                                               |  | 292,918     |   |  | 48,621      |  
|                                                                            |  |             |   |  |             |  
|Total current assets                                                        |  | 80,182,574  |   |  | 20,490,377  |  
|                                                                            |  |             |   |  |             |  
|Long-term investments(Note 5)                                               |  | 3,113,586   |   |  | -           |  
|Non-refundable deposit(Note 6)                                              |  | 557,500     |   |  | -           |  
|Reclamation bond(Note 7)                                                    |  | 557,500     |   |  | -           |  
|Property, plant and equipment(Note
      8)                                 |  | 9,824,427   |   |  | 81,747      |  
|Mineral properties(Note 9)                                                  |  | 26,389,003  |   |  | 3,228,912   |  
|                                                                            |  |             |   |  |             |  
|Total assets                                                                |  | 120,624,590 |   |  | 23,801,036  |  
|                                                                            |  |             |   |  |             |  
|LIABILITIES AND SHAREHOLDERS' EQUITY                                        |  |             |   |  |             |  
|Current                                                                     |  |             |   |  |             |  
|Accounts payable and accrued
      liabilities                              |  | 527,864     |   |  | 89,973      |  
|                                                                            |  |             |   |  |             |  
|Asset retirement obligation(Note 10)                                        |  | 915,266     |   |  | -           |  
|Future income taxes(Note 15)                                                |  | 6,019,000   |   |  | -           |  
|                                                                            |  |             |   |  |             |  
|Total liabilities                                                           |  | 7,462,130   |   |  | 89,973      |  
|                                                                            |  |             |   |  |             |  
|Shareholders' equity                                                        |  |             |   |  |             |  
|Capital stock (Note 11),
      unlimited number of common shares authorized |  |             |   |  |             |  
|without par value: 54,682,225 and 24,627,772 shares issued
      at         |  |             |   |  |             |  
|June
      30, 2006 and 2005, respectively                                  |  | 126,140,507 |   |  | 34,874,778  |  
|Contributed
      surplus (Note 11)                                         |  | 3,912,155   |   |  | 1,175,618   |  
|Commitment to issue shares
      (Note 11)                                  |  | 1,525,000   |   |  | 543,900     |  
|Deficit                                                                     |  | (18,415,202 | ) |  | (12,883,233 | )
|                                                                            |  |             |   |  |             |  
|Total shareholders
      equity                                            |  | 113,162,460 |   |  | 23,711,063  |  
|                                                                            |  |             |   |  |             |  
|Total liabilities and shareholders
      equity                            |  | 120,624,590 |   |  | 23,801,036  |  
|                                                                            |  |             |   |  |             |  
|Nature and continuance of operations(Note
      1)                          |  |             |   |  |             |  
|Commitments(Note 17)                                                        |  |             |   |  |             |  
|Subsequent events(Note 18)                                                  |  |             |   |  |             |  

|On behalf of the Board: |          |                     |         
|----------------------- | -------- | ------------------- | --------
|                        |          |                     |         
|/s/Paul
      Matysek   | Director | /s/ James G.G. Watt | Director

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

3

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|ENERGY METALS CORPORATION                        
|-------------------------------------------------
|(An Exploration Stage Company)                   
|CONSOLIDATED STATEMENTS OF OPERATIONS AND DEFICIT
|(Expressed in Canadian Dollars)                  
|YEAR ENDED JUNE 30                               
|                                                 

|                                                           |   | 2006        |   |   | 2005        |   |   | 2004        |  
|---------------------------------------------------------- | - | ----------- | - | - | ----------- | - | - | ----------- | -
|                                                           |   | $           |   |   | $           |   |   | $           |  
|                                                           |   |             |   |   |             |   |   |             |  
|EXPENSES                                                   |   |             |   |   |             |   |   |             |  
|Advertising and promotion                                  |   | 182,309     |   |   | 151,840     |   |   | 330         |  
|Amortization                                               |   | 115,204     |   |   | 23,795      |   |   | -           |  
|Bank charges and interest                                  |   | 28,829      |   |   | -           |   |   | -           |  
|Consulting fees                                            |   | 1,019,274   |   |   | 293,584     |   |   | 5,514       |  
|Filing and regulatory fees                                 |   | 213,888     |   |   | 111,352     |   |   | 14,860      |  
|Insurance                                                  |   | 23,117      |   |   | -           |   |   | -           |  
|Management fees                                            |   | 340,000     |   |   | 208,500     |   |   | 83,000      |  
|Office and
      miscellaneous                             |   | 202,897     |   |   | 68,201      |   |   | 9,296       |  
|Professional fees                                          |   | 937,932     |   |   | 86,035      |   |   | 33,425      |  
|Rent                                                       |   | 96,390      |   |   | 35,795      |   |   | 8,912       |  
|Salaries and benefits                                      |   | 638,108     |   |   | 23,105      |   |   | -           |  
|Scanning and maps                                          |   | 63,208      |   |   | -           |   |   | -           |  
|Stock-based compensation (Note 11)                         |   | 2,479,411   |   |   | 782,500     |   |   | 18,015      |  
|Telephone                                                  |   | 46,656      |   |   | 29,064      |   |   | 2,286       |  
|Transfer agent                                             |   | 51,938      |   |   | 16,874      |   |   | 4,671       |  
|Travel                                                     |   | 356,409     |   |   | 131,274     |   |   | 11,782      |  
|                                                           |   |             |   |   |             |   |   |             |  
|Loss before other items                                    |   | (6,795,570  | ) |   | (1,961,919  | ) |   | (192,091    | )
|                                                           |   |             |   |   |             |   |   |             |  
|OTHER ITEMS                                                |   |             |   |   |             |   |   |             |  
|Foreign exchange gain (loss)                               |   | 82,816      |   |   | (37,357     | ) |   | -           |  
|Accretion of
      reclamation obligation                  |   | (24,265     | ) |   | -           |   |   | -           |  
|Gain on sale of short-term investments                     |   | 33,545      |   |   | -           |   |   | -           |  
|Interest income                                            |   | 1,261,643   |   |   | 149,073     |   |   | 2,567       |  
|Write down of short-term investments                       |   | (212,138    | ) |   | (88,750     | ) |   | (20,000     | )
|Write off of mineral
      property                        |   | -           |   |   | (17,358     | ) |   | (1,708      | )
|                                                           |   |             |   |   |             |   |   |             |  
|                                                           |   | 1,141,601   |   |   | 5,608       |   |   | (19,141     | )
|                                                           |   |             |   |   |             |   |   |             |  
|LOSS BEFORE INCOME TAXES                                   |   | (5,653,969  | ) |   | (1,956,311  | ) |   | (211,232    | )
|                                                           |   |             |   |   |             |   |   |             |  
|FUTURE INCOME TAX RECOVERY(Note 15)                        |   | 122,000     |   |   | -           |   |   | -           |  
|                                                           |   |             |   |   |             |   |   |             |  
|LOSS FOR THE YEAR                                          |   | (5,531,969  | ) |   | (1,956,311  | ) |   | (211,232    | )
|                                                           |   |             |   |   |             |   |   |             |  
|DEFICIT, BEGINNING OF YEAR                                 |   | (12,883,233 | ) |   | (10,926,922 | ) |   | (10,715,690 | )
|                                                           |   |             |   |   |             |   |   |             |  
|DEFICIT, END OF YEAR                                       |   | (18,415,202 | ) |   | (12,883,233 | ) |   | (10,926,922 | )
|                                                           |   |             |   |   |             |   |   |             |  
|BASIC AND DILUTED LOSS PER COMMON
      SHARE              | $ | (0.16       | ) | $ | (0.13       | ) | $ | (0.03       | )
|                                                           |   |             |   |   |             |   |   |             |  
|Weighted average number of common shares
      outstanding |   | 35,328,561  |   |   | 15,100,764  |   |   | 6,325,929   |  

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

4

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|ENERGY METALS CORPORATION            
|-------------------------------------
|(An Exploration Stage Company)       
|CONSOLIDATED STATEMENTS OF CASH FLOWS
|(Expressed in Canadian Dollars)      
|YEAR ENDED JUNE 30                   
|                                     

|                                                            |  | 2006        |   |  | 2005       |   |  | 2004     |  
|----------------------------------------------------------- |  | ----------- | - |  | ---------- | - |  | -------- | -
|                                                            |  | $           |   |  | $          |   |  | $        |  
|CASH FLOWS FROM OPERATING ACTIVITIES                        |  |             |   |  |            |   |  |          |  
|Loss for the year                                           |  | (5,531,969  | ) |  | (1,956,311 | ) |  | (211,232 | )
|Items not affecting
      cash:                             |  |             |   |  |            |   |  |          |  
|Accretion
      of reclamation obligation                   |  | 24,265      |   |  | -          |   |  | -        |  
|Amortization                                                |  | 115,204     |   |  | 23,795     |   |  | -        |  
|Gain on
      sale of short-term investments                |  | (33,545     | ) |  | -          |   |  | -        |  
|Stock-based compensation                                    |  | 2,479,411   |   |  | 782,500    |   |  | 18,015   |  
|Write down
      of short-term investments                  |  | 212,138     |   |  | 88,750     |   |  | 20,000   |  
|Write off of mineral property                               |  | -           |   |  | 17,358     |   |  | 1,708    |  
|Future
      income tax recovery                            |  | (122,000    | ) |  | -          |   |  | -        |  
|Unrealized foreign exchange gain                            |  | (216,399    | ) |  | -          |   |  | -        |  
|Interest
      accrued on short-term investments            |  | (447,193    | ) |  | -          |   |  | -        |  
|                                                            |  |             |   |  |            |   |  |          |  
|Changes in non-cash working capital items:                  |  |             |   |  |            |   |  |          |  
|(Increase) decrease in receivables                          |  | 116,389     |   |  | (82,045    | ) |  | (6,174   | )
|Increase in
      prepaids                                  |  | (2,033      | ) |  | (48,621    | ) |  | -        |  
|Increase (decrease) in accounts payable and accrued         |  |             |   |  |            |   |  |          |  
|liabilities                                                 |  | 373,358     |   |  | 71,792     |   |  | (4,636   | )
|                                                            |  |             |   |  |            |   |  |          |  
|Net cash used in operating activities                       |  | (3,032,374  | ) |  | (1,102,782 | ) |  | (182,319 | )
|                                                            |  |             |   |  |            |   |  |          |  
|CASH FLOWS FROM INVESTING ACTIVITIES                        |  |             |   |  |            |   |  |          |  
|Acquisition of mineral
      properties                     |  | (3,397,920  | ) |  | (1,033,290 | ) |  | (26,315  | )
|Recovery of mineral property costs                          |  | 68,458      |   |  | 117,152    |   |  | 30,000   |  
|Additions to property,
      plant and equipment            |  | (666,775    | ) |  | (105,542   | ) |  | -        |  
|Cash acquired on acquisition of
      subsidiaries          |  | 1,565,120   |   |  | -          |   |  | -        |  
|Non-refundable deposit                                      |  | (557,500    | ) |  | -          |   |  | -        |  
|Purchase of convertible debentures                          |  | (6,963,027  | ) |  | -          |   |  | -        |  
|Purchase of short-term
      investments                    |  | (52,212,249 | ) |  | -          |   |  | -        |  
|Purchase of long-term investments                           |  | (2,445,936  | ) |  | -          |   |  | -        |  
|Proceeds on sale of
      short-term investments            |  | 145,599     |   |  | -          |   |  | -        |  
|Reclamation bonds                                           |  | (557,500    | ) |  | -          |   |  | -        |  
|                                                            |  |             |   |  |            |   |  |          |  
|Net cash provided by (used in)
      investing activities   |  | (65,021,730 | ) |  | (1,021,680 | ) |  | 3,685    |  
|                                                            |  |             |   |  |            |   |  |          |  
|CASH FLOWS FROM FINANCING ACTIVITIES                        |  |             |   |  |            |   |  |          |  
|Common shares issued
      for cash                         |  | 76,271,827  |   |  | 22,375,152 |   |  | 440,000  |  
|Share issue costs paid                                      |  | (1,972,176  | ) |  | (922,909   | ) |  | -        |  
|                                                            |  |             |   |  |            |   |  |          |  
|Net cash provided by financing
      activities             |  | 74,299,651  |   |  | 21,452,243 |   |  | 440,000  |  
|                                                            |  |             |   |  |            |   |  |          |  
|Increase in cash and cash equivalents during the
      year |  | 6,245,547   |   |  | 19,327,781 |   |  | 261,366  |  
|                                                            |  |             |   |  |            |   |  |          |  
|Cash and cash equivalents, beginning of year                |  | 19,701,747  |   |  | 373,966    |   |  | 112,600  |  
|                                                            |  |             |   |  |            |   |  |          |  
|Cash and cash equivalents, end of year                      |  | 25,947,294  |   |  | 19,701,747 |   |  | 373,966  |  

Supplemental disclosure with respect to cash flows(Note
16)

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

5

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|ENERGY METALS CORPORATION                 
|------------------------------------------
|(An Exploration Stage Company)            
|NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|(Expressed in Canadian Dollars)           
|JUNE 30, 2006                             
|                                          

|1. | NATURE AND CONTINUANCE OF OPERATIONS
|-- | ------------------------------------

The Company is incorporated under the
laws of British Columbia and its principal business activities include the
acquisition, development and exploration of uranium properties.

These consolidated financial statements
have been prepared in accordance with Canadian generally accepted accounting
principles with the assumption that the Company will be able to realize its
assets and discharge its liabilities in the normal course of business rather
than through a process of forced liquidation. Continued operations of the
Company are dependent upon the Companys ability to receive continued financial
support, complete public equity financing, or generate profitable operations in
the future.

|2. | SIGNIFICANT ACCOUNTING POLICIES
|-- | -------------------------------

Basis of presentation

These consolidated financial statements
include the accounts of the Company and its subsidiaries from their date of
acquisition (Note 3). Significant inter-company balances and transactions with
subsidiaries were eliminated upon consolidation.

Estimates

The preparation of consolidated
financial statements in accordance with Canadian generally accepted accounting
principles requires management to make estimates and assumptions that affect the
reported amount of assets and liabilities and disclosure of contingent assets
and liabilities at the date of the financial statements and the reported amount
of revenues and expenses during the year. Actual results could differ from these
estimates.

Cash and cash equivalents

Cash is comprised of cash on hand and
demand deposits.

Cash equivalents are short-term, highly
liquid investments with original maturities of three months or less that are
readily convertible to known amounts of cash and which are subject to an
insignificant risk of change in value.

Short-term investments

Short-term investments include
marketable securities and bankers acceptances with major financial institutions
with maturities at the date of purchase of more than three months and less than
one year. Short term investments are stated at the lower of cost and net
realizable value. Realized gains or losses on sale of securities are determined
based on the specific cost basis.

Long-term investments

Long-term investments are carried at
cost. If it is determined that the decline in the value of the investment is
other than temporary, it is written down to its estimated net realizable value.

Investments in shares of associated
companies, over which the Company has significant influence, are accounted for
by the equity method, whereby the investment is initially recorded at cost and
adjusted to recognize the Companys share of earnings or loss in the investment.

6

---

|ENERGY METALS CORPORATION                 
|------------------------------------------
|(An Exploration Stage Company)            
|NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|(Expressed in Canadian Dollars)           
|JUNE 30, 2006                             
|                                          

|2. | SIGNIFICANT ACCOUNTING POLICIES(contd)
|-- | ----------------------------------------

Property, plant and equipment

Property, plant and equipment are
recorded at cost less accumulated amortization, calculated as follows:

| | Plant and equipment     | 20% straight line  | 
| | ----------------------- | ------------------ | 
| | Computer equipment      | 30% straight line  | 
| | Office equipment        | 20% straight line  | 
| | Automobiles             | 30% straight line  | 
| | Lease hold improvements | Over term of lease | 

Mineral properties

All costs related to the acquisition,
exploration and development of mineral property interests are capitalized by
property. If economically recoverable ore reserves are developed, capitalized
costs of the related property are reclassified as mining assets and amortized
using the unit of production method. When a property is abandoned, all related
costs are written off to operations. If, after management review, it is
determined that the carrying amount of a mineral property is impaired, that
property is written down to its estimated net realizable value. A mineral
property is reviewed for impairment whenever events or changes in circumstances
indicate that its carrying amount may not be recoverable.

The amounts shown for mineral
properties do not necessarily represent present or future values. Their
recoverability is dependent upon the discovery of economically recoverable
reserves, the ability of the Company to obtain the necessary financing to
complete the development, and future profitable production or proceeds from the
disposition thereof.

Asset retirement obligations

An asset retirement obligation is a
legal obligation associated with the retirement of tangible long-lived assets
that the Company is required to settle. The Company recognizes the fair value of
a liability for an asset retirement obligation in the period in which it is
incurred when a reasonable estimate of fair value can be made. The carrying
amount of the related long-lived asset is increased by the same amount as the
liability. This policy was adopted retroactively in fiscal 2005, however, the
Company determined there were no asset retirement obligations as at June 30,
2005.

Stock-based compensation

The Company uses the fair value method
whereby the Company recognizes compensation costs for the granting of all stock
options and direct awards of stock. Any consideration paid by the option holders
to purchase shares is credited to capital stock.

Future income taxes

Future income taxes are recorded using
the asset and liability method under which future tax assets and liabilities are
recognized for the future tax consequences attributable to differences between
the financial statement carrying amounts of existing assets and liabilities and
their respective tax bases. Future tax assets and liabilities are measured using
the enacted or substantively enacted tax rates expected to apply when the asset
is realized or the liability settled. The effect on future tax assets and
liabilities of a change in tax rates is recognized in income in the period that
substantive enactment or enactment occurs. To the extent that the Company does
not consider it more likely than not that a future tax asset will be recovered,
it provides a valuation allowance against the excess.

7

---

|ENERGY METALS CORPORATION                 
|------------------------------------------
|(An Exploration Stage Company)            
|NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|(Expressed in Canadian Dollars)           
|JUNE 30, 2006                             
|                                          

|2. | SIGNIFICANT ACCOUNTING POLICIES(contd)
|-- | ----------------------------------------

Loss per share

The Company uses the treasury stock
method to compute the dilutive effect of options, warrants and similar
instruments. Under this method the dilutive effect on loss per share is
recognized on the use of the proceeds that could be obtained upon exercise of
options, warrants and similar instruments. It assumes that the proceeds would be
used to purchase common shares at the average market price during the period.
For the years presented, this calculation was not presented separately as the
calculation proved to be anti-dilutive.

Basic loss per share is calculated
using the weighted average number of common shares outstanding during the year.

Foreign currency translation and
transactions

The Companys subsidiaries are
integrated foreign operations and are translated into Canadian dollars using the
temporal method. Monetary items are translated at the exchange rate in effect at
the balance sheet date and non-monetary items are translated at historical
exchange rates. Income and expense items are translated at rates approximating
those in effect at the time of the transaction. Translation gains and losses are
reflected in loss for the period.

Comparative figures

Certain comparative figures have been
reclassified to conform with the current years presentation.

|3. | ACQUISITION OF SUBSIDIARIES
|-- | ---------------------------

On March 10, 2006, the Company acquired
all of the issued and outstanding shares of Standard Uranium Inc. (Standard),
a publicly trading company listed on the TSX Venture Exchange under the symbol
URN on the basis of 0.64 shares of the Company for every 1.00 common share of
Standard. Prior to the acquisition, the Company advanced $6,963,027
(US$6,000,000) to Standard pursuant to a convertible debenture agreement. The
acquisition is accounted for using the purchase method.

Total cost of acquisition was
$19,879,211 consisting of the issuance of 10,166,672 common shares with a fair
value of $12,033,712, stock options allowing the holders to acquire 457,600
common shares of which the fair value of the vested portion is $882,472 and the
debenture with the principal balance of $6,963,027. Standards operating results
were recognized in the consolidated statement of operations beginning on March
10, 2006, the effective date of the acquisition.

The allocation of the purchase cost of
Standards assets and liabilities are as follows:

| | Cash                                     | $ | 1,565,120  |  
| | ---------------------------------------- | - | ---------- | -
| | Receivables                              |   | 143,242    |  
| | Prepaid expenses and deposits            |   | 242,264    |  
| | Accounts payable and accrued liabilities |   | (64,533    | )
| | Property, plant and equipment            |   | 9,191,109  |  
| | Mineral properties                       |   | 16,050,409 |  
| | Future tax liability                     |   | (6,320,000 | )
| | Asset retirement obligation              |   | (928,400   | )
| |                                          | $ | 19,879,211 |  

8

---

|ENERGY METALS CORPORATION                 
|------------------------------------------
|(An Exploration Stage Company)            
|NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|(Expressed in Canadian Dollars)           
|JUNE 30, 2006                             
|                                          

|4. | SHORT-TERM INVESTMENTS
|-- | ----------------------

| |                       |  | 2006       |  |  | 2005    | 
| | --------------------- |  | ---------- |  |  | ------- | 
| |                       |  | $          |  |  | $       | 
| |                       |  |            |  |  |         | 
| | Bankers acceptances   |  | 46,503,088 |  |  | -       | 
| | Marketable securities |  | 7,323,662  |  |  | 651,250 | 
| |                       |  | 53,826,750 |  |  | 651,250 | 

The bankers acceptances have effective
interest rates of 4.00% to 4.27% and mature on dates ranging from July 13, 2006
to April 5, 2007. The quoted fair market value of the marketable securities as
at June 30, 2006 was $7,378,162 (2005 - $663,250).

|5. | LONG-TERM INVESTMENTS
|-- | ---------------------

| |                          |  | 2006      |  |  | 2005 | 
| | ------------------------ |  | --------- |  |  | ---- | 
| |                          |  | $         |  |  | $    | 
| |                          |  |           |  |  |      | 
| | Quincy Energy Corp.      |  | 667,650   |  |  | -    | 
| | High Plains Uranium Inc. |  | 2,445,936 |  |  | -    | 
| |                          |  | 3,113,586 |  |  | -    | 

Long term investments consist of common
shares of Quincy Energy Corp. (Quincy), a Company with a director in common,
and High Plains Uranium Inc. (High Plains), both listed on the TSX Venture
exchange. Subsequent to the year ended June 30, 2006, the Company acquired all
remaining issued and outstanding common shares of Quincy and entered into a
letter of intent to acquire all the issued and outstanding common shares of High
Plains (Note 18). The quoted fair market value of the long-term investments as
at June 30, 2006 was $3,714,985 (2005 - $Nil).

|6. | NON-REFUNDABLE DEPOSIT
|-- | ----------------------

On November 16, 2005, the Company paid
a non-refundable deposit of US$500,000 to Quincy pursuant to an acquisition
agreement to acquire all the issued and outstanding shares of Quincy. Subsequent
to June 30, 2006, the acquisition was completed and the deposit was refunded
(Note 18).

|7. | RECLAMATION BOND
|-- | ----------------

The Company has a deposit in place with
a Canadian bank as security for a reclamation bond required on certain of its
mineral properties. The reclamation bond is required by the State of Wyoming
prior to the commencement of exploration activities and does not represent an
asset retirement obligation. Interest earned on the deposit is paid to the
Company.

9

---

|ENERGY METALS CORPORATION                 
|------------------------------------------
|(An Exploration Stage Company)            
|NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|(Expressed in Canadian Dollars)           
|JUNE 30, 2006                             
|                                          

|8. | PROPERTY, PLANT AND EQUIPMENT
|-- | -----------------------------

| |                        |  |           |  |  | 2006         |  |  |           |  |  |         |  |  | 2005         |  |  |            | 
| | ---------------------- |  | --------- |  |  | ------------ |  |  | --------- |  |  | ------- |  |  | ------------ |  |  | ---------- | 
| |                        |  |           |  |  |              |  |  |           |  |  |         |  |  |              |  |  |            | 
| |                        |  |           |  |  | Accumulated  |  |  | Net Book  |  |  |         |  |  | Accumulated  |  |  | Net        | 
| |                        |  | Cost      |  |  | Amortization |  |  | Value     |  |  | Cost    |  |  | Amortization |  |  | Book Value | 
| |                        |  | $         |  |  | $            |  |  | $         |  |  | $       |  |  | $            |  |  | $          | 
| |                        |  |           |  |  |              |  |  |           |  |  |         |  |  |              |  |  |            | 
| | Plant and equipment    |  | 9,299,008 |  |  | -            |  |  | 9,299,008 |  |  | -       |  |  | -            |  |  | -          | 
| | Computer equipment     |  | 206,979   |  |  | 65,206       |  |  | 141,773   |  |  | 26,551  |  |  | 7,966        |  |  | 18,585     | 
| | Office equipment       |  | 155,105   |  |  | 45,696       |  |  | 109,409   |  |  | 78,991  |  |  | 15,829       |  |  | 63,162     | 
| | Automobiles            |  | 289,647   |  |  | 25,399       |  |  | 264,248   |  |  | -       |  |  | -            |  |  | -          | 
| | Leasehold improvements |  | 13,333    |  |  | 3,344        |  |  | 9,989     |  |  | -       |  |  | -            |  |  | -          | 
| |                        |  | 9,964,072 |  |  | 139,645      |  |  | 9,824,427 |  |  | 105,542 |  |  | 23,795       |  |  | 81,747     | 

|9. | MINERAL PROPERTIES
|-- | ------------------

| |                                  |  | 2006       |   |  | 2005      |  
| | -------------------------------- |  | ---------- | - |  | --------- | -
| |                                  |  | $          |   |  | $         |  
| |                                  |  |            |   |  |           |  
| | Acquisition costs:               |  |            |   |  |           |  
| | Balance, beginning of year       |  | 3,206,248  |   |  | 15,684    |  
| | Additions:                       |  |            |   |  |           |  
| | Contractual                      |  | 23,529,098 |   |  | 3,089,602 |  
| | Filing fees                      |  | 328,942    |   |  | 714,869   |  
| | Lease payments                   |  | 348,993    |   |  | 52,954    |  
| | Staking                          |  | 154,626    |   |  | 178,911   |  
| | Title search                     |  | 47,312     |   |  | 11,190    |  
| |                                  |  |            |   |  |           |  
| |                                  |  | 27,615,219 |   |  | 4,063,210 |  
| | Written-off                      |  | -          |   |  | (9,810    | )
| | Costs recovered                  |  | (1,576,358 | ) |  | (847,152  | )
| |                                  |  |            |   |  |           |  
| | Balance, end of year             |  | 26,038,861 |   |  | 3,206,248 |  
| |                                  |  |            |   |  |           |  
| | Exploration costs:               |  |            |   |  |           |  
| | Balance, beginning of
      year |  | 22,664     |   |  | 7,548     |  
| | Additions:                       |  |            |   |  |           |  
| | Consulting fees                  |  | 180,448    |   |  | -         |  
| | Drilling                         |  | 17,297     |   |  | -         |  
| | Track lease                      |  | 4,660      |   |  | -         |  
| | Travel                           |  | 1,957      |   |  | -         |  
| | Drafting                         |  | 73,468     |   |  | -         |  
| | Maps                             |  | 14,595     |   |  | 1,959     |  
| | Reports                          |  | 35,053     |   |  | 15,432    |  
| | Storage                          |  | -          |   |  | 5,273     |  
| |                                  |  |            |   |  |           |  
| |                                  |  | 350,142    |   |  | 30,212    |  
| | Written off                      |  | -          |   |  | (7,548    | )
| |                                  |  |            |   |  |           |  
| | Balance end of year              |  | 350,142    |   |  | 22,664    |  
| |                                  |  |            |   |  |           |  
| | Total costs                      |  | 26,389,003 |   |  | 3,228,912 |  

10

---

|ENERGY METALS CORPORATION                 
|------------------------------------------
|(An Exploration Stage Company)            
|NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|(Expressed in Canadian Dollars)           
|JUNE 30, 2006                             
|                                          

|9. | MINERAL PROPERTIES(contd)
|-- | ---------------------------

Title to mineral properties involves
certain inherent risks due to the difficulties of determining the validity of
certain claims as well as the potential for problems arising from the frequently
ambiguous conveyancing history characteristic of many mineral properties. The
Company has investigated title to all of its mineral properties and, to the best
of its knowledge, title to all of its properties is in good standing.

| | a) | On July 19, 2004, the Company entered into an agreement
      with an individual who subsequently became a director of the Company to
      acquire a 100% interest in advanced uranium properties known as Aurora
      Project  New U Claims in Oregon and Velvet Project  UT in Utah. As
      consideration, the Company issued 1,000,000 common shares valued at
      $350,000. In addition, the Company issued 100,000 common shares valued at
      $35,000 as a finders fee.
| | -- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| |    | Under the terms of this agreement, the Company was
      granted a right of first refusal to acquire the interest of the vendor in
      other properties located in Arizona, Wyoming, Colorado, New Mexico,
      Nevada, Utah and Texas.                                                                                                                                                                                                                                              
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| | b) | On September 24, 2004, the Company entered into an
      agreement to acquire a 100% interest in the Frank M Uranium property in
      Utah. As consideration, the Company is required to pay the following
      amounts:                                                                                                                                                                                                                                                              

| | US$ | 15,000  |  | Upon signing (paid)      | 
| | --- | ------- |  | ------------------------ | 
| |     | 20,000  |  | First anniversary (paid) | 
| |     | 25,000  |  | Second anniversary       | 
| |     | 40,000  |  | Third anniversary        | 
| | US$ | 100,000 |  |                          | 

In addition, the Company is required
to issue the following common shares:

| | 10,000 |  | First anniversary (issued at a
      fair value of $12,000) | 
| | ------ |  | ----------------------------------------------------------- | 
| | 10,000 |  | Second anniversary                                          | 
| | 10,000 |  | Third anniversary                                           | 
| | 30,000 |  |                                                             | 

| | c) | On October 25, 2004, the Company entered into an
      agreement to acquire a 100% interest in certain mineral claims and leases
      located in Arizona and Wyoming. As consideration, the Company issued
      500,000 common shares valued at $750,000.                                                                               
| | -- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                                                                                                                                                                                                           
| | d) | On October 25, 2004, the Company entered into an
      agreement with an individual who subsequently became a director of the
      Company to acquire a 100% interest in certain mineral claims and leases
      located in Arizona and Wyoming. As consideration, the Company issued
      1,250,000 common shares valued at $1,875,000.
| |    |                                                                                                                                                                                                                                                                                                                                           
| | e) | On November 5, 2004, the Company entered into an
      agreement with Quincy to grant a 50% interest in certain mineral
      properties located in Arizona. The Company received US$10,000 and is
      entitled to receive the following shares in
Quincy:                                                                              

| | 125,000 |  | Upon regulatory approval
      (received at a fair value of $70,000) | 
| | ------- |  | -------------------------------------------------------------------- | 
| | 40,000  |  | December 31, 2005 (received at a fair value of
      $26,400)        | 
| | 85,000  |  | December 31, 2006                                                    | 
| | 100,000 |  | December 31, 2007                                                    | 
| | 125,000 |  | December 31, 2008                                                    | 
| | 175,000 |  | December 31, 2009                                                    | 
| | 650,000 |  |                                                                      | 

Subsequent to June 30, 2006, the
Company acquired Quincy and the above entitlements were cancelled.

11

---

|ENERGY METALS CORPORATION                 
|------------------------------------------
|(An Exploration Stage Company)            
|NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|(Expressed in Canadian Dollars)           
|JUNE 30, 2006                             
|                                          

|9. | MINERAL PROPERTIES(contd)
|-- | ---------------------------

| | f) | On February 4, 2005, the Company entered into an
      agreement to acquire a 100% interest in the Congress Property in Utah. As
      consideration, the Company paid US$15,000 and issued 10,500 common shares
      valued at $18,900. The claims are subject to a 5.1% NPI.
| | -- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                                                                                                                                                
| | g) | On May 18, 2005, the Company entered into an agreement
      with Quincy to option a 51% interest in the Companys Aurora property in
      Oregon. The Company received US$25,000 and is entitled to receive the
      following shares in Quincy:                            

| | 1,000,000 |  | Upon execution of
      agreement (received at a fair value of $660,000) | 
| | --------- |  | ------------------------------------------------------------------------ | 
| | 333,333   |  | May 18, 2007                                                             | 
| | 333,333   |  | May 18, 2008                                                             | 
| | 333,334   |  | May 18, 2009                                                             | 
| | 2,000,000 |  |                                                                          | 

| |    | Subsequent to June 30, 2006, the Company acquired Quincy and
      the above entitlements were cancelled.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| | -- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| | h) | On June 1, 2005, the Company entered into
        an agreement with a director of the Company for the use of certain exploration
        databases and was granted the right to sublicense these databases in exchange
        for a 20% fee on any consideration received. The Company subsequently
        sublicensed various records and data regarding a uranium mining project
        in S. Africa to Uranco Inc. The Company received US$67,000. An amount
        of US$13,400 was paid to a director of the Company in respect of this
        sale pursuant to this agreement.
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| | i) | On June 20, 2005, the Company entered into
        an option agreement with Glen Hawk Minerals Ltd. (GHM) in
        respect of certain staked claims known as the San Rafael Property in Utah.
        Under the terms of the agreement, GHM is entitled to a 51% interest upon
        completion of the following:                                                                                                                                                                                                                                                                  
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| |    | i)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| |    | ii)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| |    | iii)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| |    | iv)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| |    | On May 30, 2006, GHM terminated the option
        agreement.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| | j) | On June 20, 2005, the Company entered into
        an option agreement with Thelon Ventures Ltd. (Thelon) to
        grant a 51% interest in certain staked claims known as the White River
        Valley property in Nevada. As consideration, the Company is entitled to
        receive the following:                                                                                                                                                                                                                                                                             
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| |    | i)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| |    | ii)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| |    | iii)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| |    | In addition, Thelon is required to incur exploration
        expenditures of US$1,000,000 over the next 5 years. An additional 29%
        interest can be earned by Thelon in exchange for funding a bankable feasibility
        study.                                                                                                                                                                                                                                                                                                                                                

12

---

|ENERGY METALS CORPORATION                 
|------------------------------------------
|(An Exploration Stage Company)            
|NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|(Expressed in Canadian Dollars)           
|JUNE 30, 2006                             
|                                          

|9. | MINERAL PROPERTIES(contd)
|-- | ---------------------------

| | k) | On August 23, 2005, the Company exercised
        its right of first refusal granted in an agreement dated July 19, 2004
        with a director of the Company to acquire all of his interest in various
        uranium properties. As consideration, the Company has made a commitment
        to issue the following shares:                                                                                             
| | -- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                              
| |    | i)                                                                                                                                                                                                                                                                                                                                                                                                                           
| |    | ii)                                                                                                                                                                                                                                                                                                                                                                                                                          
| |    | iii)                                                                                                                                                                                                                                                                                                                                                                                                                         
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                              
| | l) | On September 16, 2005, the Company entered
        into an agreement with United Nuclear Corporation to acquire the technical
        data pertaining to national and international uranium properties for cash
        consideration of $842,800.                                                                                                                                                                           
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                              
| | m) | On October 24, 2005, the Company entered into
        an agreement to acquire the technical data pertaining to uranium properties.
        As consideration, the Company issued 219,100 common shares valued at $701,120
        and paid cash consideration of $750,720.                                                                                                                                                    
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                              
| | n) | On November 16, 2005, the Company entered
        into an agreement with Powertech Industries Inc. (Powertech)
        to sell its 100% interest in certain properties located in South Dakota.
        As consideration, the Company received 1,000,000 common shares and 1,250,000
        share purchase warrants valued at $1,370,000 in Powertech upon closing.
        The Company is entitled to 2% to 4% royalties.
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                              
| | o) | On March 10, 2006, the Company acquired all
        of the issued and outstanding shares of Standard (Note 3). Included in
        the assets of Standard are the Palangana mineral properties located in
        Duval County, Texas.                                                                                                                                                                                       
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                              
| | p) | During the year ended June 30, 2005, the Company
        terminated option agreements relating to non-uranium properties and wrote
        off related acquisitions and exploration costs of $17,358.                                                                                                                                                                                                                        

|10. | ASSET RETIREMENT OBLIGATION
|--- | ---------------------------

| |                                                |  | 2006    |   |  | 2005 | 
| | ---------------------------------------------- |  | ------- | - |  | ---- | 
| |                                                |  | $       |   |  | $    | 
| | Balance , beginning of year                    |  | -       |   |  | -    | 
| | Liabilities assumed on acquisition of property |  | 928,400 |   |  | -    | 
| | Unrealized foreign exchange gain               |  | (37,399 | ) |  |      | 
| | Interest accretion                             |  | 24,265  |   |  | -    | 
| | Balance, end of year                           |  | 915,266 |   |  | -    | 

The amount represents an accrued
estimate of costs that would be incurred to restore the property plant and
equipment to the condition that existed prior to its operation. As the Company
plans to operate the plant, no reclamation work is currently planned. Once the
plant is operational, the accrual will be adjusted in accordance with estimated
reclamation costs to be incurred.

13

---

|ENERGY METALS CORPORATION                 
|------------------------------------------
|(An Exploration Stage Company)            
|NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|(Expressed in Canadian Dollars)           
|JUNE 30, 2006                             
|                                          

|11. | CAPITAL STOCK AND CONTRIBUTED SURPLUS
|--- | -------------------------------------

| |                                         |  |                 |  |  | Capital     |   |  | Contributed |  
| | --------------------------------------- |  | --------------- |  |  | ----------- | - |  | ----------- | -
| |                                         |  | Number          |  |  | Stock       |   |  | Surplus     |  
| |                                         |  | Of
      Shares |  |  | $           |   |  | $           |  
| |                                         |  |                 |  |  |             |   |  |             |  
| | Authorized:                             |  |                 |  |  |             |   |  |             |  
| | Unlimited number of common shares       |  |                 |  |  |             |   |  |             |  
| | without par value                       |  |                 |  |  |             |   |  |             |  
| |                                         |  |                 |  |  |             |   |  |             |  
| | Issued:                                 |  |                 |  |  |             |   |  |             |  
| | Balance as at June 30, 2003             |  | 5,272,745       |  |  | 10,849,388  |   |  | -           |  
| | Exercise of options                     |  | 200,000         |  |  | 40,000      |   |  | -           |  
| | Private
      placement                 |  | 1,600,000       |  |  | 400,000     |   |  | -           |  
| | For mineral property                    |  | 50,000          |  |  | 15,250      |   |  | -           |  
| | Stock-based
      compensation          |  | -               |  |  | -           |   |  | 18,015      |  
| |                                         |  |                 |  |  |             |   |  |             |  
| | Balance as at June 30, 2004             |  | 7,122,745       |  |  | 11,304,638  |   |  | 18,015      |  
| | Exercise of options                     |  | 470,000         |  |  | 115,550     |   |  | -           |  
| | Exercise of
      warrants              |  | 2,565,000       |  |  | 1,632,633   |   |  | -           |  
| | Finders fee                            |  | 129,500         |  |  | 64,500      |   |  | -           |  
| | For mineral
      properties            |  | 2,450,000       |  |  | 2,458,000   |   |  | -           |  
| | Private placements                      |  | 11,890,527      |  |  | 20,626,969  |   |  | -           |  
| | Share issue
      costs                 |  | -               |  |  | (1,352,409  | ) |  | -           |  
| | Agents compensation options            |  | -               |  |  | -           |   |  | 400,000     |  
| | Stock-based
      compensation          |  | -               |  |  | -           |   |  | 782,500     |  
| | Conversion of options on exercise       |  | -               |  |  | 24,897      |   |  | (24,897     | )
| |                                         |  |                 |  |  |             |   |  |             |  
| | Balance as at June 30,
      2005       |  | 24,627,772      |  |  | 34,874,778  |   |  | 1,175,618   |  
| | Acquisition
      of subsidiary         |  | 10,166,672      |  |  | 12,033,712  |   |  | 882,472     |  
| | Private placements                      |  | 14,700,000      |  |  | 71,350,000  |   |  | -           |  
| | Exercise of
      options               |  | 1,296,250       |  |  | 1,520,050   |   |  | -           |  
| | Exercise of share purchase warrants     |  | 2,301,931       |  |  | 3,401,777   |   |  | -           |  
| | For mineral
      properties            |  | 1,589,600       |  |  | 4,307,020   |   |  | -           |  
| | Stock-based compensation                |  | -               |  |  | -           |   |  | 2,479,411   |  
| | Share issue
      costs                 |  | -               |  |  | (2,492,176  | ) |  | -           |  
| | Agents warrants                        |  | -               |  |  | -           |   |  | 520,000     |  
| | Conversion
      of options on exercise |  | -               |  |  | 1,145,346   |   |  | (1,145,346  | )
| |                                         |  |                 |  |  |             |   |  |             |  
| | Balance as at June 30, 2006             |  | 54,682,225      |  |  | 126,140,507 |   |  | 3,912,155   |  

Commitment to issue shares

The Company is committed to issue
500,000 (2005  360,500; 2004 - Nil) common shares valued at $1,525,000 (2005 -
$543,900; 2004 - $Nil), being the value of the shares at the date the obligation
arose, to the vendor of certain mineral properties who is a director of the
Company.

14

---

|ENERGY METALS CORPORATION                 
|------------------------------------------
|(An Exploration Stage Company)            
|NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|(Expressed in Canadian Dollars)           
|JUNE 30, 2006                             
|                                          

|11. | CAPITAL STOCK AND CONTRIBUTED SURPLUS(contd)
|--- | ----------------------------------------------

Private placements

During the year ended June 30, 2006,
the Company:

| | a) | Issued 2,000,000 shares at $3.10 per share for proceeds
      of $6,200,000. A finders fee of $124,000 was paid in connection with this
      private placement.                                                                                                                                                                                                                                                                                                                                    
| | -- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| | b) | Issued 2,000,000 shares at $3.15 per share for proceeds
      of $6,300,000. A finders fee of $141,750 was paid in connection with this
      private placement.                                                                                                                                                                                                                                                                                                                                    
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| | c) | Issued 5,500,000 units at $5.50 per unit for proceeds of
      $30,250,000. Each unit consisted of one common share and one-half of one
      share purchase warrant. Each whole warrant entitles the holder to purchase
      one additional common share at an exercise price of $6.50 expiring April
      6, 2008. The Company paid $1,210,000 and granted warrants valued at
      $390,000 to acquire 220,000 common shares exercisable at $5.50 expiring
      April 6, 2008 as finders fees.
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| | d) | Issued 5,200,000 units at $5.50 per unit for proceeds of
      $28,600,000. Each unit consisted of one common share and one-half of one
      share purchase warrant. Each whole warrant entitles the holder to purchase
      one additional common share at an exercise price of $6.50 expiring April
      13, 2008. The Company paid $266,002 and granted warrants valued at
      $130,000 to acquire 47,764 common shares exercisable at $5.50 expiring
      April 13, 2008 as finders fees. 

During the year ended June 30, 2005,
the Company:

| | a) | Issued 1,600,000 units at US$0.27 per unit for proceeds
      of $558,967 (US$432,000). Each unit consisted of one common share and one
      warrant to purchase one additional common share at an exercise price of
      US$0.49 until September 28, 2005.                                                                                                                                                                                                                                                                                                                                                                                   
| | -- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| | b) | Issued 2,550,000 units at $1.00 per unit for proceeds of
      $2,550,000. Each unit consisted of one common share and one-half of one
      share purchase warrant. Each whole warrant entitles the holder to purchase
      one additional common share at an exercise price of $1.50 of which
      1,047,500 expire April 21, 2006 and 227,500 expire May 16, 2006. The
      Company paid $31,500 and issued 29,500 common shares valued at $29,500 as
      finders fees.                                                                                                                                                                
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| | c) | Issued 1,300,000 shares at $1.50 per share for proceeds
      of $1,950,000. A finance fee of $5,000 and commissions totalling $97,500
      were paid in connection with this private placement.                                                                                                                                                                                                                                                                                                                                                                                                                                               
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| | d) | Issued 2,230,000 units at $1.60 per unit for proceeds of
      $3,568,000. Each unit consisted of one common share and one-half of one
      share purchase warrant. Each whole warrant entitles the holder to purchase
      one additional common share at an exercise price of $2.00 until February
      1, 2007. A finance fee of $76,160 was paid in connection with this private
      placement.                                                                                                                                                                                                                                        
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| | e) | Issued 4,210,527 units at $2.85 per unit for proceeds of
      $12,000,002. Each unit consists of one common share and one-half of one
      share purchase warrant. Each whole warrant entitles the holder to purchase
      one additional common share at an exercise price of $4.00 per share until
      April 19, 2007. In addition, the underwriters were issued compensation
      options valued at $400,000 to purchase 210,526 units, with terms identical
      to the placement units, exercisable at $2.85 per unit until April 19,
      2007. A commission of $600,000 was paid in connection with this private
      placement.

15

---

|ENERGY METALS CORPORATION                 
|------------------------------------------
|(An Exploration Stage Company)            
|NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|(Expressed in Canadian Dollars)           
|JUNE 30, 2006                             
|                                          

|11. | CAPITAL STOCK AND CONTRIBUTED SURPLUS(contd)
|--- | ----------------------------------------------

During the year ended June 30, 2004,
the Company issued 1,600,000 units at $0.25 per unit for proceeds of $400,000.
Each unit consisted of one common share and one warrant entitling the holder to
purchase one additional common share at a price of $0.50 to December 15, 2004,
then $0.75 to December 15, 2005.

Stock options and warrants

The Company has a stock option plan
under which it is authorized to grant options to executive officers and
directors, employees and consultants enabling them to acquire up to 6,354,731
common shares of the Company. Under the plan, the exercise price of each option
shall not be less than the average closing price as calculated on the date of
grant. The options can be granted for a maximum term of 5 years and vest 25% on
grant and 25% every six months.

Stock option and share purchase warrant
transactions are summarized as follows:

| |                              |  | Warrants   |   |  | Stock Options    | 
| | ---------------------------- |  | ---------- | - |  | ---------------- | 
| |                              |  |            |   |  | Weighted average | 
| |                              |  |            |   |  | exercise price   | 
| |                              |  | Number     |   |  | $                | 
| |                              |  |            |   |  |                  | 
| | Outstanding, June 30, 2003   |  | -          |   |  | -                | 
| | Granted                      |  | 1,600,000  |   |  | 0.50             | 
| | Exercised                    |  | -          |   |  | -                | 
| | Cancelled                    |  | -          |   |  | -                | 
| |                              |  |            |   |  |                  | 
| | Outstanding, June 30, 2004   |  | 1,600,000  |   |  | 0.50             | 
| | Granted                      |  | 6,411,052  |   |  | 2.24             | 
| | Exercised                    |  | (2,565,000 | ) |  | 0.64             | 
| | Cancelled                    |  | -          |   |  | -                | 
| |                              |  |            |   |  |                  | 
| | Outstanding, June 30, 2005   |  | 5,446,052  |   |  | 2.52             | 
| | Granted                      |  | 5,617,764  |   |  | 6.45             | 
| | Exercised                    |  | (2,301,931 | ) |  | 1.48             | 
| | Cancelled                    |  | (25,000    | ) |  | 1.50             | 
| |                              |  |            |   |  |                  | 
| | Outstanding, June 30, 2006   |  | 8,736,885  |   |  | 5.33             | 
| |                              |  |            |   |  |                  | 
| | Number currently exercisable |  | 8,736,885  |   |  | 5.33             | 

As at June 30, 2006, incentive stock
options and share purchase warrants were outstanding as follows:

| |         | Number of shares |  | Exercise Price |  | Expiry
      Date
| | ------- | ---------------- |  | -------------- |  | -----------------
| | Options | 50,000           |  | $     0.35     |  | July 20, 2006    
| |         | 25,000           |  | 1.28           |  | October 12, 2006 
| |         | 350,000          |  | 1.48           |  | November 26, 2006
| |         | 62,500           |  | 1.70           |  | January 21, 2007 
| |         | 100,000          |  | 2.40           |  | May 13, 2007     
| |         | 62,500           |  | 2.50           |  | March 17, 2008   

16

---

|ENERGY METALS CORPORATION                 
|------------------------------------------
|(An Exploration Stage Company)            
|NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|(Expressed in Canadian Dollars)           
|JUNE 30, 2006                             
|                                          

|11. | CAPITAL STOCK AND CONTRIBUTED SURPLUS(contd)
|--- | ----------------------------------------------

Stock options and warrants
(contd)

| |                                  | 180,000   |  | 7.00 |  | June 20, 2008    
| | -------------------------------- | --------- |  | ---- |  | -----------------
| |                                  | 192,000   |  | 1.27 |  | April 11, 2009   
| |                                  | 80,000    |  | 3.00 |  | November 1, 2009 
| |                                  | 587,500   |  | 3.07 |  | November 30, 2009
| |                                  | 490,000   |  | 3.15 |  | December 1, 2009 
| |                                  | 150,000   |  | 4.15 |  | January 30, 2010 
| |                                  | 275,000   |  | 4.00 |  | February 20, 2010
| |                                  | 201,600   |  | 2.00 |  | March 9, 2010    
| |                                  | 707,500   |  | 7.10 |  | April 21, 2010   
| |                                  | 130,000   |  | 5.53 |  | June 30, 2010    
| |                                  | 64,000    |  | 4.11 |  | February 24, 2011
| | **Warrants**                     |           |  |      |  |                  
| |                                  | 1,000,000 |  | 2.00 |  | February 1, 2007 
| |                                  | 1,855,963 |  | 4.00 |  | April 19, 2007   
| |                                  | 220,000   |  | 5.50 |  | April 6, 2008    
| |                                  | 47,764    |  | 5.50 |  | April 13, 2008   
| |                                  | 2,750,000 |  | 6.50 |  | April 6, 2008    
| |                                  | 2,600,000 |  | 6.50 |  | April 13, 2008   
| | **Agent’s Compensation Options** |           |  |      |  |                  
| |                                  | 157,895   |  | 2.85 |  | April 19, 2007   
| |                                  | 105,263   |  | 4.00 |  | April 19, 2007   

Each agents compensation option is
exercisable into one common share and one-half of one common share purchase
warrant. Each whole warrant entitles the holder to acquire one additional common
share at an exercise price of $4.00 until April 19, 2007.

Stock-based compensation

During fiscal 2006, the Company
recognized stock based compensation of $2,479,411 (2005 - $782,500; 2004 -
$18,015) in the statement of operations as a result of incentive stock options
granted and vested. The weighted average fair value of options granted was $1.82
(2005 - $0.94; 2004 - $0.08) per share.

The fair value of all compensatory
options and warrants granted is estimated on grant date using the Black-Scholes
option pricing model. The weighted average assumptions used in calculating the
fair values are as follows:

| |                         | 2006    | 2005    | 2004   
| | ----------------------- | ------- | ------- | -------
| |                         |         |         |        
| | Risk-free interest rate | 3.34%   | 3.34%   | 3.34%  
| | Expected life           | 2 years | 2 years | 2 years
| | Volatility              | 65%     | 108%    | 52%    
| | Dividend rate           | 0.00%   | 0.00%   | 0.00%  

|12. | RELATED PARTY TRANSACTIONS
|--- | --------------------------

During the year ended June 30, 2006,
the Company paid or accrued the following amounts to directors, former directors
or to companies controlled by common directors:

| | a) | Management fees in the amount of $340,000 (2005 -
      $208,500; 2004 - $83,000).
| | -- | ----------------------------------------------------------------------------------

17

---

|ENERGY METALS CORPORATION                 
|------------------------------------------
|(An Exploration Stage Company)            
|NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|(Expressed in Canadian Dollars)           
|JUNE 30, 2006                             
|                                          

|12. | RELATED PARTY TRANSACTIONS(contd)
|--- | -----------------------------------

| | b) | Consulting fees in the amount of $314,403 (2005 -
      $87,892; 2004 - $5,296).
| | -- | --------------------------------------------------------------------------------

These transactions were in the normal
course of operations and were measured at the exchange amount, which is the
amount of consideration established and agreed to by the related parties.

During the year ended June 30, 2006,
the Company exercised its right of first refusal granted in an agreement dated
July 19, 2004 with a director of the Company to acquire all of his interest in
various uranium properties in consideration for the commitment to issue
1,500,000 common shares valued at $4,575,000.

Included in short-term investments are
marketable securities with a value of $Nil (2005 - $641,250; 2004 - $Nil) held
in a company with a director in common.

|13. | FINANCIAL INSTRUMENTS
|--- | ---------------------

The Companys financial instruments
consist of cash and cash equivalents, short-term investments, receivables,
long-term investments, non-refundable deposit, reclamation bond and accounts
payable and accrued liabilities. Unless otherwise noted, it is managements
opinion that the Company is not exposed to significant interest, currency or
credit risks arising from these financial instruments. The Company is exposed to
financial risk arising from fluctuations in foreign exchange rates and the
degree of volatility of these rates. The Company does not use derivative
instruments to reduce its exposure to foreign currency risk. The fair market
values of these financial instruments approximate their carrying values, unless
otherwise noted.

The financial instruments that
potentially subject the Company to concentrations of credit risk consist
primarily of cash and cash equivalents. The Company places its cash and cash
equivalents with high quality financial institutions, thereby minimizing
exposure for deposits in excess of federally insured amounts. The Company
believes that credit risk associated with cash is remote.

|14. | SEGMENTED INFORMATION
|--- | ---------------------

The Companys one reportable operating
segment is the acquisition and exploration of mineral properties. Geographic
information is as follows:

| |                 | 2006       | 2005     
| | --------------- | ---------- | ---------
| |                 | $          | $        
| |                 |            |          
| | Capital assets: |            |          
| | Canada          | 92,416     | 77,247   
| | U.S.A.          | 36,121,014 | 3,233,412
| |                 | 36,213,430 | 3,310,659

18

---

|ENERGY METALS CORPORATION                 
|------------------------------------------
|(An Exploration Stage Company)            
|NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|(Expressed in Canadian Dollars)           
|JUNE 30, 2006                             
|                                          

|15. | INCOME TAXES
|--- | ------------

A reconciliation of income taxes at
statutory rates with the reported taxes is as follows:

| |                                              |  | 2006       |   |  | 2005       |   |  | 2004     |  
| | -------------------------------------------- |  | ---------- | - |  | ---------- | - |  | -------- | -
| |                                              |  | $          |   |  | $          |   |  | $        |  
| |                                              |  |            |   |  |            |   |  |          |  
| | Loss before income taxes                     |  | (5,653,969 | ) |  | (1,956,311 | ) |  | (211,232 | )
| |                                              |  |            |   |  |            |   |  |          |  
| | Expected income tax recovery                 |  | (1,978,889 | ) |  | 687,107    |   |  | 75,199   |  
| | Non-deductible items for income tax purposes |  | 111,660    |   |  | (50,813    | ) |  | (14,933  | )
| | Stock-based compensation                     |  | 867,794    |   |  | (273,823   | ) |  | -        |  
| | Share issue costs                            |  | (235,383   | ) |  | 96,292     |   |  | -        |  
| | Unrecognized benefits of non-capital losses  |  | 1,356,818  |   |  | (458,763   | ) |  | (60,266  | )
| | Future income tax recovery                   |  | 122,000    |   |  | -          |   |  | -        |  

The Companys future tax assets are as
follows:

| |                                                       |  | 2006       |   |  | 2005       |  
| | ----------------------------------------------------- |  | ---------- | - |  | ---------- | -
| |                                                       |  | $          |   |  | $          |  
| |                                                       |  |            |   |  |            |  
| | Future income tax assets:                             |  |            |   |  |            |  
| | Non-capital loss carryforwards                        |  | 2,272,829  |   |  | 668,196    |  
| | Share issuance costs                                  |  | 748,900    |   |  | 385,166    |  
| | Other items                                           |  | 16,904     |   |  | 8,317      |  
| | Cumulative exploration
      and development expenses |  | 81,502     |   |  | 61,479     |  
| |                                                       |  |            |   |  |            |  
| | Total future income tax assets                        |  | 3,120,135  |   |  | 1,123,158  |  
| | Less: Valuation allowance                             |  | (2,999,870 | ) |  | (1,123,158 | )
| |                                                       |  |            |   |  |            |  
| | Future income tax assets net of allowance             |  | 120,265    |   |  | -          |  
| |                                                       |  |            |   |  |            |  
| | Future income tax liabilities:                        |  |            |   |  |            |  
| | Property, plant and
      equipment                   |  | 1,270,625  |   |  | -          |  
| | Cumulative exploration and development
      expenses |  | 4,868,640  |   |  | -          |  
| |                                                       |  |            |   |  |            |  
| | Total future income tax liabilities                   |  | 6,139,265  |   |  | -          |  
| | Net future income tax liabilities                     |  | 6,019,000  |   |  | -          |  

The Company has available for deduction
against future taxable income non-capital losses in Canada of approximately
$4,266,000 and in the USA of approximately US$2,400,000. These losses, if not
utilized, will expire through to 2026. Subject to certain restrictions, the
Company also has resource expenditures available to reduce taxable income in
future years. Future tax benefits which may arise as a result of these
non-capital losses and resource deductions, and other tax assets have not been
recognized in these financial statements and have been offset by a valuation
allowance.

19

---

|ENERGY METALS CORPORATION                 
|------------------------------------------
|(An Exploration Stage Company)            
|NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|(Expressed in Canadian Dollars)           
|JUNE 30, 2006                             
|                                          

|16. | SUPPLEMENTAL DISCLOSURE WITH RESPECT TO CASH
      FLOWS
|--- | --------------------------------------------------------

| |                                            | 2006       | 2005       | 2004   
| | ------------------------------------------ | ---------- | ---------- | -------
| |                                            | $          | $          | $      
| | Cash paid during the year for interest     | -          | -          | -      
| | Cash paid during the year for income taxes | -          | -          | -      
| | Cash and equivalents:                      |            |            |        
| | Cash balances                              | 3,619,195  | 8,702,581  | 373,966
| | Bankers acceptances                        | 22,328,099 | 10,999,166 | -      
| |                                            | 25,947,294 | 19,701,747 | 373,966

Significant non-cash transactions for
the year ended June 30, 2006 were as follows:

| | a) | Issuance of 10,166,672 common shares valued at $12,033,712
        and granting of stock options at a fair value of $882,472 to acquire Standard
        Uranium Inc.                   
| | -- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | b) | Issuance of 1,360,500 common shares valued at $3,593,900
        pursuant to commitments to issue shares for the acquisition of mineral
        properties.                             
| | c) | Issuance of 229,100 common shares valued at $713,120
        and the commitment to issue 1,500,000 common shares valued at $4,575,000
        for the acquisition of mineral properties.
| | d) | Receipt of short-term investments valued at $1,507,900
        as the recovery of mineral properties.                                                                                   
| | e) | Issuance of 267,764 brokers and agents warrants
        valued at $520,000 as finders fee on private placements.                                                                     

Significant non-cash transactions for
the year ended June 30, 2005 were as follows:

| | a) | Issuance of 2,450,000 common shares valued at $2,458,000
        and the commitment to issue 360,500 common shares valued at $543,900 for
        the acquisition of mineral properties.
| | -- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | b) | Issuance of 129,500 common shares valued at $64,500
        for finders fees of mineral properties and private placements.                                                             
| | c) | Receipt of 1,125,000 common shares of Quincy valued
        at $730,000 as recovery of mineral properties.                                                                              
| | d) | Issuance of 210,526 agents compensation options
        valued at $400,000 as finders fee on a private placement.                                                                     

Significant non-cash transactions for
the year ended June 30, 2004 were as follows:

| | d) | Issuance of 50,000 common shares valued at $15,250 for
        the acquisition of mineral properties.                                
| | -- | -------------------------------------------------------------------------------------------------------------------------------------
| | e) | Receipt of 200,000 common shares of North American Gems
        Inc. valued at $30,000 as partial recovery on mineral property costs.

20

---

|ENERGY METALS CORPORATION                 
|------------------------------------------
|(An Exploration Stage Company)            
|NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|(Expressed in Canadian Dollars)           
|JUNE 30, 2006                             
|                                          

|17. | COMMITMENTS
|--- | -----------

The Company has entered into operating
lease agreements for premises with the following annual lease commitments:

| | 2007 | $ | 171,900 | 
| | ---- | - | ------- | 
| | 2008 |   | 158,160 | 
| | 2009 |   | 60,134  | 
| |      | $ | 390,194 | 

|18. | SUBSEQUENT EVENTS
|--- | -----------------

Subsequent to June 30, 2006, the
Company:

| | a) | Issued 10,232,602 common shares in exchange for 100% of
      the issued and outstanding common shares of Quincy, a company listed on
      the TSX Venture Exchange under the symbol QUI. The acquisition will be
      accounted for using the purchase method.                                                                                                                                                                                                                                                                                                                                                                                                                        
| | -- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| | b) | Entered into a letter of intent (LOI) to acquire all
      the issued and outstanding shares of High Plains by way of share exchange
      at a deemed value of $1.15 per High Plains common share. Under the terms
      of the LOI, the Company will subscribe for $6-8 million of convertible
      secured debentures of High Plains. The debentures will be convertible at
      the price of $0.93 per High Plains common share. The LOI also contemplates
      that the Company and High Plains will enter into a joint venture option
      agreement in respect of High Plains' interests in the Gas Hills and North
      Platte Complex properties in the State of Wyoming.
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| | c) | Issued 190,000 common shares for cash of $321,391 upon
      the exercise of outstanding stock options.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| | d) | Issued 707,212 common shares for cash of $2,271,142 upon
      the exercise of outstanding share purchase warrants.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| | e) | Issued 192,000 common shares for services provided
      pursuant to Standards consulting agreements with third parties.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| | f) | Granted stock options for 70,000 common shares
      exercisable at $5.77 to $5.90 per share expiring on July 17, 2009 to July
      10, 2010.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           

21

---

|ENERGY METALS CORPORATION                 
|------------------------------------------
|(An Exploration Stage Company)            
|NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|(Expressed in Canadian Dollars)           
|JUNE 30, 2006                             
|                                          

|19. | DIFFERENCES BETWEEN CANADIAN
      AND UNITED STATES GENERALLY ACCEPTED
      **ACCOUNTING PRINCIPLES**
|--- | -------------------------------------------------------------------------------------------------------

| | a) | The consolidated financial statements have been prepared
      in accordance with Canadian GAAP. Canadian GAAP differs in certain
      material respects from US GAAP. The material differences between Canadian
      and US GAAP and their effect on the Companys consolidated financial
      statements are summarized in the tables below.
| | -- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Consolidated balance sheets                         |  |             |   |  |            |  
| | --------------------------------------------------- |  | ----------- | - |  | ---------- | -
| |                                                     |  | 2006        |   |  | 2005       |  
| |                                                     |  | $           |   |  | $          |  
| | TOTAL ASSETS                                        |  |             |   |  |            |  
| | Canadian GAAP                                       |  | 120,624,590 |   |  | 23,801,036 |  
| | Mineral properties (i)                              |  | (11,092,807 | ) |  | (3,228,912 | )
| | Available-for-sale marketable securities
      (ii) |  | 496,184     |   |  | 12,000     |  
| |                                                     |  |             |   |  |            |  
| | US GAAP                                             |  | 110,027,967 |   |  | 20,584,124 |  
| |                                                     |  |             |   |  |            |  
| | TOTAL LIABILITIES                                   |  |             |   |  |            |  
| | Canadian and US GAAP                                |  | 7,462,130   |   |  | 89,973     |  
| |                                                     |  |             |   |  |            |  
| | SHAREHOLDERS EQUITY                                |  |             |   |  |            |  
| | Canadian GAAP                                       |  | 113,162,460 |   |  | 23,711,063 |  
| | Mineral properties (i)                              |  | (11,092,807 | ) |  | (3,228,912 | )
| | Accumulated other comprehensive income
      (ii)   |  | 496,184     |   |  | 12,000     |  
| | US
      GAAP                                       |  | 110,027,967 |   |  | 20,584,124 |  

| | Consolidated statements of operations                     |  |             |   |  |            |   |  |           |  
| | --------------------------------------------------------- |  | ----------- | - |  | ---------- | - |  | --------- | -
| |                                                           |  | 2006        |   |  | 2005       |   |  | 2004      |  
| |                                                           |  | $           |   |  | $          |   |  | $         |  
| | Net loss under Canadian GAAP                              |  | (5,531,969  | ) |  | (1,956,311 | ) |  | (211,232  | )
| | Write off of mineral property costs (i)                   |  | -           |   |  | 17,358     |   |  | 1,708     |  
| | Mineral property acquisition and
      exploration        |  |             |   |  |            |   |  |           |  
| | costs (2004  recovery) (i)                               |  | (7,863,895  | ) |  | (3,223,038 | ) |  | 18,435    |  
| | Allowance for decline on marketable
      securities (ii) |  | 212,138     |   |  | 88,750     |   |  | 20,000    |  
| |                                                           |  |             |   |  |            |   |  |           |  
| |                                                           |  |             |   |  |            |   |  |           |  
| | Net loss
      under US GAAP                              |  | (13,183,726 | ) |  | (5,073,241 | ) |  | (171,089  | )
| | Other comprehensive income                                |  |             |   |  |            |   |  |           |  
| | Unrealized holding gain (loss) on available-for           |  |             |   |  |            |   |  |           |  
| | sale marketable securities (ii)                           |  | 272,046     |   |  | (76,750    | ) |  | (20,000   | )
| |                                                           |  |             |   |  |            |   |  |           |  
| | Comprehensive loss for the year                           |  | (12,911,680 | ) |  | (5,149,991 | ) |  | (191,089  | )
| |                                                           |  |             |   |  |            |   |  |           |  
| | Loss per share under US GAAP                              |  | (0.37       | ) |  | (0.34      | ) |  | (0.03     | )
| |                                                           |  |             |   |  |            |   |  |           |  
| | Weighted average number of common shares                  |  |             |   |  |            |   |  |           |  
| | outstanding
      under US GAAP                           |  | 35,328,561  |   |  | 15,100,764 |   |  | 6,325,929 |  

22

---

|ENERGY METALS CORPORATION                 
|------------------------------------------
|(An Exploration Stage Company)            
|NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|(Expressed in Canadian Dollars)           
|JUNE 30, 2006                             
|                                          

|19. | DIFFERENCES BETWEEN CANADIAN AND
      UNITED STATES GENERALLY ACCEPTED
      **ACCOUNTING PRINCIPLES**(Contd )
|--- | -----------------------------------------------------------------------------------------------------------------

| | Consolidated statements of cash flows        |  |             |   |  |            |   |  |          |  
| | -------------------------------------------- |  | ----------- | - |  | ---------- | - |  | -------- | -
| |                                              |  | 2006        |   |  | 2005       |   |  | 2004     |  
| |                                              |  | $           |   |  | $          |   |  | $        |  
| | OPERATING ACTIVITIES                         |  |             |   |  |            |   |  |          |  
| | Cash used under Canadian GAAP                |  | (3,032,374  | ) |  | (1,102,782 | ) |  | (182,319 | )
| | Mineral property
      expenditures (i)      |  | (3,397,920  | ) |  | (1,033,290 | ) |  | (26,315  | )
| | Recovery of mineral property
      costs (i) |  | 68,458      |   |  | 117,152    |   |  | 30,000   |  
| |                                              |  |             |   |  |            |   |  |          |  
| | Cash used under US GAAP                      |  | (6,361,836  | ) |  | (2,018,920 | ) |  | (178,634 | )
| |                                              |  |             |   |  |            |   |  |          |  
| | INVESTING ACTIVITIES                         |  |             |   |  |            |   |  |          |  
| | Cash used under Canadian GAAP                |  | (65,021,730 | ) |  | (1,021,680 | ) |  | 3,685    |  
| | Mineral property expenditures (i)            |  | 3,397,920   |   |  | 1,033,290  |   |  | 26,315   |  
| | Recovery of mineral
      property costs (i) |  | (68,458     | ) |  | (117,152   | ) |  | (30,000  | )
| |                                              |  |             |   |  |            |   |  |          |  
| | Cash used under US GAAP                      |  | (61,692,268 | ) |  | (105,542   | ) |  | -        |  

| | i) | Mineral property acquisition and exploration
  costs
| | -- | ----------------------------------------------------

Under Canadian GAAP, the Company
accounts for mineral properties as described in Note 2.

In March 2004, the Emerging Issues Task
Forces (EITF) reached a consensus that mineral interests conveyed by leases
should be considered tangible assets. On April 30, 2004, the FASB 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 for based on
their substance. The Company considered the effects of this statement on its
mineral properties and concluded that the acquisition costs relating to its
Palangana mineral properties acquired in the business combination with Standard
should be considered as tangible assets.

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. The Company applied this consensus and others within this EITF report
using the technical reports on the measured and indicated reserves on its
Palangana property. The Company concluded that the acquisition costs of
$15,296,196 relating to the Palangana property were not impaired.

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 property exploration expenditures are expensed as incurred. As the
Company does not have reports on proven and probable reserves on any of its
mineral properties, all exploration expenditures incurred on the Palangana
property, other than its acquisition costs, and its other mineral properties
have been expensed as incurred.

23

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|ENERGY METALS CORPORATION                 
|------------------------------------------
|(An Exploration Stage Company)            
|NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|(Expressed in Canadian Dollars)           
|JUNE 30, 2006                             
|                                          

|19. | DIFFERENCES BETWEEN CANADIAN AND
      UNITED STATES GENERALLY ACCEPTED
      **ACCOUNTING PRINCIPLES**(Contd )
|--- | -----------------------------------------------------------------------------------------------------------------

| | ii)  | Marketable securities                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| | ---- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| |      | US GAAP requires marketable securities which are
      classified as available-for-sale to be carried at fair value, as
      determined by quoted published market prices, with unrealized holding
      gains and losses to be included in a separate component of stockholders
      equity. In addition, net realized gains and losses on security
      transactions would be determined on the specific identification cost basis
      and included in the determination of earnings for the year. The Company
      has determined that all its investments in marketable securities and
      bankers acceptances are classified as available-for-sale securities. The
      Company has included the unrealized holding gain (losses) of $272,046
      (2005 - $(76,750); 2004  $(20,000)) on its available-for-sale marketable
      securities in accumulated other comprehensive income for US GAAP
      purposes.
| |      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| | iii) | Asset retirement obligations                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| |      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| |      | Statement of Financial Accounting Standards No. 143,
      Accounting for Asset Retirement Obligations, requires companies to
      record the fair value of the liability for closure and removal costs
      associated with the legal obligations upon retirement or removal of any
      tangible long-lived assets 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.                                                                                                                                                                                                                                                                                                                                                                                 
| |      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| |      | Under Canadian GAAP, the Company was not required to
      record asset retirement obligations as at June 30, 2004. As discussed in
      Note 2, the Company determined there were no asset retirement obligations
      as at June 30, 2005 and 2004.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             

| | (b) | New authoritative pronouncements                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| |     | In May 2005, the Financial Accounting Standards Board
      (FASB) issued SFAS No. 154, Accounting changes and error corrections
      -A replacement of APB Opinion No. 20 and SFAS No. 3 (SFAS 154).
      SFAS 154 requires retrospective application to prior periods' financial
      statements for changes in accounting principle. SFAS 154 also requires
      that a change in depreciation, amortization, or depletion method for
      long-lived, non- financial assets be accounted for as a change in
      accounting estimate affected by a change in accounting principle. SFAS 154
      is effective for accounting changes and corrections of errors made in
      fiscal years beginning after December 15, 2005. The implementation of SFAS
      154 is not expected to have a material impact on our results of
      operations, financial position or cash flows.

24

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