In accordance with National Instrument 51-102 released by the Canadian Securities Administrators the Company discloses that its external auditors have not reviewed the unaudited financial statements for the period ended September 30, 2006 in accordance with Section 7050 of the CICA Handbook.

NEW GUINEA GOLD CORPORATION
Consolidated Balance Sheets
As at September 30, 2006 and December 31, 2005

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

NEW GUINEA GOLD CORPORATION
Consolidated Statements of Operations and Deficit
For the Three and Nine Months Ended September 30

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

NEW GUINEA GOLD CORPORATION
Consolidated Statements of Cash Flows
For the Three and Nine Months Ended September 30

Supplemental Disclosure of Non-Cash Investing and Financing Activities:

During the nine-month period ended September 30, 2006, the Company issued 315,438 units consisting of one common share and one warrant valued at $63,088 and 3,300,000 agent's warrants valued at $532,950 for financing fees.

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

NEW GUINEA GOLD CORPORATION
Consolidated Schedule of Deferred Mineral Property Costs
For the Nine Month Period Ended September 30

1. NATURE OF OPERATIONS AND CONTINUANCE OF BUSINESS

The Company is incorporated in the Province of British Columbia, Canada, and is involved in the acquisition, exploration and development of mineral properties in Papua New Guinea ("PNG"). The carrying amounts of deferred mineral exploration costs represent expenditures made to date and does not necessarily reflect present or future values. The recovery of these costs is dependent upon the discovery of economically recoverable mineral reserves and the ability of the Company to obtain the necessary financing to complete exploration and development work and to resolve any environmental, regulatory, or other constraints, which may hinder the successful exploitation of its mineral properties or dispose of its interests on an advantageous basis.

The Company has taken steps to verify title to the mineral properties in which it has an interest, in accordance with industry standards for the current stage of exploration of these properties. However, these procedures do not guarantee the Company's title. Title to these rights may be subject to unregistered prior agreements or transfers and may be affected by undetected defects.

The Company does not generate cash flows from operations. In order to pay for future work performed on its mineral properties and administrative costs, the Company will need to raise additional funds through future issuances of securities. Although the Company has been successful in raising funds in the past, there can be no assurance the Company will be able to raise sufficient funds in the future, in which case the Company may be unable to meet its obligations as they come due in the normal course of business. Should the Company be unable to realize its assets and discharge its liabilities in the normal course of business, the net realizable value of its assets may be materially less than the amounts disclosed on the balance sheet.

The accompanying unaudited consolidated financial statements have been prepared by management in accordance with Canadian generally accepted accounting principles (GAAP). These interim financial statements should be read in conjunction with the Company's annual audited financial statements as at the year-end December 31, 2005, which are available at www.sedar.com. All material adjustments, which, in the opinion of management are necessary for a fair presentation of the results, have been reflected. The results for the three months and nine months ended September 30, 2006 are stated utilizing the same accounting policies and methods of application as the most recent annual financial statements, but are not necessarily indicative of the results to be expected for a full year.


2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

a) Basis of Consolidation
The consolidated financial statements include the accounts of the Company and its wholly owned subsidiary, New Guinea Gold Ltd ("NGG PNG"), and its proportionate 50% interest in the accounts of Kanon Resources Ltd. ("Kanon"). References to the Company included herein are inclusive of the Canadian parent company, NGG PNG and Kanon.

b) Financial Instruments
The Company's financial instruments consist of current assets and current liabilities whose fair values approximate their carrying values due to their short-term nature. Financial risk is the risk arising from fluctuations in foreign currency exchange rates. The Company does not use any derivative or hedging instruments to reduce its exposure to fluctuations in currency exchange rates.

c) Use of Estimates
The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of any contingent assets and liabilities as at the date of the financial statements as well as the reported amounts of expenses incurred during the period. Significant areas requiring the use of management estimates include the determination of potential impairments of asset values, and rates for amortization of equipment, as well as the assumptions used in determining the fair-value of non-cash stock-based compensation. Actual results could differ from those estimates.

d) Deferred Mineral Property Costs
Costs incurred to acquire a mineral property and costs of exploration, development and direct field support are deferred until the property to which they relate are placed into production, sold or abandoned. These deferred costs will be amortized over the estimated useful life of the property following commencement of production, or written-off if properties are sold, allowed to lapse or abandoned. Administration costs and other exploration costs that do not relate to a specific property are expensed as incurred.

Cost includes the cash consideration and the fair value of shares issued on the acquisition of mineral properties. Properties acquired under option agreements or joint ventures, whereby payments are made at the sole discretion of the Company, are recorded in the accounts when the payments are made. Proceeds from options granted by the Company are to be netted against the accumulated deferred cost of the related mineral property with any excess being included in earnings.

Management reviews the carrying amounts of mineral properties on a periodic basis and will recognize impairment in value based upon current exploration results and upon management's assessment of the probability of profitable exploitation of each property or realizable value from disposal of each property. Management's assessment of each property's estimated fair value is also based upon a review of other mineral property transactions that have occurred in the same geographic area as that of the properties under review.

e) Mine Development - (Mt. Sinivit)

The Mt Sinivit property costs, where mine development has commenced, have been separated from the other mineral properties effective from this quarter. The mine development amount includes plant and equipment on site which will be transferred to Equipment when the development is completed.

f) Translation of Foreign CurrenciesThe Company translates the results of foreign operations as follows: monetary items are translated at the rate of exchange in effect at the balance sheet date, non-monetary items at average exchange rates in effect during the period in which they are incurred and expenses are translated at average exchange rates in effect during the period, except for amortization, which is translated using historical rates. Gains and losses resulting from the fluctuations in foreign exchange rates are included in the determination of income.

g) EquipmentEquipment is carried at cost less accumulated amortization. Amortization is provided over the estimated useful life of each type of equipment using the declining balance method at annual rates varying from 20% to 30%.
g) Share Capital
Common shares issued for non-monetary consideration are recorded at their fair market value based upon the trading price of the shares on the TSX Venture Exchange on the date of the agreement to issue the shares. Costs incurred to issue shares are deducted from share capital.

h) Income Taxes
Income tax liabilities and assets are recognized for their tax consequences attributable to differences between the amounts reported on the financial statements and their respective tax bases, using enacted income tax rates. The effect of a change in income tax rates on future income tax liabilities and assets is recognized in income in the period in which the change occurs. Future income tax assets are recognized to the extent that they are considered more likely than not to be realized.

i) Marketable securities
Marketable securities are carried at the lower of cost and market value.

j) Stock-based CompensationThe Company records compensation associated with stock options granted using a fair value measurement basis and records the expense when the options vest with the recipients. The adoption of this accounting policy for stock-based compensation has been applied prospectively to all stock options granted subsequent to January 1, 2003.

k) Loss Per Share
Basic earnings per share are computed by dividing the net loss during the period by the weighted average number of common shares outstanding during the period. The computation of diluted earnings per share assumes the conversion, exercise or contingent issuance of securities only when such conversion, exercise or issuance would have a dilutive effect on earnings per share. The dilutive effect of outstanding options and warrants is reflected in earnings per share by application of the treasury stock method. Basic and fully diluted losses per share are the same in the current financial statements.

l) Asset Retirement Obligations
The fair value of a liability for an asset retirement obligation is recognized when a reasonable estimate of its fair value can be made. The asset retirement obligation is recorded as a liability with a corresponding increase to the carrying amount of the related long-lived asset. Subsequently, the asset retirement cost is allocated to expenses using a systematic and rational method and is adjusted to reflect period-to-period changes in the liability resulting from the passage of time and revisions to either timing or the amount of the original estimate of the undiscounted cash flow. As at September 30, 2006 the Company does not have any asset retirement obligations.

m) Impairment of Long-Lived Assets
Long-lived assets are assessed for impairment when events and circumstances warrant. The carrying value of a long-lived asset is impaired when the carrying amount exceeds the estimated undiscounted net cash flow from use and fair value. In that event, the amount by which the carrying value of an impaired long-lived asset exceeds its fair value is charged to earnings.


3. MARKETABLE SECURITIES
The Company's marketable securities at September 30, 2006 consist of 540,000 shares of Vangold Resources Ltd. (trading symbol TSX-V: VAN) with a fair market value of $243,000 and a book value of $214,200.


4. MINING DEPOSITS RECEIVABLE
These amounts are comprised of refundable deposits pledged with the Papua New Guinea Mining Department for the Company's mineral tenements.


5. EQUIPMENT

6. SHARE CAPITAL AND RELATED INFORMATION

a) Authorized: Unlimited

b) Issued and outstanding:

*Net of issue costs of $1,159,895, of which $563,857 was paid in cash, $63,088 was paid by the issuance of 315,440 Units at $0.20 per Unit and the issuance of 3,300,000 Agent's Warrants with a fair value of $532,950. Each Unit consisted of one common share and one share purchase warrant, exercisable into an additional common share for a period of two years at an exercise price of $0.30. The Agent's Warrants have the same terms as the warrants included in the Units above.

c) Stock options

Stock option activity for the nine months ended September 30, 2006 and the year ended December 31, 2005:

The fair value of stock options and warrants granted during 2006 and 2005 are estimated on the date of their grant using the Black-Scholes option pricing model using the following assumptions:

Option pricing models require the use of estimates and assumptions including the expected volatility. Changes in the underlying assumptions can materially affect the fair value estimates and, therefore, existing models do not necessarily provide a reliable measure of the fair value of the grant of the Company's stock options.

Amounts expensed as stock-based compensation are credited to contributed surplus. On exercise, the amounts originally credited to contributed surplus are credited to share capital.

d) Warrants
Warrants outstanding at September 30, 2006:

7. MINERAL PROPERTIES

The Company's mineral properties are all located in Papua New Guinea.

The Company has various interests in twelve exploration projects in Papua New Guinea through its wholly-owned subsidiary New Guinea Gold Ltd (formerly Macmin PNG) and its 50% owned subsidiary Kanon Resources Ltd. The Company has a 100% interest in five of the projects, a 90% interest in two, a 60% interest in one, and 50% interest in 4 of the projects.

The Company is conducting operations on the Sinivit, Normanby, Sehulea, Simuku, and Mt. Penck Projects:


Sinivit
The Sinivit Property is held under three titles in which New Guinea Gold has a direct 90% equity interest and a further 2.5% indirect equity interest.


Normanby
The Normanby Licence covers approximately 68 square kilometres on Normanby Island, Milne Bay Province.


Sehulea
The Sehulea Project covers approximately 30 square kilometres in the eastern part of Normanby Island, in Milne Bay Province, adjacent to the Normanby Project.


Simuku
The West New Britain Porphyry Copper/Gold Project covers four exploration licenses totaling 3,093 square kilometres.


Mt. Penck
The Company elected to earn a direct 20% interest in the Mt. Penck property from Kanon Resources Ltd by funding the first CDN$300,000 worth of exploration. The Company has completed its earn in and has an effective 60% interest in the property. The Mt. Penck exploration licence covers 102.6 square kilometres in area and is 55 kilometres west of Kimbe in the West New Britain Province.

The Company has optioned out the following projects:

Crater Mountain

• Optioned by agreement dated January 6, 2004 to Celtic Minerals Ltd., a TSX Venture-listed company, which acquired a 51% interest by expending $2,000,000 on exploration prior to March 1, 2006, and can acquire a further 25% interest upon completion of a further $2,000,000 exploration program prior to March 1, 2009.

Feni

• Vangold Resources Ltd. (Vangold), a TSX Venture company has earned a 50% interest and been granted the right to earn an additional 25% interest by performing $2,500,000 in exploration by 30 June 2007, and by issuing to the Company 800,000 shares in stages prior to June 30, 2007 (600,000 shares received at December, 31, 2005). The Company must pay a finder's fee of 10% on all share consideration received (60,000 Vangold shares paid).

Mt. Nakru

• Optioned to Kanon, whereby Kanon acquired a 50% interest by spending $250,000 on exploration and issuing 5% of its then issued share capital to the Company. Funding for exploration is now contributed equally by the Company and Kanon.

NSR and production bonus in respect of certain Mineral Properties

Seven of the twelve projects, Sinivit, Normanby, Sehulea, Simuku, Mt Nakru, Feni, and Crater Mountain are each subject to a 1% Net Smelter Royalty (NSR) payable to Macmin Silver Ltd in accordance with the agreement for acquisition of New Guinea Gold Ltd (formerly Macmin (PNG) Limited) dated 12 June 2002. In addition, under that agreement, if any mine is developed on these properties and production is achieved in excess of 50,000 ounces of gold or equivalent in any year then a once-only issue of 9% of the Company's issued share capital to Macmin Silver Ltd is to be made. 


8. RELATED PARTY TRANSACTIONS

The amounts paid to related parties were in the normal course of operations and were valued at fair value as determined by management. Amounts due to or from related parties are unsecured, non-interest bearing and due on demand.


9. SUBSEQUENT EVENTS
Between 1 October 2006 and 28 October 2006 the Company, as a result of the exercise of warrants, issued 1,706,500 common shares at $0.30 for gross proceeds of $511,950.

On 29 October 2006, 6,909,500 warrants exercisable at $0.55 expired.

On 16 November 2006 the Company announced a proposed re-organisation ("spin-off"). A copy of the Press Release can be viewed at www.newguineagold.ca and an extract from it is included in the Management Discussion & Analysis for the period ended September 30, 2006.

On 18 November 2006, 100,000 warrants exercisable at $0.55 expired.

On November 23, 2006 the Company announced that it had closed a Kina 7 million (about C$3 million) working capital facility from Bank of South Pacific, the leading Papua New Guinea based commercial bank, with assets totalling Kina 2.95 billion (C$ 1.3 billion). The Bank of South Pacific (BSP) is internationally rated by Standard and Poors.  The line of credit is intended provide required working capital, if required, for the Company prior to receipt of cash flow.

Management Discussion & Analysis
For the Period Ended September 30, 2006

The following Management Discussion and Analysis of the Company's financial position is for the period ended September 30, 2006. The operations information is current to 31 October 2006. This discussion should be read in conjunction with the unaudited financial statements and related "Notes to the Consolidated Financial Statements" which have been prepared in accordance with Canadian Generally Accepted Accounting Principles (GAAP).

BUSINESS & DEVELOPMENT STRATEGY IN PAPUA NEW GUINEA

The Company is involved in Mineral Exploration and Mine Development in Papua New Guinea ("PNG"). New Guinea Gold Corporation ("NGG") has interests in 10 gold properties and 2 porphyry copper-gold-molybdenum properties. In excess of 63,000 metres of drilling has been completed on all properties and this drilling has located extensive mineralisation at 11 of the 12 projects. An additional project contains widespread and extensive alluvial gold.

Three gold properties, Sinivit, Normanby and Mt. Penck are currently regarded as key projects. Mine development is underway at Sinivit and on the latter two projects the Company is presently focusing on defining resources by early 2007.

The remaining gold properties are all well advanced in terms of exploration. The two porphyry copper-gold-molybdenum systems are large areas of mineralisation, each in excess of 6 square kilometers in area as defined by surface geochemistry, trenching and drilling. The Company is presently in discussions regarding financing the definition of resources at these properties with the objective of obtaining better value for shareholders without further share dilution.

The Sinivit, Mt. Nakru, Simuku, Normanby, Sehulea, Feni and Crater Mountain Projects, are each subject to a 1% Net Smelter Royalty (NSR) payable, and a one time issue on one project only of 9% of the Company's issued share capital to Macmin Silver Ltd. at the time that any mine is developed on these properties and production is achieved in excess of 50,000 ounces of gold or equivalent in any year.

Readers are advised to review the Company's Press Releases and website for complete details of each project.


SINIVIT MINE DEVELOPMENT (92.5% NGG)

The development of the Sinivit Gold Project experienced delays due to unseasonable weather and delayed delivery of equipment caused by shipping problems and the worldwide shortage of mining equipment. In late August, over a two-day period, 350mm (14 inches) of rain fell, followed by several days when 50mm (2 inches) was recorded each day. On the 13th September a further 320mm (12.8 inches) of rain fell with 150mm (6 inches) on the 14th September. This latter rainfall has not resulted in any substantial delays, due to substantial upgrading of all site roads over the past few weeks. Total rainfall for the past year has been more than 200% of average annual rainfall.

Completion has been held up by late delivery of equipment due to shipping delays, and a consequence of the general pressure on suppliers of mining equipment. For example, the screening plant from Ireland was off-loaded in the Solomon Islands (it is now on site), the scheduled shipping of the crushing plant to site has now been twice delayed and, in another instance, our cargo was left at the wharf in Brisbane, Australia.

All site and haul roads are now completed to all weather gravel status, and rain since September has not resulted in significant delays. Mine infrastructure is essentially complete. The mining contractor is now fully operational and the first gold production is expected in early 2007.

Total capital cost to date is approximately C$7 million. Delays and increases in costs will add approximately C$1 million to the original capital estimate of $6.2 million.


EXPLORATION

Most of the Company's projects already have significant defined mineralisation in drill hole and/or trench. For details refer to project descriptions at www.newguineagold.ca. The Company's main objective is to increase its resource base as rapidly as possible. In the third quarter, three diamond core rigs were being used for resource definition at the Imwauna (100% NGG) and Mt Penck (60% NGG) Projects. Imwauna is within the Normanby Property. NI 43-101 compliant resource estimates are targeted for completion in the first quarter of 2007 for the Imwauna project.

Independent Qualified Person, Ralph Stagg, visited the Normanby, Sehulea and Mt Penck properties in preparation for compilation of Independent Technical reports on those properties.

NGG has acquired two further drills, which have commenced operating at its Sinivit property, with the objective of increasing the present defined resources.


Excellent drill results are being received from both Imwauna and Mt Penck.


Imwauna (Normanby Property - 100% NGG)

Resource definition drilling has continued using a single diamond core drill rig. Subject to available finance it is intended to acquire a further drill rig for the project later this year or early 2007. Excellent drill assays have been received since the last update and were released in a Press Release dated 13th September 2006. In particular two further holes were drilled into the high-grade zone noted in recent press releases. Previous intersections into this zone gave best results of 6m at 68g/t gold including 3m at 106g/t gold and 6.45m at 20.9g/t gold (see Press Release dated 26th July 2006) In the latest Press release the highest gold value so far intersected in core at Imwauna, 438g/t gold, was noted with the best intersections summarized below. All results are available in the Press Release of 13th September 2006.

* - Please note that the interval is length down hole and not a true thickness. True thickness is unknown.

The Imwauna Vein system has been defined at surface over a length of 1.2 kms by excavator trenching. Refer to the website for excavator trench results. Approximately 110 drill holes have now been completed over approximately 850m of the 1.2 km system. The vein system with significant gold grades is now known to extend over a vertical interval of at least 200m. In the southern end of the system the highest grades and greatest widths are occurring at depths of greater than 50m. An additional drill is required to define the system to greater depths.

The individual veins within the Imwauna Vein System are not planar or linear over long distances. They vary in dip from as low as 50 degrees west to 65 degrees east. In addition veins may bifurcate into two or more veins, substantially vary in thickness and attitude (dip) over intervals of less than five metres thus making estimation of true thickness of any intersection uncertain. All data is being compiled into a Surpac model to more accurately assess continuity, attitude and thickness of individual veins.


Mt. Penck Project (60% NGG)

Drilling has proceeded rapidly at the Kavola East Prospect at Mt. Penck with 28 holes now completed and results (as at 14 November 2006) available for 19 holes (including one historic hole).

The drilling is defining widespread and multiple zones of lower grade disseminated type gold mineralisation with mineralisation commencing at surface and traced to a depth of approximately 130m at present.

Two drill rigs are operating, but in October one rig will be mobilised to drill at the Simuku and Mt. Nakru properties and the remaining rig will continue drilling at Mt. Penck for the remainder of 2006. A total of 18 drill holes since mid 2005 have now been reported and all drill holes intersected several zones of mineralisation at greater than 0.5g/t (see the better intervals shown below, and refer to Press Release dated 6th September 2006 for all results).

There appear to be both vertical and horizontal controls to the mineralisation and the true thickness of any intersection is not known.

Below are examples of the better intervals intersected to date:

Mt. Nakru (NGG 75%) and Simuku Properties (NGG 90%)

The Company's strategy is to have both the Simuku (90%) and Mt. Nakru (75% NGG) copper/gold/molybdenum prospects developed through to pre-feasibility within two years. However, since these are base metals properties, Management believes that the value of these properties is not reflected in the Company's share price and, in conjunction with its advisors, is investigating the possibility of financing further operations by way of raising funds into a "spin off" company.

Two diamond core holes recently tested a zone of previously announced molybdenum mineralisation at Simuku. Both holes recorded widespread, disseminated molybdenite and assays are expected in mid December.

Several drill holes are scheduled to test a zone of gold mineralisation at the Mt. Nakru property. This drilling will commence in the near future.


Fergusson Project (50% NGG)

A review of the Fergusson Project is underway with the intention of defining a comprehensive exploration program to be initiated in 2007, initially at the Igwageta prospect. Historic drill holes intersected numerous promising intersections with intersections above 0.2g/t set out in the table below.

* - Please note that the intercept is length down hole and not a true thickness. True thickness is unknown.

Twenty-one of 52 RC drill holes have open mineralisation at depth.


Allemata Project (50% NGG)

A review of the Allemata Project is almost complete with additional drill sites identified for testing in 2007.


Yup River Project (50% NGG)

A comprehensive soil and rock chip program was completed at the Biaka prospect. This program yielded 752 soil samples and 32 outcrop samples. Results, which have just become available, suggest extensive gold in soil anomalism and compilation of data is underway.


Feni Project (50% NGG, Vangold earning 75%)

A field assessment of the northern Caldera area of the Feni project by former VP Exploration Dr D. Lindley resulted in a recommendation for approximately 2,250m of drilling in 10 holes to be completed in early 2007.


Drilling Schedule for Remainder of 2006

A reverse-circulation drill and a diamond core drill rig have been purchased for the Sinivit Project, and both are scheduled to be in operation during the last quarter, also with the objective of defining additional resources.
The drilling schedule for later in 2006, anticipates possibly 5 or 6 holes to test the recently discovered gold in trench (35m at 7.2g/t gold) at the Mt. Nakru porphyry copper/gold Project.
NGG also anticipates drilling several holes at the Weioko Prospect (Sehulea Property NGG 100%) towards the end of the year to ensure compliance with work commitments, using the drill rig presently at Imwauna.

CORPORATE

NGG has agreed to an extension to June 30, 2007 for Vangold Resources to spend a further C$1.26M and issue 200,000 common shares to earn a further 25% in the Feni Islands Project (EL 1021). Vangold presently owns 50% of the project. The Feni Islands lie within the Lihir Corridor, which hosts the world-class porphyry copper-gold deposit at Bougainville and the large gold deposit at Lihir Island (approx. 50 million ounces gold).

NGG has accepted an offer of Kina 7 million (about C$3 million) working capital facility from Bank of South Pacific, the leading Papua New Guinea based bank, with assets totalling Kina 2.95 billion (C$ 1.3 billion). The Bank of South Pacific is internationally rated by Standard and Poors. The line of credit is regarded as "insurance" but could provide required working capital for the Company prior to receipt of cash flow. Final documentation is in progress.

NGG recently requested warrant holders, in view of the premium between current stock market share price and exercise price of C$0.30, to exercise some or all of their warrants now.

Warrant holders including Company Officers, exercised a total of approximately C$2.25 million of warrants.

MARKET OUTREACH

RESULTS OF OPERATIONS

The Company's net loss for the three-month period ended September 30, 2006 was $702,538 or $0.01 per common share compared to $210,494 in the same period ended 2005 or $0.01 per common share. The Company received $57,764 in interest payments on cash balances and deposits. Interest revenues fluctuate according to the amounts of funds held in deposit and the interest rates attained during the period.

The increase in net loss for the period ended September 30, 2006 compared to the same period in 2005 was $492,044 and due to increases in amortization and repairs and maintenance costs for equipment purchases during the previous two fiscal years, higher losses on foreign exchange, and increases in stock-based compensation. Also, the Company had higher salaries and wages, a cost necessary to retain and hire quality staff. The loss in the period ended 2005 was lessened by $157,992 in other income, which derived from operating third party projects.

During the three-month period ended September 30, 2006 the Company completed $2,834,768 in exploration and development expenditures on its mineral property interests, primarily the Mt. Sinivit gold project.

Summary of Quarterly Results December 31, 2004 to September 30, 2006

The Company is in the exploration and development stage and has no mining revenue, and therefore variances in its quarterly losses are not affected by sales or production-related factors. Increases in costs are generally attributed to growth in operations related to the success in financing activities, which in turn allows the Company to increase expenditures on its properties.

FINANCIAL CONDITION

At September 30, 2006, the Company had working capital of $2,946,865 (2005 - $1,447,983). The Company has no long-term indebtedness or long-term obligations. The change in working capital is the result of increased available cash of $3,839,879 compared to the previous period (2005 - $2,127,193).

Current liabilities increased to $893,014 as at September 30, 2006 from $416,529 on June 30, 2006. This was primarily owed to Macmin Silver Ltd., a related party, for expenditures made on behalf of NGG.

The Company is committed to paying approximately $360,000 in amounts owing at October 31, 2006 for expenses billed subsequent to the period end.

CAPITAL RESOURCES AND LIQUIDITY

Capital resources of the Company consist primarily of cash and liquid short-term deposits of approximately $ 3,564,000 at October 31, 2006.

The Company has adequate cash reserves to continue operations at current levels to early 2007, and has been able to fund its operations by the issue of shares as needed. The Company has warrants and stock options outstanding, which are "in-the-money" and could generate an additional $11,702,031 if exercised. There is no certainty that the Company will be able to continue to obtain funding by share issuances in the future.

The Company does not anticipate the payment of dividends in the foreseeable future.

Financing Operations

During the nine month period ended September 30, 2006:

• The Company closed a brokered Private Placement with Bolder Investment Partners Ltd acting as Agent. The total subscriptions represent 32,850,000 units (the "Units") priced at $0.20 per unit, raising gross proceeds of $6,570,000. The units consisted of one share and one non-transferable share purchase warrant. Each warrant is exercisable into an additional share for a period of two years from closing at an exercise price of $0.30. The Agent received a cash commission of $429,662 plus 315,438 Units at a deemed price of $0.20 per Unit in lieu of cash and 3,285,000 Agent's Warrants. In addition, the Agents received a Corporate Finance Fee of 300,000 Units of the Company plus an administration fee of $7,500. The Agent's Warrants have the same terms as the clients' warrants.

• The Company also closed a non-brokered Private Placement of 2,150,000 Units at $0.20 per Unit, raising gross proceeds of $430,000. Finder's fees of $2,500 and 15,000 Agent's Warrants were paid in respect of the non-brokered placement.

• The Company granted 550,000 stock options to employees and consultants exercisable at a price of $0.23 for a five-year period.

• On July 25, 2006 the Company announced that it had granted 1,000,000 incentive stock options to officers, employees, contractors and consultants at an exercise price of $0.30 for a period of five years.

• The Company issued 270,000 common shares for proceeds of $62,100 on the exercise of stock options.

CASH FLOWS

The Company has not generated cash flow from mining operations. The Company has funded its operations by issuing its shares either through financings or the exercise of existing share purchase warrants and stock options.

Shares issued from December 31, 2005 to October 31, 2006 and to the date of this report are as follows:

Related Party Transactions

Amounts paid to related parties were in the normal course of operations and were valued at fair market value as determined by management.


Contractual Obligations

The Company has no long-term debt and does not anticipate that it will require debt financing for current planned expenditures.


Off-Balance Sheet Arrangement

The Company has no off-balance sheet arrangements or transactions and none are contemplated.


Financial and Other Instruments

The Company's financial instruments consist of cash, amounts receivable, prepaid expenses, marketable securities, accounts payable and accrued liabilities and amounts due to related parties. The balances in these accounts are in Canadian dollars, Papua New Guinea kina and Australian dollars and are recorded at their fair value.


Legal Proceedings

The Company and its subsidiaries are not parties to any legal proceedings and have no contingent liabilities.


Changes in Accounting Policy

There were no significant changes in accounting policy.


Outstanding Share Data

The Company has one class of shares and there were 108,443,434 shares issued as at October 31, 2006 and 146,228,372 on a fully diluted basis.

The Company has a stock option plan and at October 31, 2006 there were 6,415,000 options outstanding exercisable into one common share between $0.23 and $0.49.

The Company has 37,784,938 warrants outstanding as at October 31, 2006.

Between 1 October 2006 and 28 October 2006 the Company issued 1,706,500 common shares at $0.30 for gross proceeds of $511,950

On 29 October 2006, 6,909,500 warrants exercisable at $0.55 expired.


Subsequent Financial Events

On November 23, 2006 the Company announced that it had closed a Kina 7 million (about C$3 million) working capital facility from Bank of South Pacific, the leading Papua New Guinea based commercial bank, with assets totalling Kina 2.95 billion (C$ 1.3 billion). The Bank of South Pacific (BSP) is internationally rated by Standard and Poors.  The line of credit is intended provide required working capital, if required, for the Company prior to receipt of cash flow.

On 18 November 2006, 100,000 warrants exercisable at $0.55 expired.

On 16 November 2006 the Company announced a proposed re-organisation ("spin-off"). The following is an extract from the Press Release, a full copy can be obtained at www.newguineagold.ca

"Management, our investment advisers and some major shareholders are of the opinion that the present share price and market capitalisation of the Company only reflects the few key properties on which exploration/ development is currently focussed and does not factor in a value for most of the remaining properties.

Seven properties are being considered as part of the re-organisation and of these seven properties six are held in conjunction with Vangold Resources Ltd. The Boards of Directors of the partners are pleased to announce that their respective management teams are preparing a proposal for the re-organisation of mineral property assets currently held by Kanon Resources Ltd (Kanon), the Simuku porphyry copper/gold/molybdenum system held by NGG (90%) and Yeaman (10%) and the Mt Nakru porphyry copper/gold/molybdenum system held by NGG 50% and Kanon (50%). Kanon is owned 50% NGG and 50% Vangold. Each of the respective Boards of Directors have instructed their management teams to negotiate the terms of the re-organisation, review financing sources and nominate Boards of Directors.

The terms of the re-organisation are subject to the necessary financing and the respective Board's, shareholder, regulatory and statutory approvals.

The re-organisation will allow NGG to focus more closely on its three key gold properties, Sinivit (NGG 92.5%), Normanby (Imwauna 100% NGG), and Sehulea (Weioko 100% NGG). NGG will also retain its interests in J/V properties Feni and Crater Mountain. The re-organisation should allow a substantial increase in drilling activity at the key properties.

The "spin off" companies being considered for the re-organisation are:

• The first company would be Kanon Resources properties which include the Mt Penck, Allemata, Bismarck, Fergusson and Yup River properties.
• The second company would include the 90% NGG, 10% Yeaman owned Simuku porphyry copper/gold/molybdenum property and the jointly held Mt Nakru porphyry copper/gold/molybdenum property (Kanon 50%, NGG 50% giving NGG an effective 75% interest). Yeaman has indicated an interest in extending an option on his 10% carried interest in Simuku to NGG."