CONSOLIDATED FINANCIAL STATEMENTS

THREE AND SIX MONTHS ENDED
JUNE 30, 2006

(Expressed in Canadian Dollars, unless otherwise stated)

CONTINENTAL MINERALS CORPORATION
Consolidated Balance Sheets
(Expressed in Canadian Dollars)

		June 30			December 31
		2006			2005
		(unaudited)			(restated - note 2(b))
Assets
Current assets
Cash and equivalents	$	745,957		$	4,009,244
Accounts receivable		481,640			200,588
Amounts due from related party (note 5)		–			152,319
Prepaid expenses and other items		518,289			56,669
		1,745,886			4,418,820
Mineral property interests		1,903,525			1,903,525
Equipment (note 3)		497,197			132,241
Investments		1			1
	$	4,146,609		$	6,454,587
Liabilities and Shareholders' Equity
Current liabilities
Accounts payable and accrued liabilities	$	853,000		$	500,346
Amounts due to related party (note 5)		1,704,479			–
		2,557,479			500,346
Non-controlling interest (note 2)		–			944,880
Shareholders' equity
Share capital (note 4)		24,548,183			19,465,518
Contributed surplus (notes 4)		1,189,767			545,035
Deficit		(24,148,820	)		(15,001,192	)
		1,589,130			5,009,361
Continuing operations (note 1)
Subsequent event (note 4(c) and 7)
Proposed merger transaction (note 6)
	$	4,146,609		$	6,454,587

See accompanying notes to the consolidated financial statements

Approved by the Board of Directors

/s/ Gerald Panneton	/s/ Jeffrey Mason
Gerald Panneton	Jeffrey Mason
Director	Director

CONTINENTAL MINERALS CORPORATION
Consolidated Statements of Operations
(Unaudited - Expressed in Canadian Dollars)

		Three months ended June 30						Six months ended June 30
		2006			2005			2006			2005
Expenses (income)
Conference and travel	$	197,044		$	31,552		$	346,488		$	35,428
Exploration (schedule)		5,246,327			1,525,594			7,442,880			2,033,017
Foreign exchange		33,019			(13,546	)		26,822			(16,422	)
Interest		(7,634	)		(39,966	)		(24,731	)		(78,970	)
Legal, accounting and audit		227,975			88,691			383,270			146,281
Office and administration		476,002			197,051			884,616			328,275
Stock-based compensation - administration (note 4)		371,896			86,965			600,422			199,186
Stock-based compensation - exploration (note 4)		162,199			61,866			194,814			179,324
Project investigation		–			20,634			–			20,634
Shareholder communications		107,029			48,560			206,229			76,354
Trust and filing		17,318			20,809			31,698			30,012
Loss before non-controlling interest		6,831,175			2,028,210			10,092,508			2,953,119
Non-controlling interest		–			–			944,880			–
Loss for the period	$	6,831,175		$	2,028,210		$	9,147,628		$	2,953,119
Basic and diluted loss per common share	$	0.13		$	0.05		$	0.19		$	0.08
Weighted average number of common shares outstanding		51,080,722			37,796,256			49,223,744			37,703,156

See accompanying notes to the consolidated financial statements

Consolidated Statements of Deficit
(Unaudited - Expressed in Canadian Dollars)

		Six months ended June 30
		2006		2005
Deficit, beginning of period	$	15,001,192	$	6,420,405
Loss for the period		9,147,628		2,953,119
Deficit, end of period	$	24,148,820	$	9,373,524

See accompanying notes to the consolidated financial statements

CONTINENTAL MINERALS CORPORATION
Consolidated Statements of Cash Flows
(Unaudited - Expressed in Canadian Dollars)

		Three months ended June 30						Six months ended June 30
Cash provided by (used for)		2006			2005			2006			2005
Operating activities
Loss for the period	$	(6,831,175	)	$	(2,028,210	)	$	(9,147,628	)	$	(2,953,119	)
Items not involving cash
Non-controlling interest		–			–			(944,880	)		–
Stock-based compensation		534,095			148,831			795,236			378,510
Amortization		27,484			1,403			48,061			1,403
Changes in non-cash operating working capital
Amounts receivable		(91,276	)		(142,866	)		(281,052	)		(163,421	)
Prepaid expenses		(462,121	)		39,222			(461,620	)		72,079
Accounts payable and accrued liabilities		262,960			1,016,116			352,654			890,736
Cash used for operating activities		(6,560,033	)		(965,504	)		(9,639,229	)		(1,773,812	)
Investing activities
Acquisition of equipment		(195,901	)		(14,030	)		(413,017	)		(14,030	)
Cash used for investing activities		(195,901	)		(14,030	)		(413,017	)		(14,030	)
Financing activities
Issuance of common shares, net of issue costs		4,769,861			419,091			4,932,161			431,571
Due to (from) related parties, net		1,597,750			(152,520	)		1,856,798			(194,588	)
Cash provided by financing activities		6,367,611			266,571			6,788,959			236,983
Decrease in cash and equivalents		(388,323	)		(712,963	)		(3,263,287	)		(1,550,859	)
Cash and equivalents, beginning of period		1,134,280			6,558,412			4,009,244			7,396,308
Cash and equivalents, end of period	$	745,957		$	5,845,449		$	745,957		$	5,845,449
Supplementary information
Taxes paid	$	–		$	–		$	–		$	–
Interest paid	$	–		$	–		$	–		$	–
Non-cash financing and investing activities
Fair value of stock options transferred to share capital
on options exercised from contributed surplus	$	104,281		$	299,910		$	150,504		$	299,910

See accompanying notes to the consolidated financial statements

CONTINENTAL MINERALS CORPORATION
Consolidated Schedules of Exploration Expenses
(Unaudited - Expressed in Canadian Dollars)

		Three months ended June 30				Six months ended June 30
Xietongmen Property, China		2006		2005		2006		2005
Exploration Costs
Amortization	$	27,484	$	1,403	$	48,061	$	1,403
Assays and analysis		558,366		86,691		900,382		101,975
Drilling		1,851,605		894,826		2,570,649		1,007,770
Engineering		953,944		–		1,043,687		6,920
Environmental		171,533		–		171,533		–
Equipment rentals and leases		161,658		26,939		248,430		54,129
Freight		16,155		–		16,155		–
Geological		603,337		268,324		954,859		410,859
Graphics		32,708		7,712		50,888		21,563
Property Fees/Assessments		22,001		–		22,001		–
Reclamation fees		–		24,398		–		28,106
Site activities		487,646		116,939		759,782		175,490
Socioeconomic		146,375		35,957		314,353		93,272
Transportation		213,515		62,405		342,100		131,530
Incurred during the period		5,246,327		1,525,594		7,442,880		2,033,017
Non-cash stock based compensation		162,199		61,866		194,814		179,324
		5,408,526		1,587,460		7,637,694		2,212,341
Cumulative balance, beginning of period		11,945,744		3,997,613		9,716,576		3,372,732
Cumulative balance, end of period	$	17,354,270	$	5,585,073	$	17,354,270	$	5,585,073

CONTINENTAL MINERALS CORPORATION

Notes to Consolidated Financial Statements

For the six months ended June 30, 2006

(Unaudited - Expressed in Canadian Dollars)

1.	NATURE OF OPERATIONS
	These consolidated financial statements are prepared in accordance with Canadian generally accepted accounting principles and are presented in Canadian dollars. They do not include all the disclosures as required for annual financial statements under generally accepted accounting principles. However, these interim consolidated financial statements follow the same accounting policies and methods of application as the Company’s most recent annual financial statements. These interim consolidated financial statements should be read in conjunction with the Company’s amended and restated annual consolidated financial statements for the year ended December 31, 2005 as filed on SEDAR on August 24, 2006.
	Operating results for the three month and six month periods ended June 30, 2006 are not necessarily indicative of the results that may be expected for the full year ending December 31, 2006 or for any other period.
	These consolidated financial statements are prepared on the basis that the Company will continue as a going concern. Management recognizes that the Company will need to generate additional financial resources in order to discharge current liabilities and meet its planned business objectives. However, there can be no assurances that the Company will continue to obtain additional financial resources and/or achieve profitability or positive cash flows. If the Company is unable to obtain adequate additional financing, the Company will be required to curtail operations and exploration activities. Furthermore, failure to continue as a going concern would require that the Company’s assets and liabilities be restated on a liquidation basis which would differ significantly from the going concern basis.
2.	BASIS OF PRESENTATION AND PRINCIPLES OF CONSOLIDATION

(a)	These consolidated financial statements have been prepared in accordance with Canadian generally accepted accounting principles. The consolidated financial statements include the accounts of the Company and its wholly owned and controlled subsidiaries.
	All material intercompany balances and transactions have been eliminated. NCI has been reduced to zero to reflect its share of the loss incurred by Highland Mining Inc.
(b)	Restatement
	The consolidated balance sheet as at December 31, 2005 has been amended and restated to increase the value assigned to non-controlling interest and mineral property interests recorded as a result of the acquisition of 50% of Highland Mining Corporation by $904,519, which amendment reflects the non-controlling interest at their fair value, instead of at the book value of the assets acquired as previously recorded, at the date the Company became the primary beneficiary, in order to comply with the provisions of AcG-15 on variable interest entities. This restatement had no impact on working capital, shareholders’ equity or on any amounts or totals reported in the statements of operations, deficit or cash flows or the schedule of exploration expenses as at and for the year ended December 31, 2005 (refer to notes 2(r) and 4(a) of the

CONTINENTAL MINERALS CORPORATION

Notes to Consolidated Financial Statements

For the six months ended June 30, 2006

(Unaudited - Expressed in Canadian Dollars)

	amended and restated consolidated financial statements as at and for the year ended December 31, 2005 which were filed on SEDAR on August 24, 2006).
	The consolidated balance sheet as at December 31, 2005 has been amended and restated to increase the value assigned to mineral property interests recorded by $904,519. The consolidated statements of operations and cash flows for the three months ended March 31, 2006 were amended prior to this filing to increase the amount allocated to the non-controlling interest and decrease the net loss by $904,519, which reflects the non-controlling interest’s share of the joint venture losses after giving effect to the amended value assigned to the non-controlling interest at the date of combination. This amendment is reflected in the results of operations and cash flows for the three and six month periods ended June 30, 2006.
3.	EQUIPMENT

				June 30, 2006				December 31, 2005
				Accumulated		Net book				Accumulated		Net book
		Cost		amortization		value		Cost		amortization		value
Vehicles	$	385,855	$	30,130	$	355,725	$	109,702	$	2,806	$	106,896
Buildings		12,767		3,192		9,575		12,767		–		12,767
Field		79,157		10,606		68,551		5,356		–		5,356
Computers		54,604		5,143		49,461		6,269		–		6,269
Furniture		15,681		1,796		13,885		953		–		953
	$	548,064	$	50,867	$	497,197	$	135,047	$	2,806	$	132,241

4. SHAREHOLDERS’ EQUITY

(a)	Authorized share capital
	The Company’s authorized share capital consists of an unlimited number of common shares without par value and an unlimited number of non-voting, redeemable preferred shares.
(b)	Issued and outstanding common share capital

	Number of		Dollar
	common shares		Amount
Balance, December 31, 2005	47,306,185	$	19,465,518
Share purchase warrants exercised	158,000		183,461
Share purchase options exercised, net of issuance costs (note 4(c))	4,954,000		4,748,700
Fair value of stock options allocated to shares issued on exercise	–		150,504
Balance, June 30, 2006	52,418,185	$	24,548,183

CONTINENTAL MINERALS CORPORATION

Notes to Consolidated Financial Statements

For the six months ended June 30, 2006

(Unaudited - Expressed in Canadian Dollars)

(c)	Warrants
	The continuity of share purchase warrants is as follows:

Expiry date	July 12, 2006
Exercise price	$1.05
Balance, December 31, 2005	5,640,000
Issued	–
Exercised	(4,954,000	)
Expired	–
Balance, June 30, 2006	686,000

	A total of 4,311,000 warrants of the 4,954,000 warrants exercised during the period were subject to a commission fee of 10% of the exercised amounts. Hence, a total of $453,000 issuance costs was recorded during the period.
	Subsequent to June 30, 2006, a total of 686,000 warrants were exercised for gross proceeds of $720,300.
(d)	Share purchase option plan
	The continuity schedule of share purchase options of which 994,000 are exercisable is as follows:

			Weighted
Share purchase options outstanding	Number of		average
	options		exercise price
Balance, December 31, 2005	1,859,267		$ 1.44
Granted	3,195,000		1.72
Exercised	(158,000	)	1.16
Expired or cancelled	(5,000	)	1.33
Balance, June 30, 2006	4,891,267		$ 1.63

CONTINENTAL MINERALS CORPORATION

Notes to Consolidated Financial Statements

For the six months ended June 30, 2006

(Unaudited - Expressed in Canadian Dollars)

Options outstanding and exercisable at June 30, 2006 were as follows:

		Number of	Number of
		options	options
Expiry date	Option price	outstanding	exercisable
November 30, 2006	$ 1.10	316,600	316,600
November 30, 2006	$ 1.33	204,667	204,667
September 28, 2007	$ 1.70	900,000	300,000
November 30, 2007	$ 1.20	260,000	173,333
December 24, 2007	$ 1.50	15,000	–
February 29, 2008	$ 1.61	40,000	–
February 27, 2009	$ 1.61	50,000	–
April 30, 2009	$ 2.01	855,000	–
November 30, 2009	$ 1.61	250,000	–
February 28, 2011	$ 1.61	2,000,000	–
Total		4,891,267	994,000
Average option price		$ 1.63	$ 1.35

The exercise prices of all share purchase options granted were at or above the market price at the grant date. Using an option pricing model with the assumptions noted below, the estimated fair value of all options granted in the six months ended June 30, 2006, and which have been reflected in the consolidated statements of operations, is as follows:

		Three months ended				Six months ended
		June 30				June 30
		2006		2005		2006		2005
Exploration
Engineering	$	3,871	$	2,731	$	5,052	$	13,524
Environmental, socioeconomic and land		976		3,967		1,407		9,910
Geological		105,323		55,168		136,326		155,890
Exploration		110,170		61,866		142,785		179,324
Administration		352,275		86,965		580,801		199,186
Total compensation cost recognized in
operations, credited to contributed
surplus	$	462,445	$	148,831	$	723,586	$	378,510

CONTINENTAL MINERALS CORPORATION

Notes to Consolidated Financial Statements

For the six months ended June 30, 2006

(Unaudited - Expressed in Canadian Dollars)

The weighted-average assumptions used to estimate the fair value of options vesting during the respective periods were as follows:

	Three months ended June 30		Six months ended June 30
	2006	2005	2006	2005
Risk free interest rate	4.25%	3%	4.25%	3%
Expected life	2.9 years	2.1 years	2.9 years	2.1 years
Expected volatility	69%	95%	69%	95%
Expected dividends	nil	nil	nil	nil

(e) Contributed surplus

Balance, December 31, 2005	$	545,035
Changes during the period
Non-cash stock-based compensation		723,586
Share purchase options exercised, credited to share capital		(150,504	)
Balance, June 30, 2006	$	1,118,117

5. RELATED PARTY BALANCES AND TRANSACTIONS

Due from (to) related parties		June 30 2006			December 31 2005
Hunter Dickinson Inc.	$	(1,704,479	)	$	152,319

		Three months ended				Six months ended
Reimbursement for third party		June 30				June 30
expenses and services rendered		2006		2005		2006		2005
Hunter Dickinson Inc.	$	1,051,526	$	305,135	$	1,811,139	$	481,961

CONTINENTAL MINERALS CORPORATION

Notes to Consolidated Financial Statements

For the six months ended June 30, 2006

(Unaudited - Expressed in Canadian Dollars)

6. PROPOSED MERGER TRANSACTION

(a)	In April 2006, the Company completed the exploration expenditure requirement to exercise the Second Option to earn-in additional 10% (to a total of 60%) interest in Highland Mining Inc. pursuant to the Highland Mining Option Agreement. On July 1, 2006, the Company served notice to Great China Mining Inc (“GCMI”) of its intention to exercise the Second Option. GCMI is currently undertaking the review of the expenditures incurred effective from the date of the earn-in. Under the terms of the Option Agreement, once the Second Option is exercised and the first US$8 million in exploration expenditures is funded, further equity and/or loan funding of Highland will be proportional to interests held in the project, with a proportionate reduction in the shareholdings of any shareholder which fails to match the funding of the others.
(b)	In April 2006, the Company announced that it had entered into agreements with shareholders holding approximately 67% of GCMI’s common shares who have agreed to support a merger among GCMI and the Company, whereby GCMI shares will be exchanged for Continental common shares on a ratio of 8.7871 GCMI shares for each Continental common share. The Company will also issue 136,607 options at exercise prices ranging from $1.02 to $1.23 with expiry dates ranging from August 2, 2006 to December 2, 2008, to replace certain GCMI options currently outstanding. If for any reason the corporate merger cannot complete, the majority shareholders of GCMI have agreed to exchange their shares at the above ratio in a series of private transactions, subject to regulatory approval.
	The Company will also acquire three mineral property interests totalling approximately 100 square kilometers, lying within an area of interest near the Xietongmen Property, in exchange for 1,500,000 units, with each unit consisting of one Continental common share and one common share purchase warrant exercisable at $1.59 per common share for two years, from the date of the completion of the merger and US$3,250,000 cash, with US$1,250,000 payable on completion of the merger and the remaining balance in four equal annual installments of US$500,000.
	Pursuant to the terms of the merger agreement, Continental will increase its board of directors to 11 and appoint to it three GCMI nominees. Two of these nominees are Messrs. Wang Zhi and Yang (Jack) Jie, both of whom currently serve as directors of GCMI. Continental will also issue 700,000 options exercisable at $1.61 per common share expiring February 28, 2011. The Company has also agreed to retain Mr. Wang under an incentive arrangement and has agreed to pay a bonus of 2,500,000 units of Continental (one share plus one one-year share purchase warrant exercisable at $1.59 per common share) in the event that all necessary mining permits are received in a timely manner, but in any event, no later than June 30, 2010.
	As at June 30, 2006, completion of the merger is pending shareholder and regulatory approvals.

CONTINENTAL MINERALS CORPORATION

Notes to Consolidated Financial Statements

For the six months ended June 30, 2006

(Unaudited - Expressed in Canadian Dollars)

7. SUBSEQUENT EVENT

Subsequent to June 30, 2006, the Company entered into an agreement with Taseko Mines Ltd. (“Taseko”), a public company with certain directors in common with the Company, whereby the Company will issue to Taseko a $11.5 million Convertible Secured Promissory Note of Continental (the “Note”).

Taseko has the right to convert any or the entire principal then outstanding under the one year Note, plus a 5% premium into Continental common shares at $2.05 per share if the Note is exercised within the first six months or, at $2.25 per share if exercised in the second six months. Taseko also receives the right to participate in Continental’s future financings (the “Participation Right”) and in such event can redeem the Note at 105% of the $11.5 million principal amount of the Note and use the proceeds to subscribe for securities offered under such future financing. In addition, upon conversion of the Note or its redemption in the event that the Participation Right is exercised, Taseko will acquire a right of first refusal (the “Pre-Emptive Right”) for up to five years, during which time Taseko may purchase up to 50% of any equity or convertible securities, excepting certain normal course securities offerings and strategic alliances, offered by Continental in a subsequent financing until a maximum of 19.9% of Continental’s then outstanding shares on a fully diluted basis are held by Taseko. If Taseko fails to exercise the PreEmptive Right in regards to any offered securities under a future financing, the Pre-Emptive Right thereupon expires.

The Note provides for interest at the rate of 16% per annum payable monthly. Interest is payable in cash, or at Taseko’s election, in Continental common shares based upon the higher of the five day volume weighted average of the closing price of Continental’s common shares at the time the interest payment is due or at Closing. Repayment of the Note is secured by an indirect pledge of Continental’s 60% interest in the Xietongmen property, which security interest will be subordinated, if necessary, to any security interest granted by Continental in respect of senior debt. Continental retains the right to pre-pay the Note on 10 days notice, after 180 days from closing.

Completion of this financing is subject to regulatory approval. Any Continental shares issued pursuant to the conversion of the Note will be subject to a four month hold period from closing.