05/10/2005- First Quarter Earnings

[Franko10 ™]

Claude Reports First Quarter Earnings

MONTREAL, May 10 /CNW Telbec/ - The price for gold remained stable
throughout the first quarter of 2005 just above US $427 per ounce - a 5%
increase quarter over quarter. However, the appreciation of the Canadian
versus US dollar - a 7% movement - actually resulted in a 3% drop in spot gold
prices realized in Canadian dollar terms. The weakness in gold mining shares
experienced over the past 18 months continued in the first quarter of 2005,
with most gold stocks trading near their 12 month lows.
Claude Resource's winter re-supply to the Seabee mine went smoothly and
was completed on schedule near the end of March 2005. This year's re-supply
was larger than usual, as additional materials for the mill expansion and the
bulk samples at Porky Lake and Santoy had to be brought in.
Gold production was on forecast with 11,200 ounces recovered and
retained, and 10,300 ounces sold during the quarter. The Company's
diversification into oil and gas continues to serve Claude's stakeholders
well, with oil prices reaching more than US $58 per barrel in April 2005.
First quarter exploration results at Santoy were excellent. (see April
26, 2005 press release "More Gold Discovered at Claude's Santoy Lake Property"
at www.clauderesources.com ). Claude is confident that this rapidly growing
gold resource can form an important part of the feedstock for Claude's
expanded mill capacity in the future.
Placer Dome has not yet reported on its work activities for the first
quarter of 2005 at Claude's Madsen, Red Lake project in Ontario, Canada.

<<
Highlights
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Three Months Three Months
Ended March 31, Ended March 31,
2005 2004
-------------------------------------------------------------------------
Revenue ($ millions) 8.0 7.6
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Net earnings (loss) ($ millions) 0.3 (0.4)
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Earnings (loss) per share ($) - (0.01)
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Cash provided by operations ($ millions)(*) 1.3 1.0
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Cash from operations per share ($)(*) 0.02 0.02
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Average realized gold price for the period
(US $/ounce) 439 412
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Total cash operating costs (US $/ounce) 319 324
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Working capital ($ millions) 5.0 10.6
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(*) before net change in non-cash working capital.
>>

Operations

Gold

For the first quarter of 2005, the mine processed 54,200 tonnes of ore
grading 6.93 grams per tonne yielding 11,200 ounces of gold and resulting in
sales of 10,300 ounces. The increased mill throughput was a result of free
pull from the 6809 stope combined with development ore from several work
headings below the 395 level. This high tonnage from development ore was also
the cause of the lower grade processed during the period.
<<
Operating Statistics
Quarter Ended Mar 31, 2005 Mar 31, 2004

Tonnes milled 54,200 46,700
Grade processed (g/t) 6.93 7.11
Recovery (%) 92.65% 94.86%
Operating efficiency 98.87% 99.89%
Sales volume (ounces) 10,300 9,900
Production volume (ounces) 11,200 10,100
>>

The mine plan for the second and third quarters will focus on the
completion of 395, 490 and 570 level stoping blocks, as well as access of
stoping blocks on the 730 metre levels. Grade is expected to remain at or near
reserve grade and tonnage is forecast to increase by approximately 100 tonnes
per day towards the beginning of the third quarter.
Development continues on the 730 haulage and access to the 7310 stope is
expected by early in the second quarter. Focus on underground diamond drilling
will continue with exploration drifts being driven throughout the second
quarter. The Company expects to increase 2005 diamond drill footage to nearly
60,000 metres, 58% above last year's drilling.
The annual ACA Howe International Limited independent review of Seabee
reserves was finalized at the beginning of February, 2005. The mine's current
mineral reserves total 732,700 tonnes grading 6.89 grams per tonne with
1,406,200 inferred mineral resources at 8.16 grams per tonne..

<<

Grade Gold Grade Gold
Tonnes g/tonne Ounces Tonnes g/tonne Ounces

Proven 400,500 6.37 82,000 187,400 7.72 46,500
Probable 332,200 7.53 80,400 487,300 7.39 115,800
------------------------------------------------------------------------
Total Mineable
Reserves 732,700 6.89 162,400 674,700 7.48 162,300
Inferred Mineral
Resources(1) 1,406,200 8.16 369,100 1,987,000 8.45 539,800
------------------------------------------------------------------------
------------------------------------------------------------------------
(1) Mineral resources, all in the inferred category, stated after
applying historic mining dilution factors.
>>

Mill expansion continues with infrastructure requirements brought in over
the first quarter's winter ice road. Construction is scheduled to begin during
the middle of the second quarter.

Oil and Gas

Oil, natural gas liquids and gas operations continue to positively impact
corporate earnings and cash flow from operations before net change in non-cash
working capital items. Higher realized petroleum prices resulted in improved
contributed cash flows in the first quarter of $.5 million ($0.01 per share)
compared to $.4 million ($0.01 per share) for the same period in 2004.
Given the strength of petroleum prices, the Company continues to invest
in the Nipisi and Edson properties. Successful results from in-field drilling
programs are expected to increase reserves and maintain production.
<<
Reserves(1) 2004 2003

Crude oil and NGLs (mbbl)
Proved
Alberta 455 339
Saskatchewan 66 44
------------------------------------------------------------------------
521 383

Probable
Alberta 174 131
Saskatchewan 7 5
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181 136
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Total 702 519
------------------------------------------------------------------------
------------------------------------------------------------------------

Natural gas (MMCF)
Proved
Alberta 7,167 5,861
Probable
Alberta 1,775 1,857
------------------------------------------------------------------------
Total 8,942 7,718
------------------------------------------------------------------------
------------------------------------------------------------------------

Barrels of oil equivalent (mboe)
Proved 1,716 1,360
Probable 477 445
------------------------------------------------------------------------
Total 2,193 1,805
------------------------------------------------------------------------
------------------------------------------------------------------------

(1) Reserves at December 31, 2004, reviewed by Sproule Associates
Limited using constant prices.
>>

Exploration

During the first quarter of 2005 Claude completed a 76 hole
(12,029 metres) winter diamond drilling program in the Seabee mine area
(59 holes, 11,102 metres) and a drilling program at the Nokomis Lake property
near Sheridan, Manitoba (17 holes, 927 metres). Nokomis is a joint venture
between Pioneer Metals Corporation and Claude Resources Inc.
In the area around the Seabee mine, drilling was completed on the Porky
Lake properties, three kilometres north of the mine and on the Santoy
properties, 11.5 kilometres east of the mine.
At the Porky West Zone, 6 holes totaling 957.7 metres were drilled at
100 metre intervals in order to test the gold zone to the northwest of the
identified resource. The West zone has an estimated indicated resource of
90,000 tonnes grading 7.33 grams per tonne (gpt) and an estimated inferred
resource of 130,000 tonnes grading 5.00 gpt. One of the six holes was drilled
to obtain a water sample required for the environmental permitting for the
proposed underground bulk sample.
One hole (209 metres) was drilled between the West Zone and the Porky
Main zone to test the possibility that the shear zone is continuous between
the two deposits. Thin quartz veins with trace to minor gold were found but
there were no significant values. The main zone has an estimated indicated
resource of 160,000 tonnes grading 7.50 gpt and an estimated inferred resource
of 70,000 tonnes grading 10.4 gpt.
Four holes totaling 911 metres were drilled on the portage between Porky
Lake and Pigeon Lake. A number of noteworthy intersections were found in the
Porky-Pigeon lake portion of the winter drilling program. In the Porky Lake
West area, GAS05-46, GAS05-50 and GAS 05-51 all encountered visible gold over
narrow widths.
The encouraging results of the winter drilling in the Porky Lake/Pigeon
Lake area will be followed up during the second and third quarter of 2005.
Five step-out holes (1,200 metres) are planned for the Porky West Zone and 3
step-out holes (800 metres) are planned for the Pigeon Lake area.
A total of 48 holes (9,024 metres) were drilled in the Santoy area,
11.5 kilometres east of the Seabee mine. Six holes were drilled in Zone 6 to
test the down dip extension of the mineralized shear. Eleven holes were
drilled in Zone 7 to test for additional resources around the resources
outlined in 2004 (190,000 tonnes indicated at 8.42 gpt, 10,000 tonnes inferred
at 10.0 gpt). Thirty-one holes (6,238 metres) were drilled in the Zone 8 area
(zone 8, 8E and 8S). Excellent results were obtained in the zone 8 and 8-E
areas. A number of holes encountered a wide gold mineralized shear zone.
<<
-------------------------------------------------------------------------
Significant Sections, Winter 2004-2005 Drill Programs on
Santoy Zones 8 and 8E
-------------------------------------------------------------------------
Zone Hole No. From (m) to (m) Core Au (g/t) Comments
length
-------------------------------------------------------------------------
8E J125 64.70 68.35 3.65 7.16
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8E J129 90.70 93.73 3.03 35.00 (uncut)
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8E J129 90.70 93.73 3.03 18.60 (cut to 30g/t)
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8E J130 104.50 105.85 1.35 16.00
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8E J130 108.48 114.20 5.72 3.78
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8E J130 149.76 151.75 1.99 3.76
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8E J132 148.20 150.60 2.40 9.18
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8E J132 179.90 182.70 2.80 5.26
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8E J132 196.61 198.17 1.56 6.95
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8E J136 159.30 162.40 3.10 3.61
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8E J138 141.88 145.85 3.97 4.85
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8 J112 61.72 64.06 2.34 12.40
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8 J113 22.05 23.50 1.45 2.16
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8 J115 73.44 74.35 0.91 7.73
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8 J119 69.00 74.30 5.30 8.22
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8 J120 52.30 54.10 1.80 9.37
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8 J121 62.80 67.25 4.45 10.90 (uncut)
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8 J121 62.80 67.25 4.45 9.58 (cut to 30 g/t)
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8 J143 138.90 140.15 1.25 14.90
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8 J145 142.40 144.90 1.30 5.03
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8 J146 198.30 200.40 2.10 9.13
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8 J146 232.25 236.30 4.05 4.50
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8 J155 131.07 136.90 3.20 17.10 (uncut)
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8 J155 131.07 136.90 3.20 8.50 (cut to 30 g/t)
-------------------------------------------------------------------------
8 J155 150.65 154.25 3.60 7.51
-------------------------------------------------------------------------

(*) A cutting factor of 30 g/t was used on individual assays making up
the section.
>>

During the second and third quarters of 2005, approximately 12,500 metres
of in-fill drilling is planned (50 holes) for the Santoy area in addition to
the 2,000 metres planned for the Porky Lake-Pigeon lake area. Drilling is also
planned for the Jojay property, located approximately 150 kilometres north of
La Ronge, and at the Tartan property, located near Flin Flon, Manitoba.
Permitting is in progress for underground bulk sampling at Porky West and
at Santoy Zone 7. Approximately 880 metres of decline is planned for the Porky
West structure and approximately 715 metres of decline work is planned for the
Santoy Zone 7 structure.
At Nokomis, drilling was conducted to test the host tonalite formation
north of a previously defined resource. There were no significant gold values
intersected in the program. For 2005, line cutting, prospecting and geological
mapping is planned for the area south of the previously identified resources
prior to further exploration drilling. In the year 2000, Eckart Buhlmann, P.
Geo., an independent consultant for Pioneer, estimated that a mineral resource
of approximately 80,000 tonnes grading 10 gpt, with an average width of 4
metres, was located at the Nokomis Lake Gold Zone, formerly known as the South
Showing. (Note: The mineral resources cited are historical estimates that do
not conform to the standards outlined in sections 1.3 and 1.4 of National
Instrument 43-101).
During the first quarter, Placer-Dome delivered its final 2004
exploration report for the Madsen property located near Red Lake, Ontario.
(see March 30, 2005 press release "New High Grade Zones Discovered at Madsen"
at www.clauderesources.com ). With the completion of this drill program,
Placer has met the $8.2 million exploration expenditure requirement of its
option agreement with Claude Resources Inc. Placer has until December of 2006
to deliver a positive feasibility study to fulfill its obligations and vest in
the Madsen Joint Venture with a 55% working interest.

Financial

For the three months ended March 31, 2005, the Company recorded net
earnings of $.3 million, or $0.00 per share, after a $1.3 million income tax
recovery. This compares to a net loss of $.4 million, or $0.01 per share, for
the first quarter of 2004.

Revenues

Total revenue generated for the quarter was $8.0 million, 5% higher than
reported for the same period in 2004.
The Seabee mine contributed $5.5 million to revenue for the first quarter
of 2005 compared to $5.4 million for the same period last year. Sales volume
for this period improved 4% from 9,900 ounces in 2004 to 10,300 ounces this
quarter. As a result of the appreciating Canadian versus US dollar exchange
rate, average gold prices realized remained relatively unchanged period over
period: 2005 - CDN $539 (US $439) versus 2004 - CDN $543 (US $412).
Gross oil, natural gas liquids and gas revenues totaled $2.5 million for
the current period compared to $2.3 million last period. The improvement was
due largely to higher oil prices realized for the period offset by normal
production declines.

Expenditures

[Franko10 ™]

Total mine operating costs were $4.0 million this quarter, relatively
unchanged from the $4.2 million recorded last period. The improved operating
costs combined with higher sales volume resulted in a small decline in cash
operating costs per ounce: 2005 - US $319; 2004 - US $324. The strengthening
Canadian dollar continues to negatively impact the per ounce calculation; it
is responsible for US $22 of this quarter's comparable total cash cost per
ounce.
Oil and gas operating costs increased slightly period over period.
General and administrative costs rose 33% from $.6 million during the first
quarter of 2004 to $.8 million this period. This was largely due to increased
non-recurring legal and listing costs on the Toronto and American stock
exchanges.
Depreciation and depletion of the Company's gold assets was $2.1 million
for the three months ended March 31, 2005 compared with $1.3 million in the
corresponding 2004 period. The increase was a result of more tonnes broken and
milled. Depreciation and depletion costs per ounce for the period were US $166
versus US $98 for the first quarter of 2004.
The Income Tax Recovery of $1.3 million during the period was the
estimated income tax benefit arising from the issuance of flow-through shares
in 2004 and the subsequent renouncement of those expenditures in 2005.

Liquidity & Financial Resources

Cash flow from operations before net changes in non-cash working capital
items was $1.3 million, or $0.02 per share, compared to $1.0 million, or $0.02
per share, in the first quarter of 2004.
Capital invested increased from $4.4 million during the first quarter of
2004 to $5.7 million this period. Mineral property expenditures this quarter
of $4.1 million were comprised mostly of $2.2 million in development
investment, $1.2 million in exploration funded by two separate 2004 flow-
through issues, and $1.7 million in mill expansion and equipment costs.
Investment in oil and gas properties remained relatively unchanged at
$.4 million, much of which reflects drilling and infrastructure costs at the
Nipisi Unit and Edson Gas plant.
To partially finance the mill expansion and related projects, the Company
borrowed $5.0 million in the first quarter of 2005 in the form of a 5 year
demand loan. The $110,000 increase in share capital was from the issuance of
common shares pursuant to the Employee Share Purchase Plan.
At March 31, 2005, the Company had $5.0 million in working capital, a
decrease of $4.3 million from the year ended December 31, 2004. This amount
was due largely to a $4.9 million, 5 year demand loan classified as a current
liability. As well, the 2005 winter resupply included added expenditures for
the Porky Lake and Santoy bulk samples and mill expansion infrastructure
costs.

Outlook

The Company's production and cost forecasts remain unchanged for both the
Seabee mine and oil and gas properties. For 2005, gold sales volume is
estimated to be 46,000 ounces with mine operating costs approximately
$17.0 million. Capital expenditures remain as forecast, with mine development
costs of $6.9 million, plant and equipment costs of $3.0 million to
$4.0 million (due to the mill expansion) and exploration costs of $5.0 million
(due to Porky Lake and Santoy bulk samples).
Oil and gas revenues should remain unchanged as production and price are
forecast to remain strong. Both operating and capital expenditures are also
expected to remain near 2004 levels.
Extensive delineation drilling will begin on the Porky Lake and Santoy
properties near the end of the second quarter. Permitting for the Porky Lake
bulk sample extraction is expected to be received early in the second quarter,
with an 880 metre decline expected to begin on the Porky West Zone. Final
permitting for the Santoy bulk sample extraction is expected to be received
during the third quarter.

Derivative Instruments and Hedging Activities

To mitigate the effects of price fluctuations on revenues, the Company
undertakes hedging transactions, from time to time, in respect of foreign
exchange rates and the price of gold.
At March 31, 2005, Claude had outstanding forward gold contracts related
to 2005 production of 2,000 ounces, at an average price of US $423 per ounce.
The market value loss inherent in these contracts was US $26,000. At March 31,
2005, the Company had outstanding foreign exchange contracts to sell US
$3.5 million, at an average exchange rate of CDN$/US$ 1.2347. The market value
gain inherent in these contracts was US $73,000.

Caution Regarding Forward-Looking Information

Some of the statements contained in this report are forward-looking
statements, such as estimates and statements that describe the Company's
future plans, objectives or goals. This includes words to the effect that the
Company or management expects a stated condition or result to occur. Since
forward-looking statements address future events and conditions, by their very
nature they involve inherent risks and uncertainties. Actual results in each
case could differ materially from those currently anticipated in such
statements.

<<
Consolidated Balance Sheets
(Canadian Dollars in Thousands)
March 31 December 31
2005 2004
-------------- -----------------
Assets
Current assets:
Receivables $ 3,266 $ 1,667
Inventories 9,829 4,828
Shrinkage stope platform
costs (Note 2) 8,142 7,903
Prepaids 399 364
-------------------------------------------------------------------------
21,636 14,762

Oil and gas properties 6,327 6,101
Mineral properties 37,522 34,327
Investments (Note 3) 668 668
Promissory note 6,982 6,982
Deposits for reclamation costs 2,065 2,061
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$ 75,200 $ 64,901
-------------------------------------------------------------------------
-------------------------------------------------------------------------

Liabilities and Shareholders' Equity
Current liabilities:
Bank indebtedness $ 22 $ 343
Payables and accrued liabilities 11,230 4,580
Demand loan (Note 4) 4,921 -
Other current liabilities 443 528
-------------------------------------------------------------------------
16,616 5,451

Royalty obligation 6,982 6,982
Deferred revenue 546 563
Asset retirement obligations 2,080 2,046

Shareholders' equity:
Share capital (Note 5) 42,756 43,966
Contributed surplus 394 330
Retained earnings 5,826 5,563
-------------------------------------------------------------------------
48,976 49,859
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Commitments and contingencies
(Note 7 and Note 8)
$ 75,200 $ 64,901
-------------------------------------------------------------------------
-------------------------------------------------------------------------

Consolidated Statements of Earnings (Loss)
(Canadian Dollars in Thousands)
Three Months Ended
March 31
2005 2004

Revenues
Gold $ 5,538 $ 5,358
Oil and gas:
Gross revenue 2,478 2,286
Crown royalties (602) (580)
Alberta Royalty Tax Credit 125 67
Overriding royalties (1,187) (1,097)
-------------------------------------------------------------------------
Net oil and gas revenue 814 676
-------------------------------------------------------------------------
6,352 6,034

Expenses
Gold 4,021 4,216
Oil and gas 328 283
General and administrative 801 563
Interest and other (83) (73)
Provision for income taxes 9 14
-------------------------------------------------------------------------
5,076 5,003
-------------------------------------------------------------------------

Earnings from operations 1,276 1,031
Depreciation, depletion and accretion:
Gold 2,127 1,302
Oil and gas 206 157
-------------------------------------------------------------------------

Loss before income taxes
(1,057) (428)

Income tax recovery (Note 6) 1,320 -

Net earnings (loss) $ 263 $ (428)
-------------------------------------------------------------------------
-------------------------------------------------------------------------

Net earnings (loss) per share
Basic and diluted $ 0.00 $ (0.01)
-------------------------------------------------------------------------
-------------------------------------------------------------------------

Weighted average number of
shares outstanding (000's) 61,764 59,118
-------------------------------------------------------------------------
-------------------------------------------------------------------------

Consolidated Statements of Cash Flows
(Canadian Dollars in Thousands)
Three Months Ended
March 31
2005 2004

Cash provided from (used in):

Operations:
Net earnings (loss) $ 263 $ (428)
Non-cash items:
Depreciation and depletion 2,299 1,428
Stock-based compensation 64 9
Accretion of asset retirement
obligation 34 31
Income tax recovery (1,320) -

Net change in non-cash working capital:
Receivables (1,599) 30
Inventories (5,001) (4,479)
Shrinkage stope platform costs (239) 600
Prepaids (35) (31)
Payables and accrued liabilities 6,650 4,348
-------------------------------------------------------------------------
Cash from operations 1,116 1,508

Investing:
Mineral properties (5,296) (4,057)
Oil and gas properties (424) (384)
Increase in reclamation deposits (4) -
-------------------------------------------------------------------------
(5,724) (4,441)
Financing:
Issue of common shares,
net of issue costs 110 2,168
Deferred revenue (87) -
Demand loan
Proceeds 5,000 -
Repayment (79) -
Capital lease repayment (15) (15)
-------------------------------------------------------------------------
4,929 2,153

Increase (decrease) in cash position 321 (780)
Cash position, beginning of period (343) 3,259
-------------------------------------------------------------------------
Cash position, end of period $ (22) $ 2,479
-------------------------------------------------------------------------
-------------------------------------------------------------------------


Consolidated Statements of Retained Earnings
(Canadian Dollars in Thousands)
Three Months Ended
March 31
2005 2004

Retained earnings,
beginning of period $ 5,563 $ 6,161
Net earnings (loss) 263 (428)
-------------------------------------------------------------------------
Retained earnings, end of period $ 5,826 $ 5,733
-------------------------------------------------------------------------
-------------------------------------------------------------------------

Notes to Consolidated Financial Statements

Note 1 - General

The accompanying unaudited consolidated financial statements should be
read in conjunction with the notes to the Company's audited consolidated
financial statements for the year ended December 31, 2004. The unaudited
financial statements include the financial statements of the Company and its
subsidiaries.
The unaudited interim consolidated financial statements reflect all
normal and recurring adjustments which are, in the opinion of management,
necessary for a fair presentation of the respective interim periods'
presented.

Note 2 - Shrinkage Stope Platform Costs

Shrinkage stope platform costs represent cost of the ore that is being
used as a working stage, within the stope, to gain access to further ore. This
ore is expected to be processed in the following 12 months. The processing of
this broken ore occurs in accordance with a mine plan based on the known
mineral reserves and current mill capacity. The timing of processing of ore
has not been significantly affected by historic prices of gold.

Note 3 - Investments

At March 31, 2005, the quoted market value of the investments was
$6.1 million (December 31, 2004 - $3.9 million).

Note 4 - Demand Loan

The demand loan bears interest at 5.99%, is repayable in monthly
principal and interest payments of $96,514 and matures in February 2010. The
loan is secured by a general security agreement covering all assets of the
Company, excluding oil and gas assets in Alberta.

Note 5 - Share Capital

At March 31, 2005 there were 61,796,314 common shares outstanding.
Options in respect of 2,725,000 common shares are outstanding under the
stock option plan. These options have exercise prices ranging from $.53 to
$3.05 with expiration dates between April, 2006 and March, 2015.
On December 22, 2003, the Company completed a private placement of
2,500,000 units, each unit consisting of one common share and one half of one
common share purchase warrant, at a price of $2.00, for gross proceeds of
$5,000,000. Each whole purchase warrant will entitle the holder, upon exercise
at any time up to and including June 23, 2005, and upon payment of $2.50, to
subscribe for one common share. In partial consideration of the services
provided to Claude in connection with the private placement, the Underwriters
were issued 150,000 common share purchase warrants each of which will entitle
the holder, upon exercise at any time up to and including December 23, 2004
and upon payment of $2.10, to subscribe for one common share. At March 31,
2005, there were 1,250,000 warrants outstanding.
On December 31, 2004 the Company entered into a flow-through share
agreement for the issue of 1,150,033 units, each unit consisting of one flow-
through common share and one common share purchase warrant, at a price of
$1.50 per unit, for gross proceeds of $1,725,000 million. Each warrant will
entitle the holder, upon exercise, to purchase one common share for a two year
period following the date of issue at a price of $2.00 up to and including
December 31, 2005 and $3.00 up to and including December 31, 2006. The Company
must expend $1,725,000 in qualifying Canadian Exploration Expenses as defined
in the Income Tax Act (Canada) prior to December 31, 2005. At March 31, 2005,
there were 1,150,033 warrants outstanding.

Note 6 - Income taxes

The Company finances a portion of its exploration activities through the
issue of flow-through shares. The Company records the tax cost of expenditures
renounced to subscribers on the date the deductions are renounced to the
subscribers. Share capital is reduced and future income tax liabilities are
increased by the estimated tax benefits renounced by the Company to the
subscribers. Because the Company has unrecorded loss carryforwards and tax
pools in excess of book value available, future income tax liabilities are
reduced with a corresponding credit to income tax recovery of $1.3 million.

Note 7 - Financial Instruments

The Company's financial results are affected by the normal risks and
capital expenditure requirements associated with exploration, development and
production of mineral and oil & gas properties. Financial results are also
affected by market prices for gold and oil & gas, changes in foreign currency
exchange rates, interest and other operating risks. To manage risks associated
with prices for gold, oil & gas and changes in foreign currency, the Company
may use commodity and foreign currency derivative instruments.
Except as discussed below, the fair market value of the Company's
financial assets and liabilities approximate net book value.
At March 31, 2005, the Company had outstanding forward gold contracts
related to 2005 production of 2,000 ounces at an average price of US $423 per
ounce with a market value loss inherent in these contracts of US $26,000. At
March 31, 2004, the Company had outstanding forward gold contracts related to
2004 production of 4,500 ounces at an average price of US $418 per ounce with
a market value loss inherent in these contracts of US $24,000.
At March 31, 2005, the Company had outstanding foreign exchange contracts
to sell US $3.5 million at an average exchange rate of 1.2347 CDN$/US$ with a
market value gain inherent in these contracts of US $73,000. At March 31,
2004, the Company had outstanding foreign exchange contracts to sell US
$11.0 million at an average exchange rate of 1.3375 CDN$/US$ with a market
value gain inherent in these contracts of US $227,000.

Note 8 - Contingencies

Pursuant to a Notice of Contravention issued by Saskatchewan Labour,
Occupational Health and Safety Division, dated March 17, 2003, the Company was
ordered to reinstate three workers and reimburse them for lost pay and
benefits. The contravention alleges that the Company dismissed these employees
contrary to the Occupational Health and Safety Act. The contravention was
appealed to the Executive Director and subsequently to an adjudicator. The
matter is currently under appeal to the Court of Queen's Bench, where a
decision is pending. Management is of the opinion these claims are
unwarranted. The amount of potential loss, if any, may involve payment of
approximately 18 months in back pay to each of the employees and will be
recognized in earnings at the time of settlement.

Note 9 - Comparative Figures

Certain prior year balances have been reclassified to conform to the
current financial statement presentation.

Note 10 - Differences from United States Accounting Principles

These consolidated financial statements have been prepared in accordance
with accounting principles generally accepted in Canada. See Note 21 of the
Company's audited financial statements for the year ended December 31, 2004
for a narrative explanation of the differences in Canadian and US GAAP.
>>
%SEDAR: 00000498E



For further information: Renmark Financial Communications Inc., Edith
English: [e-mail]; Neil Murray-Lyon:
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