Exhibit 99.1

NOTICE OF AUDITOR REVIEW OF INTERIM FINANCIAL STATEMENTS

Under National Instrument 51-102, Part 4, subsection 4.3(3)(a), if an auditor has not performed a review of the interim financial statements, they must be accompanied by a notice indicating that the financial statements have not been reviewed by an auditor.

The Management of Claude Resources Inc. is responsible for the preparation of the accompanying unaudited interim consolidated financial statements.  The unaudited interim consolidated financial statements have been prepared in accordance with accounting principles generally accepted in Canada and are considered by Management to present fairly the financial position, operating results and cash flows of the Company.

The Company's independent auditor has not performed a review of these financial statements, in accordance with standards established by the Canadian Institute of Chartered  Accountants.  These unaudited financial statements include all adjustments, consisting of normal and recurring items that Management considers necessary for a fair presentation of the consolidated financial position, results of operations and cash flows.

Neil McMillan Chief Executive Officer	Rick Johnson, CA Chief Financial Officer

Date: August 7, 2009

Consolidated Balance Sheets
(Canadian Dollars in Thousands - Unaudited)
	June 30			December 31
	2009			2008
Assets
Current assets:
Cash and cash equivalents	$	-		$	8,390
Accounts receivable		3,005			275
Interest receivable on restricted promissory notes		2,059			4,830
Inventories and stockpiled ore		15,945			10,028
Shrinkage stope platform costs (Note 3)		13,196			12,091
Prepaids		187			193
Assets held for sale (Note 4)		122			912
		34,514			36,719
Mineral properties		94,268			89,038
Assets held for sale (Note 4)		5,042			4,857
Investments (Note 5)		602			607
Restricted promissory notes		82,568			81,938
Deposits for reclamation costs		2,277			2,277
	$	219,271		$	215,436
Liabilities and Shareholders' Equity
Current liabilities:
Bank indebtedness	$	3,433		$	-
Accounts payable and accrued liabilities		8,142			5,794
Interest payable on royalty obligations		2,001			4,709
Demand loans (Note 6)		5,722			3,969
Liabilities related to assets held for sale (Note 4)		200			732
Other liabilities		2,985			2,307
		22,483			17,511
Obligations under capital lease		2,248			1,614
Debenture (Note 7)		9,132			16,575
Royalty obligations		83,554			83,130
Deferred revenue		5,990			6,434
Liabilities related to assets held for sale (Note 4)		354			342
Asset retirement obligations		2,853			2,758
		126,614			128,364
Shareholders' equity:
Share capital (Note 8)		94,105			83,960
Contributed surplus		2,074			1,748
Retained earnings (deficit)		(3,021	)		1,896
Accumulated other comprehensive loss		(501	)		(532	)
		92,657			87,072
	$	219,271		$	215,436
The accompanying notes form an integral part of these unaudited consolidated financial statements

Consolidated Statements of Loss

(Canadian Dollars in Thousands, except per share amounts - Unaudited)

	Three Months Ended						Six Months Ended
	June 30						June 30
	2009			2008			2009			2008
Revenue	$	9,090		$	9,840		$	20,627		$	17,966
Expenses:
Operating expenses		6,871			8,068			14,607			14,493
Depreciation, depletion and accretion		5,316			2,782			9,472			5,338
General and administrative		966			1,275			1,928			2,381
Interest and other		353			(194	)		49			(376	)
Loss (gain) on sale of investments		-			(166	)		21			(166	)
		13,506			11,765			26,077			21,670
Loss from continuing operations before income taxes		(4,416	)		(1,925	)		(5,450	)		(3,704	)
Income taxes (Note 9)		-			-			-			2,240
Loss from continuing operations		(4,416	)		(1,925	)		(5,450	)		(1,464	)
Earnings from operations held for sale (Note 4)		486			1,154			533			1,138
Net loss	$	(3,930	)	$	(771	)	$	(4,917	)	$	(326	)
Net loss per share
Basic and diluted
From continuing operations	$	(0.04	)	$	(0.02	)	$	(0.05	)	$	(0.02	)
Net loss	$	(0.04	)	$	(0.01	)	$	(0.05	)	$	(0.00	)
Weighted average number of common shares outstanding (000's)
Basic and diluted		110,087			97,112			103,749			97,100

The accompanying notes form an integral part of these unaudited consolidated financial statements

2

Consolidated Statements of Shareholders'  Equity

(Canadian Dollars in Thousands - Unaudited)

	Three Months Ended						Six Months Ended
	June 30						June 30
	2009			2008			2009			2008
Share Capital
Balance, beginning of period	$	84,104		$	83,484		$	83,960		$	85,591
Common shares issued		10,001			-			9,968			-
Flow-through renunciation		-			-			-			(2,240	)
Fair value of warrants issued		-			550			-			550
Other		-			-			177			133
Balance, end of period	$	94,105		$	84,034		$	94,105		$	84,034
Contributed Surplus
Balance, beginning of period	$	2,023		$	1,467		$	1,748		$	1,308
Stock-based compensation		51			120			326			279
Balance, end of period	$	2,074		$	1,587		$	2,074		$	1,587
Retained Earnings (Deficit)
Balance, beginning of period	$	909		$	1,958		$	1,896		$	1,513
Net loss		(3,930	)		(771	)		(4,917	)		(326	)
Balance, end of period	$	(3,021	)	$	1,187		$	(3,021	)	$	1,187
Accumulated other comprehensive income (loss)
Balance, beginning of period	$	(474	)	$	(590	)	$	(532	)	$	(305	)
Other comprehensive gain (loss) (Note 5)		(27	)		2,731			31			2,446
Balance, end of period	$	(501	)	$	2,141		$	(501	)	$	2,141
Total retained earnings (deficit) and accumulated other comprehensive income (loss)	$	(3,522	)	$	3,328		$	(3,522	)	$	3,328
Shareholders' equity, end of period	$	92,657		$	88,949		$	92,657		$	88,949
Consolidated Statements of Comprehensive Income (Loss)
(Canadian Dollars in Thousands - Unaudited)
	Three Months Ended						Six Months Ended
	June 30						June 30
		2009			2008			2009			2008
Net loss	$	(3,930	)	$	(771	)	$	(4,917	)	$	(326	)
Other comprehensive income (loss)
Unrealized gain (loss) on available-for-securities (Note 5)		(27	)		2,731			31			2,446
Total comprehensive income (loss)	$	(3,957	)	$	1,960		$	(4,886	)	$	2,120

The accompanying notes form an integral part of these unaudited consolidated financial statements

3

Consolidated Statements of Cash Flows

(Canadian Dollars in Thousands - Unaudited)

	Three Months Ended						Six Months Ended
	June 30						June 30
	2009			2008			2009			2008
Cash provided from (used in):
Operations:
Loss from continuing operations	$	(4,416	)	$	(1,925	)	$	(5,450	)	$	(1,464	)
Non-cash items:
Depreciation, depletion and accretion		5,316			2,782			9,472			5,338
Loss (gain) on sale of investments		-			(166	)		21			(166	)
Stock-based compensation		51			120			326			279
Amortization of debenture issue costs		753			25			814			25
Deferred revenue		(215	)		(204	)		(422	)		(556	)
Income taxes		-			-			-			(2,240	)
Net changes in non-cash operating working capital:
Accounts receivable		(1,494	)		(2,518	)		41			145
Inventories and stockpiled ore		2,576			1,893			(5,917	)		(7,057	)
Shrinkage stope platform costs		(880	)		70			(1,105	)		(2,585	)
Prepaids		527			(153	)		6			59
Accounts payable and accrued liabilities		(2,221	)		(7,685	)		(360	)		521
Cash used in continuing operations		(3	)		(7,761	)		(2,574	)		(7,701	)
Cash provided by operations held for sale (Note 4)		396			222			803			376
		393			(7,539	)		(1,771	)		(7,325	)
Investing:
Mineral properties		(6,526	)		(6,094	)		(14,607	)		(13,697	)
Assets held for sale		(98	)		(403	)		(185	)		(616	)
Restricted promissory notes		-			-			(630	)		(332	)
Investments		-			546			15			546
Cash used in investing		(6,624	)		(5,951	)		(15,407	)		(14,099	)
Financing:
Issue of common shares, net of issue costs		10,002			-			10,145			133
Debenture proceeds, net of issue costs		-			17,105			-			17,105
Partial redemption of debenture		(8,257	)		-			(8,257	)		-
Royalty obligations		-			-			424			351
Bank indebtedness		2,738			(3,073	)		3,433			915
Demand loans:
Proceeds		2,800			-			2,800			-
Repayment		(526	)		(510	)		(1,047	)		(1,016	)
Obligations under capital lease:
Proceeds		-			398			2,353			2,071
Repayment		(526	)		(430	)		(1,063	)		(763	)
Cash provided from financing activities		6,231			13,490			8,788			18,796
Decrease in cash and cash equivalents		-			-			(8,390	)		(2,628	)
Cash and cash equivalents, beginning of period		-			-			8,390			2,628
Cash and cash equivalents, end of period	$	-		$	-		$	-		$	-

The accompanying notes form an integral part of these unaudited consolidated financial statements

4

Notes to Consolidated Financial Statements

For the Six Months Ended June 30, 2009

(Canadian Dollars in Thousands, except as otherwise noted)

(Unaudited)

Note 1 - Basis of Presentation

These unaudited interim consolidated financial statements have been prepared by the Company in accordance with Canadian Generally Accepted Accounting Principles (Canadian GAAP) for interim financial statements.  The preparation of financial data within these statements is based on accounting policies and practices consistent with those used in the preparation of the most recent audited annual consolidated financial statements.  The accompanying unaudited interim 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, 2008, as they do not contain all disclosures required by Canadian GAAP for annual financial statements.

In the opinion of Management, all adjustments (including reclassifications and normal recurring adjustments) necessary to present fairly the financial position, results of operations and cash flows at June 30, 2009, and for comparative periods presented, have been made.

Note 2 - Significant Accounting Policies

These unaudited interim consolidated financial statements are prepared using accounting policies consistent with the Company's audited annual consolidated financial statements and notes thereto for the year ended December 31, 2008, except for the following:

(a) Changes in Accounting Policies

Effective January 1, 2009, the Company adopted the following new accounting standards issued by the Canadian Institute of Chartered Accountants (“CICA”):

(i) Section 3064, "Goodwill and Intangible Assets"

This new standard replaces the previous goodwill and intangible asset standard and revises the requirement for recognition, measurement, presentation, and disclosure of intangible assets.  The adoption of this standard has had no impact on the Company's financial statements.

(ii) Section 1400, "General Standards of Financial Statement Presentation"

This standard includes requirements for Management to assess and disclose an entity's ability to continue as a going concern.  This standard applies to interim and financial statements relating to fiscal years beginning on or after January 1, 2009.  The adoption of this standard has had no impact on the Company's financial statements.

(iii) EIC-173, "Credit Risk and Fair Value of Financial Assets and Financial Liabilities"

Emerging Issues Committee Abstract 173 (EIC-173), "Credit Risk and the Fair Value of Financial Assets and Financial Liabilities," was issued by the CICA in January 2009.  EIC-173 provides guidance on how to take into account credit risk of an entity and counterparty when determining the fair value of financial assets and financial liabilities, including derivative instruments.  EIC-173 is applicable for the Company’s interim and annual consolidated financial statements for its fiscal year ending December 31, 2009, with retroactive application. The adoption of EIC-173 did not impact the consolidated financial statements of the Company.

(iv) EIC-174, "Mining Exploration Costs"

In March 2009, Emerging Issues Committee Abstract 174 (EIC-174), "Mining Exploration Costs," was issued by the CICA.  EIC-174 supersedes EIC-126,

"Accounting by Mining Enterprises for Exploration Costs," and provides additional guidance for mining exploration enterprises on the accounting for capitalization of exploration costs and when an impairment test of these costs is required.  EIC-174 is applicable for the Company’s interim and annual consolidated financial statements for its fiscal year ending December 31, 2009, with retroactive application. The adoption of EIC - 174 did not impact the consolidated financial statements of the Company.

(b) Future Changes in Accounting Policies

(i) Section 1506, "Accounting Changes"

This Section has been amended to exclude from its scope changes in accounting policies upon the complete replacement of an entity's primary basis of accounting.  The amendment applies to interim and annual financial statements relating to fiscal years beginning on or after July 1, 2009.  The Company does not expect this amendment to have a material impact on its consolidated financial statements.

(ii) Section 3862, "Financial Instruments - Disclosures"

This Section has been amended to include additional disclosure requirements about fair value measurements of financial instruments and to enhance liquidity risk disclosure requirements for publicly accountable enterprises.  The amendments apply to annual financial statements relating to fiscal years ending after September 30, 2009.  The Company does not expect this amendment to have a material impact on its consolidated financial statements.

(iii) Section 1582, "Business Combinations"

In January 2009, the CICA issued Handbook Section 1582, "Business Combinations".  This Section, which replaced the former Business Combination Section, Section 1581, establishes standards for the accounting for a business combination and provides the Canadian equivalent to International Financial Reporting Standard IFRS 3, "Business Combinations".  Section 1582 requires assets and liabilities acquired in a business combination, contingent consideration and certain acquired contingencies to be measured at their fair values as of the date of acquisition.  In addition, acquisition-related and restructuring costs are to be recognized separately from the business combination and included in the statement of earnings.  The guidance within Section 1582 has an effective date of January 1, 2011. The Company is reviewing the impact this standard will have on its consolidated financial statements.

5

Notes to Consolidated Financial Statements

For the Six Months Ended June 30, 2009

(Canadian Dollars in Thousands, except as otherwise noted)

(Unaudited)

(iv) Section 1601, "Consolidated Financial Statements"

In January 2009, the CICA issued Handbook Section 1601, "Consolidated Financial Statements".  This Section, together with new Section 1602 ("Non-controlling Interests"), replaces the former Consolidated Financial Statements (Section 1600) and establishes standards for the preparation of financial statements.  Sections 1601 is applicable for the Company’s interim and annual consolidated financial statements for its fiscal year beginning January 1, 2011.  The Company is reviewing the impact that this standard will have on its consolidated financial statements.

(v) Section 1602, "Non-controlling Interests"

Effective January 1, 2011, the Company will be required to adopt CICA Handbook Section 1602, "Non-controlling Interests", which with CICA Handbook Section 1601, will supersede the existing business combinations standard.  This section establishes the standards for the accounting for a non-controlling interest in a subsidiary in consolidated financial statements subsequent to a business combination.  A non-controlling interest in a subsidiary will be required to be classified as a separate component of equity under this standard.  The Company is reviewing the impact that this standard will have on its consolidated financial statements.

(vi) Section 3855, "Financial Instruments - Recognition and Measurement"

This Section has been amended to clarify the application of the effective interest method after a debt instrument has been impaired.  This Section has also been amended to clarify when an embedded prepayment option is separated from its host debt instrument for accounting purposes.  This amendment applies to interim and annual financial statements relating to fiscal years beginning on or after January 1, 2011.  The Company is reviewing the impact that this amendment will have on its consolidated financial statements.

Note 3 - Shrinkage Stope Platform Costs

Shrinkage stope platform costs represent ore that is being used to gain access to further ore or are costs incurred to access ore within the long-hole stope.  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 4 - Assets Held for Sale and Related Operations

During the third quarter of 2008, the Company adopted a formal plan to dispose of its oil & natural gas properties.  The related assets and liabilities of the remaining oil & natural gas properties have been reported as Assets held for sale and Liabilities related to assets held for sale in separate captions in the consolidated balance sheets and the related results of operations have been presented as operations held for sale in the consolidated statements of loss and cash flows for all periods presented.

The Assets held for sale and the related liabilities were as follows:

	June 30		December 31
	2009		2008
Assets
Accounts receivable	$	-	$	770
Prepaids		122		142
		122		912
Oil & natural gas properties		4,891		4,715
Deposits for reclamation costs		151		142
		5,042		4,857
	$	5,164	$	5,769
Liabilities
Accounts payable and accrued liabilities	$	200	$	732
Asset retirement obligations		354		342
	$	554	$	1,074

6

Notes to Consolidated Financial Statements

For the Six Months Ended June 30, 2009

(Canadian Dollars in Thousands, except as otherwise noted)

(Unaudited)

	Three Months Ended						Six Months Ended
	June 30						June 30
	2009			2008			2009			2008
Revenue
Oil & natural gas (net of royalties)	$	710		$	1,789		$	1,007		$	2,490
Expenses
Operating expenses		255			377			499			891
Depreciation, depletion and accretion		6			383			12			586
		261			760			511			1,477
Earnings from operations held for sale		449			1,029			496			1,013
Other
Other income		37			-			37			-
Asset retirement obligation change in estimate		-			125			-			125
Net earnings from operations held for sale	$	486		$	1,154		$	533		$	1,138
The cash flows provided by operations held for sale were as follows:
	Three Months Ended						Six Months Ended
	June 30						June 30
		2009			2008			2009			2008
Net earnings from operations held for sale	$	486		$	1,154		$	533		$	1,138
Adjustments for:
Depreciation, depletion, and accretion		6			383			12			586
Asset retirement obligation change in estimate		-			(125	)		-			(125	)
Decrease (increase) in receivables		-			(1,316	)		770			(1,273	)
Decrease in prepaids		78			71			20			71
Increase (decrease) in accounts payable and accrued liabilities		(174	)		55			(532	)		(21	)
	$	396		$	222		$	803		$	376

Note 5 - Investments

Investments are classified as available-for-sale securities and are initially measured at fair value; measurement in subsequent reporting periods is also at fair value.  Unrealized gains or losses from such revaluations are included in other comprehensive income.  If available-for-sale securities are disposed of, or there is an impairment in value that is other than a temporary decline, these amounts are transferred from other comprehensive income (loss) to net earnings.

	June 30			December 31
	2009			2008
Available-for-sale securities, beginning of period	$	607		$	1,140
Acquisition of available-for-sale securities		-			73
Disposal of available-for-sale securities		(36	)		(379	)
Mark-to-market gain (loss) for the period		31			(227	)
Available-for-sale securities, end of period	$	602		$	607

By holding these investments, the Company is exposed to various risk factors including market price risk and liquidity risk.

Note 6 - Demand Loans

	June 30		December 31
	2009		2008
Demand loan, with interest only payments at the greater of 5.0% per annum or prime plus 2.75%, due December 2009	$	2,800	$	-
Demand loan, repayable in monthly payments of $96,514 including interest at 5.99%, due February 2010		755		1,302
Demand loan, repayable in monthly payments of $83,333 plus interest at prime plus 1.5%, due August 2011		2,167		2,667
	$	5,722	$	3,969

The demand loans are secured by a general security agreement covering all assets of the Company, excluding oil & natural gas assets.

7

Notes to Consolidated Financial Statements

For the Six Months Ended June 30, 2009

(Canadian Dollars in Thousands, except as otherwise noted)

(Unaudited)

Note 7 - Debenture

The debenture features a 12% interest rate, five year term with monthly interest only payments. Debenture holders also received warrants in the amount of 10% of the debenture purchase.  Each warrant entitles the holder to acquire one common share at an exercise price of $1.60 per common share for a period of five years from the date of closing.  The fair value of the warrants associated with the debenture on the date of issuance was $550,000.  This amount is reflected in share capital.  The debenture is secured by a general security agreement covering all of the Company's assets and contains early retraction and redemption provisions.  The general security interest, excluding the oil & natural gas assets, is subordinated to all bank debt.

During the second quarter, the Company completed an offer to purchase a portion of its outstanding debentures.  The transaction consisted of an offer from the Company to each holder of its debentures to purchase up to 58% of the debentures owned by debenture holders, rounded to the nearest $1,000, at a price equal to 100% of the principal amount of such debentures, plus accrued and unpaid interest thereon up to and including June 1, 2009.  The Company purchased a total of $8.3 million of the outstanding debentures subject to this offer, leaving a total of $9.8 million of outstanding debentures as at June 30, 2009.  The remaining balance of the debentures outstanding will continue to be amortized using the effective interest rate method at an effective rate of 14.7% over the remaining term of the liability.

The Company incurred $1.7 million of debt issue costs associated with the completion of this debenture offering.  After the partial redemption, $1.0 million of these debt issue costs remain and will be amortized using the effective interest rate method at an effective rate of 14.7% over the remaining term of the loan.

	June 30			December 31
	2009			2008
Debenture payable	$	18,095		$	18,095
Less:
Debt issue costs		(1,123	)		(1,123	)
Warrant valuation		(550	)		(550	)
Debenture redemption		(8,257	)		-
		8,165			16,422
Add: amortization of debt issue costs		967			153
	$	9,132		$	16,575

Note 8 - Share Capital

At June 30, 2009 there were 111,465,186 common shares outstanding.

a)  Issue of shares

During the period ended June 30, 2009, the Company issued 421,056 common shares pursuant to the Company's Employee Share Purchase Plan.  On April 9, 2009, the Company completed a financing for the issue of 8,599,100 units at a price of $0.75 per unit for gross proceeds of $6,449,325.  Each unit consisted of one common share of the Company and one-half of one transferable common share purchase warrant.  Each whole warrant entitles the holder to acquire one common share at a price of $0.90 for a period of 18 months.  The Company also completed a financing for the issue of 5,333,000 flow-through shares at a price of $0.80 per share for gross proceeds of $4,266,400.

b)  Stock Option Incentive Plan

The Company has established a share option plan under which options may be granted to directors, officers, key employees and consultants to purchase up to an aggregate of 9% of the issued and outstanding common shares.  Options granted have an exercise price of the prior day's closing price of the common shares on the stock exchange on which the shares are traded.  The majority of the options granted vest over two years and expire ten years from the date of the grant of the option.

For options outstanding at June 30, 2009 weighted average exercise prices are as follows:

	June 30					December 31
	2009			Average Price		2008			Average Price
Beginning of period		3,541,335		$	1.19		3,636,667		$	1.27
Options granted		626,828			0.77		583,000			0.92
Options exercised		-			-		-			-
Options lapsed		(292,333	)		1.30		(678,332	)		1.38
End of period		3,875,830		$	1.11		3,541,335		$	1.19

For options outstanding at June 30, 2009, the range of exercise prices, the weighted average exercise price and the weighted average remaining contractual life are as follows:

			Weighted Average		Weighted Average
Option Price Per Share	Number		Exercise Price		Remaining Life
$0.34-$1.02		1,716,163	$	0.70		6.83	years
$1.11-$1.47		1,201,333		1.24		4.45	years
$1.54-$2.10		958,334		1.69		7.42	years
		3,875,830	$	1.11		6.24	years

8

Notes to Consolidated Financial Statements

For the Six Months Ended June 30, 2009

(Canadian Dollars in Thousands, except as otherwise noted)

(Unaudited)

The fair value of stock options issued in the period was estimated using the Black-Scholes option pricing model with assumptions of six year weighted average expected option life, no expected forfeiture rate, 55.85% to 61.92% volatility and interest rates ranging from 2.1% to 2.25%.  For the period ended June 30, 2009, the compensation cost recorded in respect of stock options issued was $326,000 (June 30, 2008 - $279,000).

Note 9 - Income taxes

From time to time, the Company may finance a portion of its exploration activities through the issue of flow-through shares.  The Company estimates the tax cost of expenditures renounced to subscribers on the date the deductions are renounced.  Share capital is reduced and future income tax liabilities are increased by the estimated tax benefits renounced.  The Company has unrecorded tax benefits on  loss carryforwards and tax pools in excess of book values available for deduction against which a valuation has been provided.  In these circumstances, the future tax liability reduces the valuation allowance and this reduction is recognized in earnings: 2009 - $0.0 million; 2008 - $2.2 million.

Note 10 - Financial Instruments

The Company is exposed in varying degrees to a variety of financial instrument related risks by virtue of its activities.  The overall financial risk management program focuses on preservation of capital and protecting current and future Company assets and cash flows by reducing exposure to risks posed by the uncertainties and volatilities of financial markets.

The Board of Directors has responsibility to ensure that an adequate financial risk management policy is established and to approve the policy.

The Company's Audit Committee oversees Management's compliance with the Company's financial risk management policy, approves financial risk management programs, and receives and reviews reports on management compliance with the policy.

The types of risk exposure and the way in which such exposures are managed are as follows:

Credit Risk - The Company's credit risk is primarily attributable to its liquid financial assets including cash and cash equivalents, receivables, and commodity and currency instruments.  The Company limits exposure to credit risk on liquid financial assets through maintaining its cash and cash equivalents and reclamation deposits with high-credit quality financial institutions.  Sales of commodities are to entities considered to be credit worthy.  The Company does not have financial assets that are invested in asset backed commercial paper.

Liquidity Risk - The Company ensures that there is sufficient capital in order to meet short term business requirements, after taking into account cash flows from operations and the Company's holdings of cash and cash equivalents.  The Company believes operating cash flows may not be sufficient to fund the continued exploration at its Madsen exploration project.  The Company intends to continue divesting its non core assets, the proceeds of which may decrease the amount of additional capital to be raised.  The Company's cash is invested in business accounts with quality financial institutions and which is available on demand for the Company's programs.

Market Risk - The significant market risk exposures to which the Company is exposed are foreign exchange risk, interest rate risk and commodity price risk.  These are discussed further below:

Foreign exchange risk - The Company's revenues from the production and sale of gold are denominated in US dollars.  However, the Company's operating expenses are primarily incurred in Canadian dollars and its liabilities are primarily denominated in Canadian dollars.  The results of the Company's operations are subject to currency risks.  The operating results and financial position of the Company are reported in Canadian dollars in the Company's consolidated financial statements.  The fluctuation of the US dollar in relation to the Canadian dollar will consequently have an impact on the profitability of the Company and may also affect the value of the Company's assets and the amount of shareholders' equity.

Interest rate risk - In respect to the Company's financial assets, the interest rate risk mainly arises from the interest rate impact on cash and cash equivalents, reclamation deposits and debt.  In respect to financial liabilities, two of the Company's demand loans carry a floating interest rate with the other demand loan at a fixed interest rate.  The Company chooses to fix its interest costs to avoid variations in cash flows.  Due to the greater proportion of fixed rate debt, a 1% change in interest rates would not materially impact earnings or cash flow.

Commodity price risk - The value of the Company's mineral resources is related to the price of gold and the outlook for this mineral.  Gold prices historically have fluctuated widely and are affected by numerous factors outside of the Company's control, including, but not limited to, industrial and retail demand, central bank lending, forward sales by producers and speculators, levels of worldwide production, short-term changes in supply and demand because of speculative hedging activities, and certain other factors related specifically to gold.  The profitability of the Company's operations is highly correlated to the market price of gold.  If the gold price declines below the cost of production at the Company's mines, for a prolonged period of time, it may not be economically feasible to continue production.

Fair Value - The Company has various financial instruments comprising of cash and cash equivalents, receivables, restricted promissory notes, reclamation deposits, accounts payable and accrued liabilities and short term debts.

9

Notes to Consolidated Financial Statements

For the Six Months Ended June 30, 2009

(Canadian Dollars in Thousands, except as otherwise noted)

(Unaudited)

	June 30				December 31
	2009				2008
	Carrying		Estimated		Carrying		Estimated Fair
	Value		Fair Value		Value		Value
Loans and Receivables
Accounts receivable (1)		3,005		3,005		275		275
Interest receivable on restricted promissory note  (1)		2,059		2,059		4,830		4,830
Restricted promissory note (2)		n/a		n/a		n/a		n/a
Available-for-sale financial assets
Investments (3)		602		602		607		607
Held-for-trading
Cash and cash equivalents (1)		-		-		8,390		8,390
Reclamation deposits (1)		2,277		2,277		2,277		2,277
Other financial assets
Assets held for sale (Note 4) (1)		151		151		912		912
Other financial liabilities
Bank indebtedness (1)		3,433		3,433		-		-
Demand loans (1)		5,722		5,722		3,969		3,969
Payables and accrued liabilities (1)		8,142		8,142		5,794		5,794
Liabilities related to assets held for sale (Note 4) (1)		200		200		732		732
Interest payable on royalty obligations (1)		2,001		2,001		4,709		4,709
Debenture		9,132		9,838		16,575		18,095

(1) Due to the nature and / or short maturity of these financial instruments, carrying value approximated fair value

(2) The cash flows associated with the restricted promissory notes and royalty obligations match.  Due to the lack of comparable market information, the fair value of these instruments is not determinable

(3) Based on quoted market prices

Note 11 - Capital Disclosures

The Company's objective when managing its capital is to safeguard its ability to continue as a going concern so that it can continue to provide adequate returns to shareholders and benefits to other stakeholders.  The Company manages the capital structure and makes adjustments to it in light of changes in economic conditions and the risk characteristics of the underlying assets.  In order to maintain or adjust the capital structure, the Company may issue new shares through private placements, sell assets or incur debt.  The Company is not subject to externally imposed capital requirements.

The Company utilizes a combination of short-term and long-term debt and equity to finance its operations and exploration.  The Company's capital structure at June 30, 2009 was as follows:

	June 30		December 31
	2009		2008
Operating line of credit	$	3,433	$	-
Demand loans (Note 6)		5,722		3,969
Debenture (Note 7)		9,132		16,575
Total debt		18,287		20,544
Less: cash and cash equivalents		-		8,390
Net debt		18,287		12,154
Shareholders' equity		92,657		87,072
Total capital	$	110,944	$	99,226

The Company is bound by and has met all covenants on these credit facilities.

Note 12 - Comparative Figures

Certain prior period balances have been reclassified to conform to the current period's financial statement presentation.

10