Madsen Area

Claude regained 100% control of the Madsen exploration project effective September 1, 2006 after Goldcorp was unable to meet the terms of an Option Agreement.  The Madsen properties comprise six contiguous claim blocks totaling approximately 10,000 acres (4,000 hectares) located in the prolific Red Lake Mining District of northwestern Ontario.  The Company has 224 contiguous patented and leased mining claims within these claim blocks.  The Madsen property is anticipated to play a prominent role in Claude’s mission to become a recognized and valued exploration and mining company with a producing asset base.

The Madsen project includes the following properties: Buffalo, Starratt-Olsen, Aiken-Russett, Redaurum, Hagar Option, and the Madsen property.  These properties are collectively referred to as the “Madsen properties” and are located in the Red Lake Mining District of northwestern Ontario which is approximately ten kilometres southwest of the town of Red Lake.

Included on the southwestern part of the Madsen properties is the Madsen gold mine and mill.  Accessible by an all-weather road which leads directly to the headframe of the Madsen mine, the property’s infrastructure includes the historic Madsen mine workings, a 500 tonne per day mill and permitted tailings facility.  The mill consists of a single stage crushing circuit and a two stage grinding circuit, which is then followed by cyanide leaching.  Ontario Hydro supplies power via overhead lines at 44KV to a step-down transformer on the Madsen property.

From 1938 until the mine’s closure in 1976, gold production at Madsen exceeded 2.6 million ounces. The ore was mined from mineralized sulfide-replacement structures to a depth of over 1,200 metres.

Planned Exploration 

The Company considers its Madsen properties to be an advanced exploration stage project.  Although the Madsen mine is a former gold producer, the Company has not to date conducted enough exploration or prepared a feasibility study to determine if the Madsen properties contain any economic ore reserves.  Therefore, the current operations on the properties consist of an exploratory search for mineable deposits of ore.

The Company has completed a surface drill program over the main stringer envelope of mineralization intersected in the Treasure Box zone, 2.4 kilometres north of the Madsen mine complex.  Claude’s drill program, carried out from December 2006 to May 2007, comprised 13,285 metres in 49 vertical holes.  The Treasure Box zone was discovered in 2002 and given its name due to nuggety visible gold present in drill core.  This zone is characterized by quartz-tourmaline-calcite-sulphide stringers and veins up to 35 centimetres wide carrying nuggety visible gold.  The veins appear to have been emplaced as late-stage brittle fracture fillings in mafic metavolcanic rocks and are considered to represent the uppermost portion of an Archean gold system

Grid drilling was carried out with holes at 15 metre intervals along four lines spaced 30 metres apart.  The vertical holes varied from 213 to 414 metres. The main quartz-tourmaline network of veins forms a system averaging 20 metres in thickness with a general northwest trend and dip of 45 to 60 degrees to the northeast.  The mineralization is continuous along 165 metres of strike length and is considered open on both sides and at depth.  The drill program also revealed a possible layered nature to this brittle system, with one definite zone of quartz-tourmaline veining approximately 100 metres beneath the main horizon, and another possible zone to the northeast, 60 metres structurally above.

Assay results from the program together with the appropriate follow-up check assays are expected to be completed in the third quarter; however, highlights of preliminary results were given in a July 17, 2007 news release entitled Claude Resources Inc. Provides Preliminary Results of Red Lake Drill Program. 

Work on the Madsen property will continue during the summer with surface mapping and geochemical sampling programs as well as the commencement of a core drill program to test the Russet ultramafic horizons for up-plunge extensions to the historic high grade Zone 8 lense at the Madsen mine.  Zone 8 was discovered and mined between 1969 to 1974 on the 2200 to 2700 levels (1,100 to 1,200 metres depth).  This zone is a lense of quartz carbonate alteration associated with the main Russet Lake ultramafic body.   Ore taken during the historical mining operations possessed the same geological characteristics as other high grade deposits in the Red Lake area, notably at the Campbell and Red Lake Mines.

Historically, drill and face samples from this zone reported over 1 ounce per ton.  However, it was common practice at Madsen during this period to remove all visible gold pieces before bagging for laboratory analysis; this did not allow for more exact calculations.  In addition, Zone 8 ore was blended with lower grade mill feed, again blocking any true grade analysis.

The Madsen project is fully staffed and the shaft and hoist has been recommissioned for the underground de-watering project.  The Level 6 pump station is on-line and Level 16 is expected to be de-watered by the second half of 2008.  This will provide underground access for drill definition of extensions to the historic high grade Zone 8 in addition to other zones.  Concurrent with drilling from Level 16, dewatering will continue until the mine is completely dewatered to Level 24.

Regional and Property Geology

The Red Lake District is situated at the western end of the Archean Uchi Subprovince which comprises a series of metasedimentary and metavolcanic rocks essentially surrounded by granitic and gneissose rocks. Several volcanic cycles have been distinguished in the area, evolving from ultramafic, through mafic and intermediate phases to a felsic cycle with abundant clastic and chemical metasediments. The rocks trend northeast and are affected by regional and local scale folding accompanied by restricted zones of intense shearing.

The Madsen mine, when operational, worked a series of stacked, en echelon ore lenses consisting of gold-bearing pyritic shoots with subordinate pyrrhotite and arsenopyrite. The mineralization is hosted within two parallel micaceous units termed the Austin and McVeigh "tuffs". These tuffs are interpreted to be an alteration/deformation corridor within basalts, with pillowed through volcaniclastic facies. The alteration corridor occurs at the contact of the underlying Balmer assemblage with the much younger Confederation assemblage. The host rocks dip to the southeast. The McVeigh horizon lies approximately 90 metres to the north of the Austin tuff. The latter was the most prolific producer in the past. Workings extended to a depth of 1,275 metres and the mineralized zone has been traced for 2,308 metres along strike.

The McVeigh tuff contains variably altered, auriferous pyrite-bearing lenses that occur within the Flat Lake-Howey Bay deformation zone hosted by massive and pillowed basalts overlain by a thin mafic to ultramafic sill, highly altered mafic volcanic and volcaniclastic rocks (the Austin tuff) and a quartz feldspar porphyry that marks the base of the Confederation assemblage. The mineralization is semi-conformable to stratigraphy and dips at a slightly steeper angle than the host formations.

High-grade gold pods were also historically worked at depth in a zone of highly altered ultramafic rocks, in the footwall of the main mine workings. Some of this high-grade mineralization (No. 8 zone) occurs in blue quartz veins near the contact of an altered basalt with an ultramafic unit. This mineralized contact is located stratigraphically below the main sulfide replacement mineralized zones on the north side of the shaft, approximately 600 metres in the footwall.

Quality Assurance and Quality Control Procedures

Rigorous quality assurance and quality control practices have been implemented on all Company core drill programs including blank, reference and duplicate samples with each batch of assays.   Madsen and Santoy 8 samples are analyzed by fire assay with a combination of atomic absorption and gravimetric finish at an independent ISO approved facility.   Santoy 7 samples were analyzed by fire assay with a gravimetric finish at the Seabee Mine laboratory, with check samples sent to an independent ISO approved facility.

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