Overview

Gold prices were extremely volatile during the second quarter of 2006 with prices realized averaging US $621 per ounce up 45% over the second quarter of 2005. Resource stock prices were also volatile, pulling back 20-30% for most companies during the quarter.

Claude’s Seabee mine gold production for the quarter was above forecast at 12,900 ounces versus 12,100 ounces budgeted, which leads the Company to believe 2006 total production could be as much as 10% above the Company’s 48,000 ounce forecast.

Bulk sampling of the Porky Lake project near the Seabee mine was well underway during the second quarter and the nearby Santoy project bulk sample is also on schedule to be completed in 2006.

During the second quarter, Goldcorp Inc. closed their transaction with Barrick Gold Corporation for the Canadian assets of Placer Dome Inc. and consequently assumed responsibility for the “Option Agreement” on Claude’s 10,500 acre Madsen Red Lake exploration project. Discussions are currently underway with Goldcorp regarding the Madsen project.

Financial Highlights

	Three Months Ended June 30, 2006	Three Months Ended June 30, 2005	Six Months Ended June 30, 2006	Six Month Ended June 30, 2005
Revenue ($ millions)	10.7	7.5	21.9	15.5
Net earnings (loss) ($ millions)	2.4	(1.9)	6.9	(1.7)
Earnings (loss) per share ($)	0.03	(0.03)	0.09	(0.03)
Cash from operations ($ millions)*	3.4	.6	6.3	1.9
Cash from operations per share ($)*	0.05	0.01	0.09	0.03
Average realized gold price (US $/ounce)	621	427	588	434
Total cash operating costs (US $/ounce)	362	377	357	346
Working capital ($ millions)	7.1	9.6	7.1	9.6

* before net change in non-cash working capital

OPERATIONS

Gold

For the first half of 2006, the Seabee mine processed 127,200 tonnes of ore grading 6.55 grams per tonne compared to 109,600 tonnes of ore grading 6.30 grams per tonne for the similar period in 2005. This combination of increased throughput and grade resulted in a 21% improvement in produced ounces versus the same period in 2005 (2006 – 25,000; 2005 – 20,700). Also, during the first half, the mine broke 17% more tonnes (2006 – 110,500; 2005 – 94,800) with a 42% increase in grade (2006 – 8.91 grams per tonne; 2005 – 6.28 grams per tonne) resulting in a 65% increase in broken ounces (2006 – 31,700 ounces; 2005 – 19,200 ounces).

Operating Statistics		Three Months Ended June 30		Six Months Ended June 30
		2006	2005	2006	2005
	Tonnes mined	60,300	45,800	110,500	94,800
	Mined grade (g/t)	8.79	4.94	8.91	6.28
	Mined volume (ounces)	17,000	7,300	31,700	19,200
	Tonnes milled	65,500	55,400	127,200	109,600
	Grade processed (g/t)	6.52	5.69	6.55	6.30
	Recovery (%)	94.33	93.53	93.46	93.07
	Sales volume (ounces)	12,700	9,100	25,800	19,400
	Production volume (ounces)	12,900	9,500	25,000	20,700

During the quarter mill throughput continued to originate from three long-hole stopes on the 800 through 850 metre levels. The 162/3915 shrinkage stope and 2b6308 cut and fill stopes were completed and the 2b7509 and 161/395 shrinkage stopes began. The additional broken ounces and the several working places currently being mined are expected to improve mill throughput in the second half of the year and should allow production to exceed the 48,000 ounce forecast by as much as 10%.

Development during the half concentrated on the 550 south vein and 570 level diamond drill chamber while the main decline was driven down to the 830 metre level. Development during the second half will focus on driving a decline to the 850 metre level to access the 8514 ore block.

Diamond drilling continued on both the 550 level and 600 level diamond drill chambers. Drilling from the 600 level chamber focused on the 2C orebody past the 7914 vein and positive results extended this vein eastward. The 600 level drill is moving to the 340 level under the previously mined D zone. Drilling from the 550 level chamber is focusing on the 5-1 and 5-2 structures under the old No. 5 mine workings. Drill results are showing structure but no significant grade to date. This drill will remain on the 500 level but will rotate away from the 5-1 and 5-2 structures and concentrate on extending zones to the north.

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 and gas prices were offset by production declines and resulted in contributed cash flow from operations in the first half of this year of $.6 million ($0.01 per share) compared to $.9 million ($0.02 per share) for the same period in 2005.

EXPLORATION

During the second quarter, the Company began its summer exploration program with continued definition drilling of the Porky West and Santoy 7 mineralized zones. This will be followed up later in the summer with further drill tests of the Santoy 8, the Shane Property mineralization and other zones delineated through an ongoing program of soil/rock chip geochemical sampling and follow-up prospecting.

Santoy Area

The Santoy property lies 11 kilometres east of the Seabee mine. The area hosts numerous occurrences of gold mineralization. Zone 8 has been sufficiently drill-tested to support the calculation of an estimated inferred mineral resource of 910,000 tonnes of 6.10 grams per tonne (top cut of 30 grams per tonne). The bottom cut-off grade used is 3.0 grams per tonne over 1.2 metres true width. A specific gravity of 2.8 is used based on Seabee mine practice.

In October 2005, the Company received permits from the necessary regulatory agencies to proceed with bridge/road work to the site and to bulk sample Zone 7. Work at Zone 7 during the second quarter comprised the continued construction of the necessary support buildings and emplacement of the machinery required to advance the decline, slated to begin in July. The bridge is now completed along the road to Santoy from the Seabee mine, and road construction to the east of the bridge has been pushed out to kilometre seven of approximately 15. It is expected the road will be completed and the bulk sample delivered to the Seabee mill in the latter half of 2006. Pending positive results, the Company expects to begin mining at Zone 7 in 2007.

In June 2006, a 4,000 metre program of infill drilling was begun at Zone 7 as an aid to the design of the underground bulk sample program.

Porky West Zone

The Porky Lake area lies two kilometres north of the Seabee mine and contains an extensive 7.5 kilometre gold mineralized shear horizon at the contact of volcanic and sedimentary rocks. Four significant zones have been identified along this horizon to date, one of which (Porky West) has been sufficiently drill-tested to support the calculation of an estimated indicated mineral resource of 90,000 tonnes of 7.33 grams per tonne and an estimated inferred mineral resource of 130,000 tonnes of 5.00 grams per tonne.

The necessary permits were received in 2005 and by the end of this second quarter the Company had advanced the ramp approximately 600 metres, attaining a vertical depth of 60 metres. This work has allowed access to the vein system in three places. Drifting along the western sill will commence as soon as possible, removing and stockpiling ore grade material for the bulk test. It is expected the bulk sample will be delivered to the Seabee mill during the second half of 2006. Approximately 5,000 tonnes will be extracted from the 130 metre level. Pending positive results of the bulk sample, the Company expects to begin mining the Porky West deposit in 2007.

An infill core drill program of 1,228 metres was carried out during the month of June, to aid in delineation of the mineralization in selected areas.

Shane Area

The Shane area lies about five kilometres east of the Seabee mine. During the first quarter, 12 core drill holes tested mineralization hosted by quartz veins and sheared metavolcanic rocks of the Pine Lake greenstone belt. Results of this drilling were issued in the May 4, 2006 press release “Claude Resources finds significant gold intersections on Shane property”. During June, work proceeded to study this area further with a soil/rock chip geochemical survey and geological mapping and prospecting. A core drill program will follow up the summer results.

Madsen Property

In 2005, Placer delivered its final 2004 exploration report for the Madsen property located near Red Lake, Ontario in the prolific Red Lake gold mining camp. By the end of 2004, Placer had spent a total of $8.6 million on the Property, $400,000 more than required by the option agreement with Claude. As per the agreement, Placer, or its successor Goldcorp, has until December 2006 to deliver a positive bankable feasibility study to fulfill its obligations and vest in the Madsen Joint Venture with a 55% working interest. Discussions are currently underway with Goldcorp regarding the Madsen project.

FINANCIAL

The Company recorded net earnings of $2.4 million, or $0.03 per share, after a gain on sale of investments of $2.4 million for the second quarter of 2006. This compares to a net loss of $1.9 million, or $0.03 per share, for the same period last year. The period over period earnings increase was due largely to the combination of improved gold revenues and the gain on sale of investments offset by higher operating costs and increased depreciation and depletion charges on the Company’s gold assets.

For the six months ended June 30, 2006, the Company recorded net earnings of $6.9 million, or $0.09 per share, after a $3.9 million gain realized on the sale of certain portfolio investments and a $2.7 million non-cash recovery related to income tax benefits arising from the issuance of flow-through shares. This compares to a net loss of $1.7 million, or $0.03 per share, for the same period last year. The year to date earnings improvement was due largely to significantly higher gold revenues, the gain on investment sale and tax recovery offset by higher mine operating costs and non-cash depreciation and depletion charges.

Revenue

Total gross revenue generated for the second quarter of 2006 was $10.7 million, a 43% improvement over the $7.5 million reported for the same period in 2005. The Seabee mine contributed $8.9 million to revenue for the second quarter of 2006 compared to $4.8 million for the same period last year. Gold sales volume for the period improved by 40% from 9,100 ounces in 2005 to 12,700 ounces this quarter. This was due to an 18% increase in tonnes milled combined with a 14% increase in ore grade. The average price realized for this period, also contributing to revenue improvement, was CDN $697 (US $621) versus CDN $529 (US $427) for the same period in 2005. Gross oil, ngls and natural gas revenue for the quarter fell 30%, from $2.7 million in 2005 to $1.9 million in 2006. This was attributed to production declines offset by improved petroleum and gas prices realized.

Total revenue for the first half of 2006 increased 41% from $15.5 million in 2005 to $21.9 million for the comparable period in 2006. The Seabee mine contributed $17.2 million to revenue, a 65% improvement from the 10.4 million recorded in 2005. The improvement was a result of higher gold sales volume (2006 – 25,800; 2005 – 19,400) due to increased mill throughput combined with slightly higher ore grade. The significant rise in gold prices realized also contributed to revenue growth: 2006 – CDN $669 (US $588); 2005 – CDN $535 (US $434).

Gross oil, ngls and natural gas revenues totaled $4.7 million for the first half of 2006, a 10% reduction from the $5.2 million for the same period in 2005. This was due to a combination of increased petroleum prices (2006 – CDN $67.68; 2005 – CDN $53.49) and slight improvement in natural gas prices (2006 – CDN $7.78; 2005 – CDN $7.25) offset by production declines. Corresponding decreases to Alberta Crown Royalties and overriding royalties mitigated the decrease in net oil and gas revenue.

Expenditures

For the three months ended June 30, 2006, total mine operating costs were $5.2 million, a 21% increase from the $4.3 million recorded for the comparable period last year. This was largely due to the incremental costs required to mine and mill 32% and 18% more tonnes respectively than for the same period in 2005. The higher operating costs combined with the appreciating Canadian versus US dollar offset by the higher sales volume resulted in a slight decrease in cash operating cost per ounce (Q22006 – US $362; Q22005 – US $377).

The 25% increase in oil, ngls and gas operating costs, $.4 million in the second quarter of 2005 compared to $.5 million this period, was due to general cost increases.

A 17% and 16% increase in tonnes mined and milled for the first half of 2006 compared to 2005 resulted in a 27% increase in mine operating costs: 2006 - $10.5 million, 2005 - $8.3 million. As well, the Company is experiencing the industry-wide effects of increasing labour and consumable costs. Total cash cost per ounce rose from US $346 for the first half of 2005 to US $357 this year to date. This increase was due to a combination of higher mine operating costs and a stronger Canadian versus US dollar offset by higher gold ounces sold.

Oil, ngls and gas operating costs increased to $1.0 million this half from $.7 million for the same period in 2005. The Company is experiencing the same cost pressures with respect to its oil and gas assets as it is currently experiencing with its mining assets.

Administrative Costs

For the second quarter of 2006, general and administrative costs were 40% higher, rising from $.5 million in 2005 to $.7 million this period. Year to date costs increased from $1.3 million to $1.5 million largely due to added focus on investor relations and slightly stock compensation costs resulting from the expensing of stock options.

Depreciation and Depletion

For the second quarter of 2006, depreciation and depletion of the Company’s gold assets increased by 35% over the same period in 2005. For the six months ended June 30, 2006, this increase was 27%, rising from $4.4 million in 2005 to $5.6 million this period. The increase was due to a combination of more tonnes mined and milled during the period, the amortization of a larger asset base (due to aggressive development programs) and a slightly declining reserve base.

Depreciation and depletion of the Company’s oil and gas assets fell slightly, a result of improved oil reserves.

Other Income

During the first half, the Company disposed of a portion of its investment portfolio, realizing a gain of $1.5 million and $2.4 million in the first and second quarters, respectively.

Income Taxes

The income tax recovery of $2.7 million was the estimated income tax benefit arising from the issuance of flow-through shares in 2005 and the subsequent renouncement of those expenditures in 2006. During the first half of 2005, the Company reported a similar benefit and recovery of $1.3 million.

Liquidity & Financial Resources

Cash flow from operations before net change in non-cash working capital items was $6.3 million for the first half of 2006, or $0.09 per share, compared to $1.9 million, or $0.03 per share in 2005. The year to date’s 232% improvement is attributable to higher contributions from the Seabee mine in the form of both added sales volume and higher realized gold prices.

Investing

Mineral property expenditures of $9.3 million during the first half of 2006 remained relatively unchanged from the same period in 2005. This period’s expenditures were comprised of the following: Seabee mine development of $3.7 million (2005 - $4.3 million); exploration costs, focusing on the Porky and Santoy Lake bulk sample projects of $3.5 million (2005 - $1.9 million); property, plant and equipment charges of $2.1 million (2005 - $3.0 million).

Oil and gas capital expenditures of $1.7 million during the half increased from $.9 million for the same period in 2005. This primarily represents drilling costs at the Nipisi Unit and infrastructure costs on the Edson gas plant.

During the first half, the Company disposed of a portion of its portfolio investments for proceeds of $4.3 million. The Company holds several investments in publicly traded entities which have a book value of $.1 million and fair market value of $1.3 million at June 30, 2006.

Financing

Financing activities during the first half were minimal and included the issuance of 108,000 common shares pursuant to the Company’s Employee Share Purchase Plan, the exercise of 105,000 options and the exercise of 127,000 warrants issued pursuant to a 2005 private placement.

The Company repaid $.5 million during the half on a $5.0 million demand loan borrowed in February, 2005. The proceeds and repayments on capital lease obligations relate primarily to equipment acquired for the Porky and Santoy Lake bulk samples.

OUTLOOK

As a result of the added tonnage expected to be available for mill throughput in the second half, the Company is providing an upward revision of its gold sales volume guidance. With first half sales of 25,800 ounces the Company is optimistic that 2006 sales volume could exceed the original target of 48,000 ounces by as much as 10%. Mine operating costs are expected to increase by 10% to 15% over original forecasts of $18.4 million due to the expected increase in both tonnage, mined and milled. Capital investment remains close to budget, with mine development costs expected at $7.3 million, plant and equipment costs revised upwards to $3.0 million and explorations costs remaining between $5 million to $6 million due to the Porky Lake and Santoy bulk samples. Depreciation and depletion charges are also expected to increase as tonnage mined and milled improve during the second half.

During the second half, the Company expects to be in a position to process tonnes from both the Porky Lake and Santoy bulk samples. Successful bulk sampling at either or both projects could lead to a production increase as early as the first quarter of 2007.

Oil and gas revenues should remain as targeted. Operating costs and capital expenditures have been revised upwards due to general industry increases and infrastructure costs on the Edson gas plant, respectively.

DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES

To mitigate the effects of price fluctuations on revenues, the Company may undertake hedging transactions from time to time, in respect of foreign exchange rates and the price of gold. At June 30, 2006, the Company had no outstanding forward gold contracts. At June 30, 2006, the Company had outstanding foreign exchange contracts to sell US $2.0 million at an average exchange rate of 1.1199 CDN$/US$.

BALANCE SHEET

The Company’s total assets were $101 million at June 30, 2006 compared to $95 million at December 31, 2005. The increase is mostly attributable to supplies, inventory increases and capital invested on both our gold and oil and gas properties.

The long-term debt of $.4 million relates to capital lease obligations – primarily on assets to advance bulk sample programs. The Company has a $3.8 million back loan outstanding but because it is a demand loan the entire amount has been classified as a current liability for accounting purposes. Working capital was $7.1 million at June 30, 2006 compared to $6.9 million at December 31, 2005.

Shareholders’ equity for the six months ended June 30, 2006 increased by $4.7 million. The increase reflects net earnings of $6.9 million and a $2.7 million decrease to share capital, a result of the offset entry to the 2005 flow- through share issues and subsequent income tax recovery. Contributed surplus increased slightly due to stock options granted, offset by options exercised during the half.

OUTSTANDING SHARE DATA

At June 30, 2006, there were 72.8 million common shares outstanding. In addition, there were .1 million consultant options, 3.2 million employee stock options and 3.3 million warrants outstanding with exercise prices ranging from $.53 to $2.10 per share and $1.10 to $3.00 per share, respectively.

DISCLOSURE CONTROLS AND PROCEDURES

As of June 30, 2006, the Company evaluated its disclosure controls and procedures as defined under Multilateral Instrument 52-109. This evaluation was performed by the Chief Executive Officer and the Chief Financial Officer with the assistance of other Company employees to the extent necessary or appropriate. Based on this evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the design and operation of these disclosure controls and procedures were effective.

NON-GAAP PERFORMANCE MEASURES

The Company reports its operating, depreciation and depletion costs on a per-ounce basis, based on uniform standards developed by the Gold Institute. Management uses this measure to analyze the profitability, compared to average realized gold prices, of the Seabee mine. Investors are cautioned that the above measures may not be comparable to similarly titled measures of other companies, should these companies not follow the Gold Institute standards.

Cash flow from operations per common share is determined by dividing the cash flow from operations, before the net change in non-cash working capital items, by the weighted average number of common shares outstanding during the period. The measures are not necessarily indicative of operating profit or cash flow from operations as determined under Canadian GAAP.

CAUTION REGARDING FORWARD-LOOKING INFORMATION

This MD & A contains certain forward-looking statements relating but not limited to the Company’s expectations, intentions, plans and beliefs. Forward-looking information can often be identified by forward-looking words such as “anticipate”, “believe”, “expect”, “goal”, “plan”, “intent”, “estimate”, “may” and “will” or similar words suggesting future outcomes or other expectations, beliefs, plans, objectives, assumptions, intentions or statements about future events or performance. Forward-looking information may include reserve and resource estimates, estimates of future production, unit costs, costs of capital projects and timing of commencement of operations, and is based on current expectations that involve a number of business risks and uncertainties. Factors that could cause actual results to differ materially from any forward-looking statement include, but are not limited to, failure to establish estimated resources and reserves, the grade and recovery of ore which is mined varying from estimates, capital and operating costs varying significantly from estimates, delays in obtaining or failures to obtain required governmental, environmental or other project approvals, inflation, changes in exchange rates, fluctuations in commodity prices, delays in the development of projects and other factors. Forward-looking statements are subject to risks, uncertainties and other factors that could cause actual results to differ materially from expected results.

Potential shareholders and prospective investors should be aware that these statements are subject to known and unknown risks, uncertainties and other factors that could cause actual results to differ materially from those suggested by the forward-looking statements. Shareholders are cautioned not to place undue reliance on forward-looking information. By its nature, forward-looking information involves numerous assumptions, inherent risks and uncertainties, both general and specific, that contribute to the possibility that the predictions, forecasts, projections and various future events will not occur. Claude Resources undertakes no obligation to update publicly or otherwise revise any forward-looking information whether as a result of new information, future events or other such factors which affect this information, except as required by law.

ADDITIONAL INFORMATION

Additional information related to the Company is available at www.sedar.com and www.clauderesources.com

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.