Despite a reported healthy 5% growth in gold demand for the first quarter of 2001, the overall gold industry remained lackluster during the second quarter, with limited investor interest and gold prices continuing to trade in a narrow range.

The Company experienced lower gold production in the first half of the year, as ore grades from the D zone, the current area of mining at the Seabee, have not met expectations. The mine schedule, however, does provide for concurrent development of the B and C zones, which consistently grade higher than the D. With grades showing improvement in the D zone and with expected higher grade swell and free pull from the B and C zones, production is anticipated to steadily improve over the balance of the year. As a result, 2001 production forecasts have been adjusted to 50,100 ounces.

Improved oil and gas revenues combined with lower operating costs at Seabee have partially offset reduced gold revenues, enabling the Company to produce positive cash flow for the first half of 2001.

Financial Highlights

Financial Results

Claude recorded a net loss of $1.2 million ($.03 per share) for the first half of 2001 compared to break-even net earnings for the same period in 2000.

Sales revenues of $15.7 million for the first six months of the year were $.6 million lower than the 2000 period. Gold revenues decreased 25% over last year, largely as a result of decreased production. The 68% increase in gross oil and gas revenue, a result of higher realized petroleum prices for first half of 2001, mitigated the effects of reduced gold revenues.

The Seabee mine contributed $9.4 million to revenue for the first half of 2001 compared to $12.5 million for the same period last year. Gold production fell from 30,100 ounces poured in 2000 to 22,800 ounces poured this period. Although a 6% decrease in production was budgeted, the additional decline was a result of lower ore grades from certain of our larger stopes. Gold revenues were also affected by a slightly lower average realized price (2001 – CDN $411/US $268; 2000 – CDN $415/US $283).

Gross oil, natural gas liquids and gas revenues totaled $6.4 million for the 2001 year to date, compared to $3.8 million last period. This significant increase was a result of improved petroleum prices, particularly in the natural gas sector, which saw an increase of over 166% in the average realized price.

Total operating and administrative costs fell from $11.1 million for the first six months of 2000 to $9.7 million for the first six months of 2001. The concerted effort to lower operating costs at the Seabee mine, together with a reduction in interest charges, accounted for the majority of the change.

Total mine cash costs were $7.8 million, a decrease of 13% from the $9.0 million recorded in 2000. The Seabee mine continues to minimize production costs wherever and whenever possible.

Cash operating costs per ounce increased from US $203 per ounce in the first half of 2000 to US $223 per ounce in the current period. This 10% increase is largely a result of lower gold production during the first half of this year.

Depreciation and depletion of the Company’s gold assets was $2.9 million for the first six months of 2001, compared with $2.0 million in the corresponding 2000 period. This increase is a combination of two factors: a write-down of reserves this quarter, mainly a result of lower than expected grades in the Seabee D zone; and the adoption of National Instrument 43-101. Amortization and depreciation costs per ounce for the 2001 six month period were US $83 compared to US $46 in the 2000 period.

Cash flow provided from operations for the six month period was $1.9 million ($.05 per share) compared to $3.0 million ($.08 per share) in 2000, a 37% decrease. This is due to a combination of low gold production offset by minimized production costs and a $.6 million increase in operating cash flow from our oil and gas properties.

Capital expenditures for the period ended June 30, 2001 amounted to $2.0 million, a decrease of $2.6 million from the 2000 period. Capital spending at the Seabee mine included $1.3 million (2000 - $2.2 million) for mine development and $.15 million for work on the Triangle Lake tailings dam expansion. Although Claude incurred minimal expenditures on the Madsen property for the first six months of 2001, $1.8 million was spent on Madsen exploration for the same period in 2000.

Current and long-term debt at June 30, 2001 was $.6 million. Financing activities in the first six months of 2001, undertaken to secure an existing reclamation liability, amounted to $.7 million (2000 - nil).

Currency & Commodity Hedging

To manage risks associated with gold prices and changes in foreign currency, the Company may use commodity and foreign currency instruments. At June 30, 2001, the
Company had outstanding foreign exchange contracts to sell US $3.0 million at an average exchange of 1.5623 $CDN/US.

Operations

Gold

The reduced grade in the D section has led to a reduction in the mine’s proven and probable reserves, from 579,000 tonnes at the end of the first quarter to 435,000 tonnes at the end of the second quarter. Claude has added a second underground drill and expects to replace these tonnes over the ensuing three or four quarters.

During the six months ended 2001, 133,019 tonnes averaging 6.30 grams per tonne were processed to produce 22,800 ounces. This compares to 116,470 tonnes averaging 8.85 grams per tonne to produce 30,100 ounces in 2000.

Virtually all mining and exploration during the first ten years of Seabee’s mine life has occurred above the 400 metre level. For the latter half of 2001, drilling and development will emphasize targets below this level. To a limited degree, the Company has previously drilled successful exploration holes at the 800 metre level and is confident that substantial reserves exist between the 400 and 800 metre levels.

Oil & Gas

During the first half of 2001 the Company’s oil and gas holdings produced 12% less oil and ngl’s and 3% less gas than the comparable period in 2000. These decline percentages were expected and more than offset by increases in oil and gas prices realized for the current period.

Exploration

In the first quarter, Placer, as operator of the Madsen property, completed its Phase One program to test the mafic-ultramafic stratigraphy that hosts the high grade No. 8 Zone. A four-hole program totaling 3,432 metres tested approximately 1,000 metres of strike length and successfully developed the framework for the ensuing second drill phase.

Phase Two is a directional-drilling program focused on assessing the up-dip and/or up-plunge projection of the No. 8 Zone. Phase Two was started in the second quarter of 2001, with final results not expected until late fall 2001.

The protracted low price for gold has dictated reduced exploration funding for Company operated projects. As a result, the emphasis of exploration in the first half of 2001 continued to be on the Company’s core properties, the Seabee mine and Amisk Lake areas. Work at the Seabee was largely an assessment review to develop intermediate targets worthy of follow-up. Mapping and prospecting on two encouraging trends is scheduled for the third quarter.

Fieldwork in the Amisk Lake area resulted in the identification of two composite shear structures. The more westerly structure is approximately one kilometre north of the Laural Lake deposit and hosted in a similar felsic volcanic unit. The mineralized system is marked by shearing, silicification and pyritization. The second shear-hosted mineralized zone outcrops on Lookout Island, approximately three kilometres north of Denare Beach. Based on prospecting and basic geological mapping, the target appears to be a series of anastomosing shear surfaces that have been silicified and pyritized. Both structures returned elevated gold assays from grab samples. A program to establish the limits of these structures is in the formulative stage.

For further information please contact:
Neil McMillan, President
Phone: (306) 668-7505

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, 2000. The unaudited consolidated financial statements include the financial statements of the Company and its subsidiary.

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 period's presented.

Note 2 - Share Capital

At June 30, 2001 there were 40,553,853 common shares outstanding.

Options in respect of 1,550,000 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 August, 2010.

At the annual meeting of shareholders on May 23, 2001, a special resolution was passed reducing the stated capital of the Company by $40,000,000.