Financial

For the three months ended March 31, 2003, the Company recorded net earnings of $.6 million ($0.01 per share) compared to a net loss of $2.0 million ($0.05 per share) for the same period in 2002.

Total revenue generated for the quarter was $8.9 million, 71% higher than that reported in the 2002 period. Gold revenues increased 55% over the comparative quarter last year, the result of increased gold sales volume combined with higher realized gold prices. The 125% increase in oil and gas sales revenue was a result of higher averaged realized petroleum prices, particularly in the natural gas sector.

The Seabee mine contributed $5.9 million to revenue for the first quarter of 2003 compared to $3.8 million for the same period last year. Sales volume for the period increased 41% from 8,300 ounces in 2002 to 11,700 ounces in 2003. As expected, mill throughput for the first quarter of 2003 originated from the mine’s high-grade 2B zone between the 400 metre and 600 metre levels, resulting in increased production. Gold revenues were also positively impacted by higher average realized prices: 2003 – US $336 (CDN $507); 2002 US $290 (CDN $462).

Gross oil, natural gas liquids and gas revenues totalled $3.0 million for the current period compared to $1.3 million last period. First quarter oil and natural gas liquids sales volume of 19,100 barrels was relatively unchanged from the barrels sold during the previous period. The average realized price per barrel was US $27.89 (CDN $44.47) compared to US $18.56 (CDN $29.57) in the comparative 2002 period. Gas volume also remained relatively unchanged with sales volume in the current period of 217 MMCF. However, the average realized price more than doubled: 2003 – US $5.23 (CDN $7.89); 2002 – US $1.88 (CDN $3.00).

Total operating and administrative costs increased from $4.9 million for the first quarter of 2002 to $5.6 million this period. Total mine operating costs were $4.8 million for this quarter versus $3.9 million last period. Increased development and mining of more but smaller stoping blocks combined with a net draw down of stockpiled ore and shrinkage stope platform costs contributed to this increase. These increased operating costs offset by the higher sales volume during the period resulted in a 7% decline in cash operating costs per ounce: 2003 – US $272; 2002 – US $294. As the Company continues to mine and mill higher-grade ore for the remainder of 2003, the per ounce costs should continue to fall and better reflect expected US $210-220 cash costs per ounce.

General and administrative costs fell by 33% from $.6 million in the first quarter of 2002 to $.4 million this period. Last period’s balance included the settlement of a prior year property tax assessment at the Madsen property. Interest and other and the provision for income taxes, which represents capital tax payments, remained relatively unchanged.

Depreciation and depletion of the Company’s gold assets was $1.0 million for the first three months of 2003, compared with $1.3 million in the corresponding 2002 period. This slight decrease is a combination of increased Seabee ore reserves and a reduction in both tonnes broken and tonnes milled. Depreciation and depletion costs per ounce for the period were US $56 compared to US $95 for the first quarter of 2002.

Cash flow from operations before net change in non-cash working capital items was $1.7 million ($0.03 per share) for the quarter compared to cash flows used in operations of $.6 million ($0.01 per share) in 2002. This increase in cash flows was due to a combination of higher gold and oil & gas sales volumes, higher average realized prices in gold and oil & gas offset by an increase in operating costs at the Seabee mine.

Capital expenditures increased from $2.0 million in 2002 to $4.9 million in the current period. Much of this reflects $2.0 million spent to date on the Seabee shaft extension project, $.8 million in exploration, funded by a 2002 flow-through issue, and $2.1 million in mine development and equipment costs.

To finance the Seabee shaft extension, the Company completeda non-brokered private placement of 2,500,000 units, each unit consisting of one common share and one half of one common share per purchase warrant, at a price of $1.50 per unit, for gross proceeds of $3,750,000. Each whole purchase warrant will entitle the holder, upon exercise at any time up to and including January 31, 2004, and upon payment of $1.85, to subscribe for one common share.

During the quarter the Company repaid $83,000 of a demand loan and $16,000 of a capital lease obligation.

At March 31, 2002, Claude had $9.4 million in working capital, an increase of $.4 million from the year ended December 31, 2002. This increase was a combination of increased contribution margins from producing assets and share issuance proceeds offset by certain capital expenditures financed from operating cash flows.


Operations

Gold – Seabee mine

Claude’s Seabee mining operation is expected to achieve its target of 52,000 ounces of production for the year 2003. Mineral reserves and resources are at levels consistent with the mine’s history.

During the quarter, mill feed averaged 528 tonnes per day @ 8.60 grams per tonne. This daily tonnage is modestly below target but will increase as mine development below the 500 metre level achieves greater levels of completion.

The Seabee shaft extension project began during the quarter and is progressing on plan. When completed in the third quarter, the shaft will extend to the 600 metre level and result in reduced operating costs.

The annual ACA Howe International Limited independent review of the Seabee reserves was conducted in March and indicates an increase, over the prior year’s results, in both reserve tonnage and average grade of ore. The results of the review are outlined below: