UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549



Form 10-Q



QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACTS OF 1934



For the quarterly period ended August 31, 2007



Commission File Number 000-30965



KLONDIKE STAR MINERAL CORP.
(Exact name of registrant as specified in its charter)





|Delaware                        | 91-198708             
|------------------------------- | ----------------------
|(State or other jurisdiction of | (I.R.S. Employer      
|Incorporation or Organization)  | Identification Number)







Box 20116, 1031 - Ten Mile Road
Whitehorse, Yukon Y1A 7A2
(Address of principal executive offices)



(800) 579-7580
(Registrant's telephone number, including area code)



(Former name, former address, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.

Yes     [X]        
No     [ ]

Indicate by check mark whether the registrant is a large accelerated filer,
an accelerated filer, on a non-accelerated filer. See definition of "accelerated
filer and large accelerated filer" in Rule 12b-2 of the Exchange Act. (Check
One)

Large accelerated filer     [ ]    
Accelerated filer     [ ]    
Non-accelerated filer     [X]

Indicate by check mark whether the registrant is a shell company (as defined
in Rule 12b-2 of the Exchange Act)     Yes    
[ ]     No     [X]

As of August 31, 2007 there were 32,957,497 shares of the registrant's Common
Stock, par value $.0001 per share, outstanding.

FORWARD LOOKING STATEMENTS

Some of the information presented in this quarterly report constitutes
forward-looking statements within the meaning of the private Securities
Litigation Reform Act of 1995. Statements that are not historical facts,
including statements about management's expectations for fiscal year 2003 and
beyond, are forward looking statements and involve various risks and
uncertainties. Although the Company believes that its expectations are based on
reasonable assumptions within the bounds of its knowledge, there can be no
assurance that actual results will not differ materially from the Company's
expectations. Factors that could cause the actual results to differ materially
from expectations are discussed in the Company's Annual Report on Form 10-K and
in other filings with the Securities and Exchange Commission.

---

Item 1. Financial Statements



KLONDIKE STAR MINERAL CORPORATION CONSOLIDATED FINANCIAL STATEMENTS
  
  August 31, 2007






---



KLONDIKE STAR MINERAL CORPORATION

August 31, 2007



TABLE OF CONTENTS



FINANCIAL STATEMENTS



> CONSOLIDATED BALANCE SHEETS . . .
>     . . . . . . . . . . . .  . . . . . . . . . . . . . . . . . . . . . . .
>     . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
>     CONSOLIDATED STATEMENTs OF
>     OPERATIONS  . . .  . . . . . . . . . . . . . . . . . . . . . . . .
>     . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
>     CONSOLIDATED StatementS of
>     Stockholders' Equity  . . . .  . . . . . . . . . . . . . . . . . .
>     . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
>     CONSOLIDATED StatementS of Cash
>     Flows  . . . . . . . . . . .  . . . . . . . . . . . . . . . . . .
>     . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS                                                                                                    
5

---

KLONDIKE STAR MINERAL CORPORATION
  (An Exploration Stage Company)
  CONSOLIDATED BALANCE SHEETS




The accompanying condensed notes are an integral
part of these consolidated interim financial statements.
1

---

KLONDIKE STAR MINERAL CORPORATION
  (An Exploration Stage Company)
  CONSOLIDATED STATEMENTS OF OPERATIONS




The accompanying condensed notes are an integral part of these
consolidated interim financial statements.
2

---

KLONDIKE STAR MINERAL CORPORATION
  (An Exploration Stage Company)
  CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY




The accompanying condensed notes are an integral part of these
consolidated interim financial statements.
3

---

KLONDIKE STAR MINERAL CORPORATION
  (An Exploration Stage Company)
  CONSOLIDATED STATEMENTS OF CASH FLOWS




The accompanying condensed notes are an integral part of these
consolidated interim financial statements.
4

---

KLONDIKE STAR MINERAL CORPORATION
  (An Exploration Stage Company)
  Condensed Notes to the Consolidated Financial Statements
  August 31, 2007


NOTE 1 -DESCRIPTION OF BUSINESS



Klondike Star Mineral Corporation (hereinafter "the Company")
is engaged in mineral exploration in the Yukon Territory, Canada. The Company
was originally incorporated in 1999 under the laws of the State of Delaware. The
Company was also registered in the Yukon Territory, Canada effective June 22,
2004. The Company maintains its head office in Whitehorse, Yukon Territory,
Canada.



The Company was originally incorporated as Cyberbiz, Inc.,
later changed its name to Urbanfind, Inc. and again in 2004 changed its name to
Klondike Star Mineral Corporation. The Company's fiscal year-end is the last
calendar day of February.



Historically, the Company had been principally engaged in an
internet-based business. Upon its acquisition of certain mining claims in
December 2003, the Company began a new exploration stage as a minerals
exploration company.



As the Company is in the exploration stage, it has not
realized any revenues from its planned operations.



On March 16, 2007, the Company incorporated a wholly owned
subsidiary, Klondike Star Canada Inc. ("Klondike Star Canada") under the Canada
Business Corporations Act. Klondike Star Canada maintains its head office in
Whitehorse, Yukon Territory, Canada. As of August 31, 2007 Klondike Star Canada
had no operation.





NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES



The foregoing unaudited interim financial statements have been prepared in
accordance with generally accepted accounting principles for interim financial
information and with the instructions to Form 10-Q and Regulation S-K as
promulgated by the Securities and Exchange Commission ("SEC"). Accordingly,
these financial statements do not include all of the disclosures required by
generally accepted accounting principles in the United States of America for
complete financial statements. These unaudited financial statements should be
read in conjunction with the audited financial statements for the year ended
February 28, 2007. In the opinion of management, the unaudited interim financial
statements furnished herein include all adjustments, all of which are of a
normal recurring nature, necessary for a fair statement of the results for the
interim period presented. Operating results for the six-month period ended
August 31, 2007 are not necessarily indicative of the results that may be
expected for the year ending February 29, 2008.



This summary of significant accounting policies is presented to assist in
understanding the financial statements. The financial statements and notes are
representations of the Company's management, which is responsible for their
integrity and objectivity. These accounting policies conform to accounting
principles generally accepted in the U.S. and have been consistently applied in
the preparation of the financial statements.

Accounting Methods

The Company's financial statements are prepared using the accrual basis of
accounting in accordance with accounting principles generally accepted in the
United States of America.



Basis of Presentation

These consolidated interim financial statements are prepared
in accordance with accounting principles generally accepted in the United States
of America. The Company consolidates more-than-50% owned subsidiaries that it
controls and entities over which control is achieved through means other than
voting rights. These consolidated financial statements include the accounts of
the Company and its wholly-owned subsidiary Klondike Star Canada Inc.
(incorporated under the Canada Business Corporations Act). All significant
transactions and balances among the companies included in the consolidated
financial statements have been eliminated.



Concentration of Risk

The Company maintains its cash in a commercial bank in
Bellevue, Washington, and in a commercial bank in Whitehorse, Yukon Territory.
The account in Washington is guaranteed by the Federal Deposit Insurance
Corporation (FDIC) up to $100,000. The Canadian dollar accounts in Yukon
Territory are guaranteed by the Canadian Deposit Insurance Corporation (CIDC) up
to $100,000 Canadian ($94,679 US dollars at August 31, 2007). At August 31,
2007, the Company exceeded the FDIC insured amount by approximately $400 and
exceeded the CIDC insured amount by approximately $201,000 U.S.

Mineral Exploration and Development Costs

In accordance with accounting principles generally accepted
in the United States of America, the Company expenses lease exploration costs as
incurred. As of August 31, 2007, the exploration costs and mineral rights
expensed during the Company's exploration stage have been approximately
$44,025,000. Significant property acquisition payments for active exploration
properties are capitalized. If no minable ore body is discovered, previously
capitalized costs are expensed in the period the property is abandoned.
Expenditures to develop new mines, to define further mineralization in existing
ore bodies, and to expand the capacity of operating mines, are capitalized and
amortized on a units of production basis over proven and probable reserves.



Should a property be abandoned, its capitalized costs are
charged to operations. The Company charges to operations the allocable portion
of capitalized costs attributable to properties sold. Capitalized costs are
allocated to properties sold based on the proportion of claims sold to the
claims remaining within the project area.



Use of Estimates

The preparation of financial statements in accordance with generally accepted
accounting principles requires the use of estimates and assumptions that affect
the reported amounts of assets and liabilities, disclosure of contingent assets
and liabilities known to exist as of the date the financial statements are
published, and the reported amounts of revenues and expenses during the
reporting period. Uncertainties with respect to such estimates and assumptions
are inherent in the preparation of the Company's financial statements;
accordingly, it is possible that the actual results could differ from these
estimates and assumptions which could have a material effect on the reported
amounts of the Company's financial position and results of operations.

Going Concern

As shown in the financial statements, the Company incurred a net loss of
approximately $4,555,000 for the six months ended August 31, 2007 and has an
accumulated deficit of approximately $56,074,000 since inception of the
Company's exploration stage (December 8, 2003). The Company currently has no
revenues and no operating mining properties.

These factors indicate that the Company may be unable to continue in
existence. The financial statements do not include any adjustments related to
the recoverability and classification of recorded assets, or the amounts and
classification of liabilities that might be necessary in the event the Company
cannot continue in existence. Management's plans include actively seeking
additional capital and management believes that new properties can ultimately be
developed to enable the Company to continue its operations. However, there are
inherent uncertainties in mining operations and management cannot provide
assurances that it will be successful in its endeavors.

The Company's management believes that it will be able to generate sufficient
cash from public or private debt or equity financing for the Company to continue
to operate based on current expenditure projections of $11,000,000 for fiscal
year ending in 2008. The Company has approximately $341,000 in cash at August
31, 2007.



NOTE 3 - PROPERTY AND EQUIPMENT



Capital assets are recorded at cost. Depreciation is calculated using the
straight-line method over three to ten years. The following is a summary of
property, equipment, and accumulated depreciation:

|                                    |                                |                          |               
|----------------------------------- | ------------------------------ | ------------------------ | --------------
|                                    |                                |                          |               
|                                    | Balances as at August 31, 2007
|                                    | Cost                           | Accumulated Depreciation | Net Book Value
|                                    |                                |                          |               
|Depreciable Capital Assets:         |                                |                          |               
|Leasehold improvements              | $ 988,862                      | $ 277,967                | $ 710,895     
|Movable structures                  | 975,894                        | 355,343                  | 620,551       
|Vehicles                            | 415,505                        | 225,658                  | 189,847       
|Equipment                           | 316,110                        | 169,379                  | 146,731       
|Heavy equipment                     | 290,293                        | 23,399                   | 266,894       
|All-terrain vehicles                | 123,606                        | 97,758                   | 25,848        
|Trailers                            | 94,550                         | 35,656                   | 58,894        
|Computer equipment                  | 46,740                         | 30,938                   | 15,802        
|Computer software                   | 21,966                         | 15,408                   | 6,558         
|Furniture and fixtures              | 19,527                         | 8,140                    | 11,387        
|Pack horse                          | 5,765                          | 2,883                    | 2,882         
|Total Depreciable Assets            |                                |                          |               
|                                    |                                |                          |               
|Non Depreciable
    Capital Assets: |                                |                          |               
|Gold samples                        | 105,574                        | -                        | 105,574       
|Total Capital Assets                | $ 3,404,392                    | $ 1,242,529              | $ 2,161,863   

Total depreciation expense for the six months ending August 31, 2007, 2006
and 2005 is $364,653, $243,969 and $138,099 respectively.

NOTE 4 - RELATED PARTY TRANSACTIONS



Effective June 2004, the Company signed an agreement for the
right of occupancy of a barn and property from one of the directors of the
Company and his spouse ("the Owner"), for the shelter of pack horses and an
office. The right of occupancy term is five years, renewable yearly thereafter.
Rent is $1 per month. Prior to the expiration of the right of occupancy, the
Owner may require the Company at the Company's sole cost and expense, to remove
any alterations, installations, additions or improvements made by the Company.
At the expiration of the lease, the Owner is obligated to pay to the occupier
the fair market value of the buildings less 75 % and shall be entitled to pay
such sum over a 20 year period in equal monthly installments without interest.



Leaseholds improvements, which total approximately $989,000
as of August 31, 2007, have been made to the barn and office.



On occasion, the Company's shareholders or directors pay
corporate expenses and/or provide services to the Company. Related party
payables are unsecured and non-interest bearing and are due on demand. Related
party payables totaled $18,586, $110,148 and $14,465 at August 31, 2007,
February 28, 2007 and February 28, 2006, respectively. During the six months
ending August 31, 2007, the Company included in mineral exploration expense
$122,200 ($563,300 for the six months ended August 31, 2006 and, $88,700 for the
six months ended August 31, 2005) in transactions with a company controlled by
an officer and director of the Company. The transactions were recorded at fair
market value.



NOTE 5 - PREFERRED STOCK



The Company is authorized to issue 20,000,000 shares of
$0.0001 par value preferred stock. The Company previously issued 2,000,000
preferred stock convertible to 10 common shares of common stock, non-cumulative
and non-dividend bearing. The Company's board of directors will determine the
specific features of each additional issuance of preferred shares. At August 31,
2007, February 28, 2007 and February 28, 2006, the Company had 2,000,000 shares
of preferred convertible stock issued and outstanding.



On January 12, 2007 the Company modified the terms of the
issued and outstanding preferred stock. Each Series A convertible preferred
stock ("Series A") is convertible into one (1) common stock and one (1) Series B
preferred stock; non-cumulative, non-dividend bearing, non-voting and is
subordinate to common stock in the event of liquidation, dissolution, or
wind-up. Each Series A shall be convertible, at the holders option, into one
common stock and one Series B preferred stock, in the event the Company receives
a notice of tender, as defined pursuant to Regulation 14D of the Securities
Exchange Act of 1934, to purchase the majority of the issued and outstanding
common stock of the Company. The Company shall not issue fractional shares of
common stock resulting from conversion; a cash payment in lieu of fractional
shares shall be made. The conversion price shall be adjusted for any common
stock dividends, subdivisions, combinations, or other adjustment.



Series B preferred stock is non-dividend bearing,
non-convertible into any other class of Company stock, and is not eligible to
participate in the distribution of Company assets in the event of liquidation,
dissolution, or wind-up. Each Series B preferred stock is entitled to vote for
directors either at special or annual general meetings of shareholders. Each
Series B preferred stock is entitled to vote such number of votes per share as
shall equal four (4) shares of common stock.



At August 31, 2007, February 28, 2007 and February 28, 2006,
the Company had no Series B preferred shares issued and outstanding.



NOTE 6 - COMMON STOCK



As approved by the shareholders at the Company's 2006 annual
general meeting, the Company's authorized common stock was increased to
120,000,000 shares of $0.0001 par value common stock. Each holder of common
stock has one, non-cumulative vote per share on all matters voted upon by the
shareholders. At August 31, 2007, February 28, 2007 and February 28, 2006, the
Company had 33,406,909; 29,035,782 and 25,202,800 shares of common stock issued
and outstanding, respectively.



During the six months ended August 31, 2007, the Company sold
through private placements 16,000 common shares at $1.25 per share for total net
cash proceeds of $18,000; sold 20,000 common shares at $1.07 per share for total
net cash proceeds of $19,260; sold 100,000 common shares at $1.00 per share for
total net cash proceeds of $90,000; sold 285,715 common shares at $1.05 per
share for total net cash proceeds of $270,000, sold 227,273 common shares at
$1.10 per share for total net cash proceeds of $250,000 and sold 221,239 common
shares at $1.13 per share for total net cash proceeds of $250,000.



Effective May 29, 2007, the Company issued a private
placement memorandum for the issuance of up to 3,000,000 common stock of the
Company, at $0.50 per share, under Regulation S, for total estimated cash
proceeds of $1,500,000 with the offering expiring on or before July 16, 2007. As
of August 31, 2007, the Company sold 3,500,000 common shares under this private
placement memorandum for total net cash proceeds of $1,725,000.



During the six months ended August 31, 2007, the Company
issued a private placement memorandum for the issuance of up to 2,000,000 common
stock of the Company, at $0.50 per share, under Regulation S, for total
estimated cash proceeds of $1,000,000 with the offering expiring on or before
September 30, 2007. As of August 31, 2007, the Company sold 500,000 common
shares under this private placement memorandum for total net cash proceeds of
$225,000.



During the six months ended August 31, 2007, the Company
approved a private placement memorandum for the issuance of up to 3,000,000
units of one common stock of the Company and one warrant to purchase one common
stock of the company of up to $1.50 per share; with the unit price being equal
to the 5 day volume average price preceding the date of purchase less $0.10. As
of August 31, 2007, the Company has not sold any units under this private
placement memorandum.



During the three months ended May 31, 2007, the Company
approved a private placement memorandum for the issuance of 13,200,000 shares of
common stock at $2.25 per shares under Regulation S, with the offering expiring
on or before July 6, 2007.



Warrants

During the year ended February 28, 2006, the Company executed
a private placement memorandum to issue up to 4,000,000 shares of common stock
at $2.75 per share with one warrant attached to each share to purchase an
additional share at a minimum conversion price of $3.50. Each warrant must be
exercised within one year from date of the original investment. Using the Black-Scholes
formula, the Company made the following assumptions to value the warrants for
the year ended February 28, 2007; risk-free interest rate of 4.5%; volatility of
31%; life of one year; no dividends.





|                                               | Number of Warrants | Weighted Average Remaining Life | Average Exercise Price
|---------------------------------------------- | ------------------ | ------------------------------- | ----------------------
|Outstanding and exercisable, February 28, 2006 | 1,300,000          | 0.0 years                       | $ 3.50                
|Issued                                         | 3,032,982          | 0.2 years                       | 3.50                  
|Exercised                                      | -                  |                                 | -                     
|Rescinded or expired                           | (1,300,000)        |                                 | 3.50                  
|Outstanding and exercisable, February 28, 2007 | 3,032,982          | 0.2 years                       | $ 3.50                
|Issued                                         | -                  |                                 | -                     
|Exercised                                      | -                  |                                 | -                     
|Rescinded or expired                           | (2,259,982)        |                                 | 3.50                  
|Outstanding and exercisable, August 31, 2007   | 773,000            | 0.2 years                       | $ 3.50                





NOTE 7 - STOCK-BASED COMPENSATION AND STOCK OPTIONS

During the year ended February 28, 2007, the Company granted options to
employees to purchase a total of 250,000 shares of common stock at $2.50 per
share. These shares are fully vested and exercisable over a five year term. The
Company recognized employee compensation expense of $437,500. The Company also
granted options to consultants to purchase a total of 100,000 shares of common
stock at $2.50 per share and recognized $175,000 compensation expense during the
year.

In accordance with Statement of Financial Accounting Standards No. 123, the
fair value of the options granted was estimated using the Black-Scholes Option
Price Calculation. The following assumptions were made to value the stock
options:



|Risk-free Interest Rate | 4.5%   
|----------------------- | -------
|Expected Life           | 5 years
|Expected Volatility     | 30.8%  
|Dividends to be paid    | Nil    





The Black-Scholes option valuation model was developed for
use in estimating the fair value of traded options, which are fully
transferable.



In addition, option valuation models require the input of
subjective assumptions including the expected stock price volatility. Because
the Company's employee stock options have characteristics significantly
different from those of traded options and because changes in the subjective
input assumptions can materially affect the fair value estimate, in management's
opinion, the existing models do not necessarily provide a reliable single
measure of the fair value of its employee stock options.



Following is a summary of the status of the stock options
during the six months ended August 31, 2007:





|                                                                                               | 2003 Stock Incentive Plan     | 2005 Stock Incentive Plan       | Total                        
|---------------------------------------------------------------------------------------------- | ----------------------------- | ------------------------------- | -----------------------------
|                                                                                               | Number of Shares Under Option | Weighted Average Exercise Price | Number of Shares Under Option
|Outstanding
    February 28, 2004                                                              | -                             | $       -                       | -                            
|Granted                                                                                        | 1,200,000                     | 1.00                            | -                            
|Exercised                                                                                      | -                             | -                               | -                            
|Rescinded or expired                                                                           | -                             | -                               | -                            
|Outstanding
    February 28, 2005                                                              | 1,200,000                     | 1.00                            | -                            
|Granted                                                                                        | 30,000                        | 2.50                            | -                            
|Exercised                                                                                      | -                             | -                               | -                            
|Rescinded or expired                                                                           | -                             | -                               | -                            
|Outstanding
    February 28, 2006                                                              | 1,230,000                     | 1.04                            | -                            
|Granted                                                                                        | 350,000                       | 2.50                            | -                            
|Exercised                                                                                      | -                             | -                               | -                            
|Rescinded or expired                                                                           | -                             | -                               | -                            
|Outstanding at
    February 28, 2007                                                           | 1,580,000                     | 1.36                            | -                            
|Granted                                                                                        | -                             | -                               | -                            
|Exercised                                                                                      | -                             | -                               | -                            
|Rescinded or expired                                                                           | -                             | -                               | -                            
|Outstanding at
    August 31, 2007                                                             | 1,580,000                     | $ 1.36                          | -                            
|Exercisable at
    August 31, 2007                                                             | 1,580,000                     | $ 1.36                          | -                            
|Weighted average
    fair value of options granted during the six months ended August 31, 2007 |                               | $      -                        |                              







NOTE 8 - SUBSEQUENT EVENTS



Subsequent to the quarter ended August 31, 2007, the Company
issued a private placement memorandum (Regulation S) in primarily in support of
exploration investment in the Arab Republic of Egypt for up to 3,000,000 shares
at the 5 day volume averaged price preceding the date of purchase minus $0.10,
for total estimated proceeds between $3,000,000 and $3,750,000, with the
offering expiring on or before February 29, 2008.

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ITEM 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations

Overview

Klondike Star Mineral Corporation is an exploration and development
enterprise currently with eight gold, base and precious metal projects totaling
about 446 km2 or 172.5 mi2 in the Yukon, located in the
northwest corner of Canada; and one project totaling 1,245 km2 or 481
mi2 in the Arab Republic of Egypt In Canada, the Company is
developing extensive surface and subsurface mineralized zones on a 353.4 km2
or 136.6 mi2 land position underlying in the site of the
world-renowned Klondike gold producing region, and 92.6 km2 or 35.9
mi2 of select high potential targets in other parts of the Yukon.
Klondike Star was awarded a major mineral exploration and development concession
in Egypt for the Oweinat property pursuant to a law passed by the Egyptian
Parliament.

During the coming year, the Company expects to continue increasing its land
holdings, projects and exploration effort. At the same time, Klondike Star
evaluates existing properties and makes determinations about whether to sustain
exploration or take other steps. Klondike Star is evaluating the Ultra and
Indian River Conglomerate properties vis-a-vis the new strategic plan and
discussing next steps with joint venture partners to make a determination about
whether to invest in further exploration.

Description of the Business

From inception as a mineral exploration stage enterprise in December 2003,
the Company has acquired mineral properties, negotiated joint ventures,
established financing arrangements, and planned and conducted exploration
activities involving 8 different projects in the Yukon, Canada. In addition,
opportunities in other countries are being actively pursued, including Egypt.

Mineral exploration and mine development includes such activities as
conventional prospecting, geological/geophysical surveys and research, as well
as excavation, diamond and auger drilling, analysis of core, soil, mini and bulk
samples, milling and testing of processing technologies, mineral resource
assessment, facility construction and maintenance, equipment acquisition and
maintenance, road and access construction, scoping studies and environmental
monitoring for potential mine development.

In its first year as a mineral exploration company, Klondike Star earned a
55% and controlling interest in the Lone Star Project in the Dawson Mining
District, Yukon. This property includes the site of the original Klondike Gold
Rush. Since then, the Company has expanded systematically to a total of nine
exploration and development projects: six gold prospects in the Klondike region
of the Yukon and two gold, base and precious mineral properties in other parts
of the Yukon; and one major exploration project in Egypt

In support of its mission, Klondike Star has established corporate goals
relating to mineral production, capital formation and durable investor
relationships, employer of choice, sustainable development and good corporate
governance. Following substantive research, workshops and discussions in
February - June, 2007, the Board approved a formal Strategic Plan setting
corporate direction for the next three years.

Klondike Star is advancing its projects operating under a multi-prong
strategy. This involves a long-term, systematic and results-oriented approach
towards exploration research, supported by a scaled expansion of field
operations on carefully selected assets, combined with a concurrent investment
in planning for potential mine development. The strategy is founded on and
features such elements as:

* undertaking mineral exploration and development within a sustainable
  development paradigm;

* selecting and advancing quality mineral exploration projects managed and
  evaluated by a team of qualified industry professionals;

* establishing links with internationally recognized university-based
  geology resources for expertise and access to leading technology in geological
  science;

* demonstrating substantive focus on good corporate governance and best
  practices;

* forging strong relationships with financial professionals in order to
  provide adequate capital investment for its projects with the goal of bringing
  new mining production on-stream in the future;

* investing in relationships with and collaborative efforts involving First
  Nations, local suppliers and contractors;

* acquiring and supporting a large and growing shareholder base;

* practicing proactive, balanced and timely disclosure addressing what is
  newsworthy from a shareholder perspective in a manner that meets and exceeds
  regulatory requirements; and

* building shareholder value through every aspect of the Company's business
  and operations.

Currently, mineral resource exploration and exploitation property rights are
located in Canada and the Arab Republic of Egypt

On March 16, Klondike Star established Klondike Star Canada Inc., a wholly
owned Canadian subsidiary. The new company was established to support planned
growth and development including new mineral exploration and development
opportunities in Canada and globally.

The Company currently has a year-round full-time equivalent labour force of
about 15-20 employees that expands to 60-70 employees, not including contractors
and consultants during the summer/fall exploration season, with a winter
seasonal labour force of about 10 employees.

Klondike Star Mineral Corporation is listed on the NASD.OTCBB trading under
the symbol "KDSM".

Overall Performance

Highlights for the three-months ending August 31, 2007 include:

Operational

- Completing the first-ever summer Indian River gold project drilling program
that finalized 1,000 foot drill lines on a substantial portion of the
mineralized area on the property; as well as completing 500 foot in-fill drill
lines facilitating assessment of mineral reserves, mine and business planning.

- Obtaining approval from the Government of Yukon for mine development at the
Indian River Gold Project following a public environmental and socio-economic
assessment process;

- Undertaking comprehensive exploration programs including diamond and rotary
direct circulation drilling, IP geophysical survey, bulk sampling, soil sampling
on the Lone Star and Dominion gold projects;

- Concluding the agreement the Arab Republic of Egypt for exploration and
exploitation of the Oweinat property and making preparations for establishing
operations in Egypt.

- Completing the energy supply options study with a mine/mill waste rock
management and reclamation study and the fourth year of environmental monitoring
in progress as part of the Lone Star mine scoping study.

- Undertaking year 3 of the Klondike Research Project through the University
of British Columbia's Mineral Deposit Research Unit.

- Adoption of the 2007-09 strategic plan and additional governance measures,
including making progress on the implementation of Section 404 of the
Sarbanes-Oxley Act.

Financial

- The unaudited loss from operations for the three months ending August 31,
2007, was $2,786,785, net loss of $0.09 per share, compared to unaudited
operating loss of $3,178,703, net loss of $0.12 per share for the three months
ending August 31, 2006.

The unaudited loss from operations for the six months ending August 31, 2007,
was $4,553,762, net loss of $0.15 per share, compared to unaudited operating
loss of $5,098,670, net loss of $0.20 per share for the six months ending August
31, 2006.

- The unaudited cash flow used in operations for the six months ending August
31, 2007, was $3,873,023 compared to $3,602,745 for the six months ending August
31, 2006;

- The changes in cash flow used in operations from August 2006 to August 2007
relate to the increased activity on the Indian River gold project, diamond
drilling on the Spice project and early mobilization of exploration crews and
drilling for Klondike-area projects

- During the quarter ending August 31, 2007, the Company raised $2,622,260
through private placements of common stock.

Financial indicators

|                                                                            | Six Months ended August 31, 2007 | Year-end
    February 28, 2007 | Year-end
    February 28, 2006
|--------------------------------------------------------------------------- | -------------------------------- | ------------------------------ | ------------------------------
|Total expenses                                                              | $ 4,553,762                      | $ 9,967,672                    | $ 8,778,272                   
|Net loss from continuing
    operations                                     | $ 4,554,995                      | $10,043,789                    | $ 8,741,926                   
|Cash used in operating
    activities                                       | $ 3,873,023                      | $ 8,621,116                    | $ 5,610,326                   
|Cash raised by financing
    activities, net                                | $ 2,622,260                      | $ 9,090,299                    | $ 8,068,568                   
|Cash and cash equivalents on
    hand                                       | $ 341,280                        | $ 2,390,876                    | $ 3,514,176                   
|Net loss per common share: Basic
    and Diluted                            | $ (0.15)                         | $ (0.38)                       | $ (0.39)                      
|Weighted average number of
    common shares outstanding: Basic and diluted | 29,457,680                       | 26,512,538                     | 22,562,923                    
|Cash dividends declared per
    common share                                | $ 0.00                           | $ 0.00                         | $ 0.00                        
|Property, plant and equipment,
    net book value                           | $ 2,161,863                      | $ 2,227,683                    | $1,211,137                    
|Long-term debt                                                              | $ 0                              | $ 0                            | $ 0                           
|Shareholders' equity                                                        | $ 1,838,406                      | $ 4,271,141                    | $ 4,612,131                   

Investor relations indicators

|                                                  | Six Months ended August 31, 2007 | Year-end February 28, 2007      | Year-end February 28, 2006      | Change from year-end 2007 to quarter-end
    August 31, 2007
|------------------------------------------------- | -------------------------------- | ------------------------------- | ------------------------------- | ------------------------------------------------------------
|Common shares issued and
    outstanding          | 33,406,909                       | 29,035,782                      | 25,202,800                      | Increase of 4,371,127 or 15%                                
|Restricted shares                                 | 14,132,939                       | 9,943,734                       | 18,025,906                      | Increase of 4,189,205 or 42%                                
|Free trading shares                               | 19,273,970                       | 19,092,048                      | 7,176,894                       | Increase of 181,922or 0.95%                                 
|Warrants outstanding and
    exercisable          | 773,000                          | 3,032,982                       | 1,300,000                       | Decrease of 2,259,982 or 74.5%                              
|Share price range by low and
    high             | Monthly range of $0.90 to $1.44  | Monthly range of $1.50 to $3.98 | Monthly range of $2.75 to $3.40 | Reduction in price and range between low and high           
|Share volume monthly high                         | 1,009,940                        | 4,223,025                       | 2,359,551                       | Reduction in monthly high                                   
|Shareholders                                      | About 4030                       | About 5,550                     | About 4,200                     | Decrease of 1,520 or 27%                                    
|Material event press releases
    and 8-K reports | 10                               | 36                              | 22                              | Not applicable                                              
|Share options authorized and
    unexercised      | 1,580,000                        | 1,580,000                       | 1,230,000                       | Nil                                                         

Share price from February 2004 to period-end August 31, 2007

(Source: Bell Globemedia Publishing Inc. 2007 and OTCBB)

Quarter                                             
High Quarterly Price          Low Quarterly Price

|Q1, 2004 March - May         | 3.69                                        2.90    
|---------------------------- | ----------------------------------------------------
|Q2, June - August            | 3.30                                        3.00    
|Q3, September - November     | 3.75                                        3.05    
|Q4, December - 2005 February | 3.74                                        2.80    
|Q1, 2005 March - May         | 3.70                                        2.55    
|Q2, June - August            | 3.15                                        2.50    
|Q3, September - November     | 3.85                                        2.85    
|Q4, December - 2006 February | 3.50                                        2.70    
|Q1, 2006 March - May         | 3.98                                        3.00    
|Q2, June - August            | 3.92
                                           3.50
|Q3, September - November     | 3.72
                                           2.50
|Q4, December - 2007 February | 2.70
                                           1.50
|Q1, 2007 March - May         | 1.75
                                           1.00
|Q1, 2007 June - August       | 1.44                                        0.90    



Exploration and development projects

The mineral rights are organized into ninediscrete exploration and
development projects. As of August 31, 2007, the Company has a majority
ownership interest in five projects and an exclusive option to explore, earn or
purchase an ownership interest in three projects in Canada; and has been awarded
rights to explore and exploit a major exploration property in Egypt.

|Property Synopsis  
|-------------------
|Project            
|CANADA             
|Indian River Placer
|Lone Star Quartz   
|Dominion Quartz    
|Spice Quartz       
|Ultra Quartz       
|Bonanza Quartz     
|Indian River Quartz
|Eldorado Placer    
|EGYPT              
|Oweinat            

Mineral rights indicators1

|                                                 | 2nd quarter ended August 31, 2007 | 1st quarter ended May 31, 2007 | Year-end
    February 28, 2007 | Year-end
    February 28, 2006 | Year-end
    February 28, 2005  | Change from
    year-end 2007 to period-end August 31,2007               
|------------------------------------------------ | --------------------------------- | ------------------------------ | ------------------------------ | ------------------------------ | ------------------------------- | -------------------------------------------------------------------------
|Exploration projects                             | 9                                 | 9                              | 8                              | 6                              | 2                               | Increase of 1 project                                                    
|Quartz mining claims                             | No change                         | 2166                           | 2166                           | 1921                           | 1753                            | None                                                                     
|Total area of quartz claims and
    crown grants | No change                         | 418.3/161.5                    | 418.3 km2/161.5 mi2            | 352 km2/
    135.9 mi2         | 239 km2(estimate)/
    92.3 mi2 | None                                                                     
|Placer mining claims                             | No change                         | 338 plus 3 leases              | 329 plus 43 mi of leases       | 300 plus 43 miles of leases    | 114 plus 60 miles of leases     | Increase of 9 claims or 2.7% and
    significant release of annual leases
|Total area of placer claims and
    leases       | No change                         | 28 km2/10.9 mi2                | 43.9 km2/17 mi2                | 42 km2/
    16.2 mi2           | 21 km2 (estimate)/
    8.1 km2  | Decrease of 15.9 or 36.1%                                                
|Total area of mining concessions                 | No change                         | 1245 km2/481 mi2               | 0                              | 0                              | 0                               | Awarded Oweinat concession in
    Egypt                                  

Note 1: The mining claim and total areas for year-end February 28,
2007, have been adjusted to reflect changes resulting from the re-allocation of
claims between projects and to ensure comparisons with Q1 to May 31, 2007 and
subsequent figures are reasonable and appropriate. These changes are made
throughout this report.

Operational indicators

|                            | 2nd quarter ended August 31, 2007 | 1st quarter ended May 31, 2007 | Year-end February 28, 2007                                                                                                                                 | Year-end February 28, 2006                        | Change from
    year-end 2007 to
    Q2 ended August 31, 2007
|--------------------------- | --------------------------------- | ------------------------------ | ---------------------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------------------- | -------------------------------------------------------------
|Health and safety incidents | 5, 2 with lost time               | 0                              | 1 with lost time; 2 incident
    with no injury or lost time; 3 vehicle incidents with no injuries or lost
    time; 1 incident for geophysical contractor | 2 vehicle accidents, no injuries
    or lost time | 5 incidents                                                  
|Environmental incidents     | 0                                 | 0                              | 0                                                                                                                                                          | 0                                                 | 0                                                            

Footnote 1: Definitions of exploration stage

Where a project fits on the spectrum of exploration and development is in
part a matter of judgment exercised by management:

Early stage exploration - grass roots prospecting, mapping, analysis of
regional/site geology, trenching and chip sampling, staking of claims possibly
with a few holes drilled with useful results;

Intermediate stage exploration - exploration continues including
mini-bulk sampling, soil chemistry, geophysical surveys and analysis as
appropriate with more holes drilled with useful results;

Advanced stage exploration - full-scale bulk sampling, mineral assessment
establishes resource development potential, scoping or pre-feasibility study
completed or nearing completion with positive results, environmental baseline
research and assessment in progress;

Early development - bulk sampling and test mining, on-site testing of
processing technology for throughput and mineral recovery; decision made to
proceed with pre- or full feasibility study in progress or completed; scoping of
environmental assessment and permitting completed and necessary steps initiated;

Development - environmental assessment completed, permits obtained,
financing lined up, construction to begin in the next 6 - 12 months; or mine
under construction through commissioning;

Production - operating mine with sales and revenue.

Early development-stage projects:

INDIAN RIVER PLACER PROJECT

The Indian River Placer Project is an early development-stage placer gold
property. It is located 40 km from Dawson City in the heart of the Klondike
gold-producing region of the Yukon, Canada. The Company's objective is to
develop a large-scale placer mine.

The Indian River Placer Project consists of223 mineral claims plus 3
leases totaling 21.1 km2 (8.2 mi2). The Indian River is
emerging as one of the active areas of new investment and productive placer
mining in the Klondike region. With the exception of a 49% interest in a small
group of 29 claims acquired in the second quarter ending August 31, 2006,
Klondike Star holds 100% ownership of the project.

During the 2005-2006 winter drilling program, the Company completed 184 holes
(double the 2004-2005 drilling) for a cumulative total of 274 holes or 2,426
meters. The winter drilling recovered gold from 90% of the holes, with gold
recovered from 100% of the holes drilled in the main target area along the
Indian River. In 2005, drilling resulted in gold recovery from 87% of the holes
drilled.

During 2006, bulk sampling and testing of conventional processing technology
(for throughput and gold recovery) proceeded alongside a business planning study
to determine the economic viability of the mineralized area. Test mining is
being supervised by an established Canadian firm specializing in mine
engineering and processing technology. Initial results from the first stage of
test mining were announced in November 2006. The Company believes the test
mining results at this one site correlate the general findings of the previous
drill-holes on the site. The grade indicated by auger drilling is only an
indication of true grade, and in the Company's opinion, it must be checked and
calibrated by test mining. The test resulted in the recovery of 45.08 ounces of
raw placer gold. A conventional sluicing system was used to assess throughput
and gold recovery, and the findings will be used in mine planning.

Klondike Star completed upgrading and extension of the access road, set up a
camp, and identified additional bulk sample test sites for the 2007 test mining
program.

The third consecutive winter drilling program commenced in late November 2006
and concluded in March 2007. Klondike Star completed 141 holes totaling 967
meters (3,173 feet), almost entirely in the main target zone. This increases the
cumulative three-year total to 415 holes encompassing 3,393 meters (11,132
feet). Gold was recovered from 100% of the holes in the main target area (107
holes), an extension of the ground where gold was recovered from 100% of the
holes in 2006. In 2005, drilling resulted in gold recovery from 87% of the holes
drilled.

A major auger drilling initiative was launched after spring break-up in May
2007. This accelerated effort to delineate mineralized areas and assess probable
reserves. Drill lines were completed at 1000 foot intervals with holes 100 feet
apart along the drill lines spanning the complete width of the initial target
zone. Mid-summer the drilling program has shifted to infill drilling with drill
lines at 500 foot intervals to facilitate detailed mine planning and increase
confidence in the assessment of whether there may be probable mineral reserves.
As of August 31, a cumulative total of 602 holes totaling 4,566 meters/14,797
feet had been drilled on the property and gold recovery determined.

The target zone forms a wedge that is 300 meters (984 feet) at the beginning
and broadens to a width of over 1,500 meters (4,921 feet). To date, the
mineralized zone extends over a distance of more than 3 kilometers (1.9 miles)
and remains open to expansion to the east and south. Gold appears to be
consistently distributed within this broad area with consistent gold values
across the entire width of the property. The overburden is relatively thin and
bedrock is about 7.7 meters (25 feet) deep on average, which indicates a modest
amount of waste stripping.

To further calibrate drilling results, assess mining methods and determine
water management design requirements, test mining operations started in 2006
using selected heavy equipment and an industry-standard 5' trommel. One test
site was completed in 2006 totaling 7249 cubic meters of material with positive
results. As of August, test mining was completed at an additional representative
site. Results are expected to be available for release in October/November.

Following regulatory and public assessment under the Yukon Environmental and
Socio-Economic Act, the Yukon government Department of Energy, Mines and
Resources has formally authorized the development and operation of an Indian
River placer mine by Klondike Star. This approval provides the direction to
regulatory agencies for the detailed water and mining land use permits expected
to be issued in the near future.

A comprehensive business plan based on a 10-year minimum mine-life is nearing
completion. It will comply with the U.S. Securities and Exchange Commission
requirements for assessment and reporting of mineral reserves. The plan
providing the information necessary for a mine development decision is expected
to be considered by the Board of Directors. Subject to financing, this could
allow for production to commence as early as 2008. A placer mining operation
could generate cash flow for the Company to finance its major exploration and
development initiatives.

|                                                         | 2nd quarter-end August 31, 2007                                                                      | 1st quarter-end May 31, 2007                                                 | Year-end February 28, 2007                                                    | Year-end February 28, 2006                                                      | Change from
    year-end 2007 to Q2-end August 31, 2007                                                                      
|-------------------------------------------------------- | ---------------------------------------------------------------------------------------------------- | ---------------------------------------------------------------------------- | ----------------------------------------------------------------------------- | ------------------------------------------------------------------------------- | -----------------------------------------------------------------------------------------------------------------------------
|Total claims                                             | No change                                                                                            | 223 and 3 leases                                                             | 214 claims and 17 leases                                                      | 185 claims and 17 leases                                                        | Increase of 9 claims due to
    staking or 4% and decrease in one year leases as ground determined to be of
    limited value
|Total area                                               | No change                                                                                            | About 21.1 km2 (8.2
    mi2)                                                 | 37.0 km2 (14.3 mi2)                                                           | 35 km2 (13.5 mi2)                                                               | Decrease of 15.9 km2
    (6.1 mi2) or 42.7%                                                                                  
|Drilling - no. of auger drill
    holes and total meters | 187 holes totaling 1,173
    meters/3,847 feet                                                       | 15 holes totaling 86 meters/282
    feet after spring break-up               | 141 holes totaling 967
    meters/3,173 feet (winter season December - April) | 184 holes totaling 2,426
    meters/7,959 feet (winter season December - April) | Increases cumulative drilling to
    602 holes totaling 4,566 meters/14,797 feet                                             
|Bulk sampling                                            | Two sites prepared; one with
    area of 1,624 square yards of which 6200 cubic yards were processed | Preparation of 2 test mining
    sites initiated                             | 1 site of 7,249 cubic yards
    processed                                     | None                                                                            | Additional test mining site
    processed                                                                                    
|Ownership                                                | No change                                                                                            | 100% ownership of 194 claims and
    3 leases and 49% ownership of 29 claims | 100% ownership of 185 claims and
    17 leases and 49% ownership of 29 claims | 100%                                                                            | Increase in 100% ownership of 9
    claims; low value placer leases allowed to lapse                                         

Advanced-stage exploration projects:

LONE STAR PROJECT

The Lone Star Project is an advanced-stage gold exploration property that is
being studied for potential mine development. The Project consists of 719
mineral claims and crown grants totaling 135.1 km2(52.2 mi2).
Lone Star is the largest project of six in the gold-producing Klondike region of
Yukon, Canada.

The property is situated in the Tintina Gold Belt which spans Alaska and the
Yukon and includes producing mines and major deposits. The Lone Star Project is
located 20 km (12.4 mi) from Dawson City and is accessible by summer-maintained,
graded gravel roads linking to the Klondike Highway. First assembled by Canadian
mine-finder Richard Hughes, the initial 500 mineral claims in the Klondike were
optioned to Klondike Star in December 2003. It is the site of the former
producing Lone Star Mine (1912-14) and decades of previous exploration.

Since acquiring the property, the Company has become the majority owner and
operator, increased the size of the project from 500 to 719 mineral claims and
crown grants, constructed a 65-person exploration complex, with core processing
and milling infrastructure on site, and completed extensive soil, chip and bulk
sampling, diamond drilling, IP (induced polarization) geophysical surveys, assay
and other analysis.

Exploration results and professional analysis to date indicate that the Lone
Star Project represents an extensive mineralized area with a large-tonnage,
low-grade gold target augmented by higher grade zones that warrants an expanded
exploration effort and intensive evaluation for potential mine feasibility and
development. The Company is working towards a mineral resource assessment
consistent with industry and international standards and best practices.

A full-scale scoping study is in progress to assess the economic viability of
the Lone Star mineral deposit, provide a baseline assessment of environmental
and socio-economic considerations for development permitting applications,
establish mine design concepts, analyze options to address key factors (energy,
water supply, reclamation), and identify capital and operating cost estimates.

During the May to October, 2006 summer exploration program, the focus was on
diamond drilling, bulk sampling, and ground and airborne geophysical surveys
along with continuation of the sponsored Klondike Research Project with the
Canadian University of British Columbia Mineral Deposit Research Unit (UBC MDRU).
The drilling program was designed to further delineate the extent of the known
gold bearing ore body in the primary zones of interest, including the Lone Star
and extensions, the Buckland between Gay Gulch and 27 Pup, and the Nugget zone
above Oro Grande Gulch. New infrastructure, including a camp accommodation
annex, a fitness and recreation centre, and expanded kitchen and dining
facilities were constructed in the vicinity of the Eldorado Camp.

Progressive exploration results, including the discovery of a new target, the
JF Zone, were announced between December 2006 and February 2007. A progress
report on scoping study findings to date was released in March 2007 (filed with
the SEC as an 8-K report, dated March 21, 2007). A summary report on the UBC
MDRU geological studies on the Klondike region was released in March 2007.

Field work conducted to date in the 2007 exploration season continues to
confirm and advance a number of promising gold targets at the Lone Star project.
After completing structural and delineation drilling on the Lone Star zone last
year, diamond and rotary circulation drilling is proceeding on the Buckland zone
and the Pioneer zone. These are among nine known major exploration targets on
the expansive 135.1 km2/52.2 mi2 property. Ongoing work on the Lone Star Project
includes bulk sampling, trenching, soil geochemistry and detailed geological
mapping.

The first diamond drill target tested this year was the Buckland zone, an
area which has returned multiple intersections of gold mineralization for
previous operators, but which has not been drilled by Klondike Star. This zone
lies about one kilometre/0.62 miles south of the Lone Star zone and 0.5
kilometers/0.31 miles southeast of the Nugget zone, and occupies an area roughly
800 meters/2624.7 feet by 300 meters/984.3 feet. The Buckland zone lies between
Emile Gay Gulch and Oro Grande gulch, which have been significant producers of
placer gold and are still being mined. Five holes have been completed in a fence
which cuts across the centre of the zone, and tests the best IP anomalies
identified by geophysical surveys in 2006. A total of 845 meters/2772.3 feet
have been drilled in the holes completed, and 710 samples from the first 4 holes
have been sent for analysis.

The reverse circulation drill was moved to the Pioneer zone, which lies about
700 meters/2296.6 feet southeast of the Lone Star zone. The Pioneer zone was the
focus of underground exploration for gold in the same era as the Lone Star mine
(ca. 1911). Only 3 holes have previously been drilled in this area, with hole
87R-47 returning 0.60 g/t gold over 50 meters/164 feet. A fence of several holes
has been drilled, starting from above the Pioneer shaft and progressing
northward downslope into a linear IP anomaly identified in 2006 which is thought
to be the eastward extension of the Lone Star zone. This target is 200
meters/656.2 feet wide and at least 550 meters/1804.5 feet long; the holes
planned here represent a 400 meter/1312.3 foot step-out to the known Lone Star
zone.

Five bulk samples have been processed from the Lone Star zone to date in
2007. These samples were collected from the southern end of trench 87TR-16, and
continue to extend the sampling of this area reported in 2006 (Press Release
#3-2007: Klondike Star Releases Bulk Sampling Results Including 1.33 G/T Over 24
Meters). The 2006 work at this site included 10 contiguous bulk samples which
cut the zone over a 67 meter/219.8 foot length, and which proved the zone to be
continuously mineralized. The 5 samples collected in 2007 extend this trend an
additional 30 meters/98.4 feet.

A bulk test from a trench near the Pioneer zone is in progress - this is the
first bulk sample from the Pioneer zone. A small bulk test from the 310 zone has
also been processed. The 310 zone is a continuous, narrow vein located about
1500 meters/4921.3 feet southwest of Eldorado Creek on the Lone Star property.
This vein has returned chip samples up to 1.12 g/t gold over 1.32 meters/4.3
feet.

A cut-line grid totalling 20 line-kilometers has been completed in
preparation for geophysical surveys at the JF zone. A detailed soil geochemical
survey, with samples collected at 25 meter/82 foot intervals on lines spaced 100
meters/328.1 feet apart is in progress on this grid, and an IP survey is
anticipated to start by early September. An extension to the discovery trench is
planned within the next month. An area immediately south of the JF zone grid
that had not previously been geochemically sampled has been tested with 299
samples over a 1 kilometer/0.62 mile square area.

Klondike Star, in conjunction with the University of British Columbia Mineral
Deposit Research Unit, has been developing an exploration model for this area
that combines an improved understanding of the structural geology with
compilation of other data, including airborne geophysics, geochronology,
petrology and placer gold characteristics and distribution. A geological map at
1:10,000 scale has been produced for the Eldorado Dome - Lone Star ridge area. A
detailed map of the Lone Star zone at 1:1,000 scale is also being produced by
company geologists.

Klondike Star's objective for the 2007 season at the Lone Star property is to
be able to significantly advance the Buckland, JF and Pioneer targets, to
improve the overall understanding and assessment of the scope mineralization on
the property, and to extend the Lone Star zone a substantial distance to the
east.

The Lone Star is an advanced-stage hard-rock exploration project in the
legendary Klondike gold-producing region, Yukon, Canada. An in-depth scoping
study is progressing towards scheduled release on or about December 2007.



|                                                           | 2nd quarter-end August 31, 2007                                                                                                                                             | 1st quarter-end May 31, 2007            | Year-end
    February 28, 2007                                                                                                                                                                  | Year-end 
    February 28, 2006                                                                                                                    | Year-end February 28, 2005                                                          | Change from year-end 2007 to Q2-end August 31, 2007                                                                                                                        
|---------------------------------------------------------- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | --------------------------------------- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | -------------------------------------------------------------------------------------------------------------------------------------------------- | ----------------------------------------------------------------------------------- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Total claims and crown grants                              | No change                                                                                                                                                                   | 719                                     | 719                                                                                                                                                                                             | 1056                                                                                                                                               | 500                                                                                 | None                                                                                                                                                                       
|Total area                                                 | No change                                                                                                                                                                   | 135.1 km2/52.2 mi2                      | 135.1 km2/52.2 mi2                                                                                                                                                                              | 152 km2/58.7 mi2                                                                                                                                   | 100 km2
    estimated/38.6 mi2                                                      | None                                                                                                                                                                       
|Drilling - no. of diamond
    drill holes and total meters | 5 holes totaling 846
    meters/2,774 feet                                                                                                                                  | Nil                                     | 23 holes totaling 2,892
    meters/9,488 feet; 17 holes totaling 2,100 meters/6,890 feet                                                                                                        | 32 holes totaling 4830
    meters/15,846 feet                                                                                                      | 0                                                                                   | 5 holes totaling 846
    meters/2,774 feet                                                                                                                                 
|Direct circulation rotary
    drill                        | 3 holes totaling 294 meters/965
    feet                                                                                                                                    | Nil                                     | Nil                                                                                                                                                                                             | Nil                                                                                                                                                | Nil                                                                                 | 3 holes totaling 294 meters/965
    feet                                                                                                                                   
|Bulk sampling, surface
    trenching and sampling          | 6 bulk samples totaling 34.7
    tonnes/34,713 kg; 26 chips (rocks), 679 soil samples; 15 line-km cut grid
    with soils every 25 meters, ready for IP survey in September | Nil                                     | 16 bulk samples totaling 78
    tonnes; trenching; 640 chip samples, 393 soil samples; 3 IP geophysical
    grids totaling 35 km or 21.7 mi of line; 470 rock samples, and 134 soil
    samples | 14 trenches totaling 2858 m3/3,738
    yd3,
    421 soil samples, 551 trench samples, 23 rock samples and 57 bulk chip
    samples                 | 17 trenches totaling 1,300 m3/1,700
    yd3, 1,024 rock samples, 1,165 soil samples | 6 bulk samples totaling 34.7
    tonnes/34,713 kg; 26 chips (rocks), 679 soil samples; 15 line-km cut grid
    with soils every 25 meters, ready for IP survey in September
|Assay and other analysis                                   | 878 core samples and 7 rotary
    samples                                                                                                                                   | Nil                                     | 2866 core samples shipped for
    assay; 1,883 core samples shipped for assay                                                                                                                   | 5095 core samples from drilling
    and core fire assays (1st round) at 1250 samples, trench ICP
    totaled 551 samples and 92 trench fire assays | 1165 soil samples by ICP; also
    refer to the 2004 assessment report              | 878 core samples and 7 rotary
    samples                                                                                                                                  
|Ownership                                                  | None                                                                                                                                                                        | 55% with exclusive option up to
    75% | 55% with exclusive option up to
    75%                                                                                                                                                         | 55% with exclusive option up to
    75%                                                                                                            | 55% with exclusive option up to
    75%                                             | None                                                                                                                                                                       

Intermediate-stage exploration projects:

DOMINION PROJECT

An intermediate-stage gold and silver exploration project at the headwaters
of Dominion Creek, the Dominion Project includes an advanced exploration stage
target at the JAE claims, as well as a large area with little previous
exploration. Of Klondike Star's six hard-rock Yukon projects, the Dominion ranks
second in importance after the Lone Star project. The property is comprised of
331 mineral claims involving an area of 62.8 square kilometres/24.3 square
miles, including the Mitchell zone, Sheba zone, Dome Lode and Lloyd zone. All
zones extend over large areas with excellent opportunity for the existence of
multiple mineralized zones, along both strike and dip. They belong to a class of
structures which have potential for large, medium-to-low grade, gold bearing ore
bodies. Klondike Star holds 100% or majority interest in 246 claims and an
additional exclusive option to purchase an undivided 100% interest in 85 claims
acquired in the first quarter ending May 31, 2006 and the second quarter ending
August 31, 2006.

On April 27, 2006, the Company announced the acquisition from Klondike Source
Limited's (KSL) subsidiary, KSL Exploration (Yukon) Limited, of the exclusive
right to purchase an undivided 100% interest in up to 56 quartz claims in the
DOM block located on Hunker Dome in the eastern part of the Klondike goldfield.
On August 8, 2006, Klondike Star announced the acquisition of the exclusive
option to explore and purchase the J.A.E. claim group on King Solomon's Dome
bordering on mineral claims already held by the Company. The Company has also
staked additional claims to further consolidate the property into a single
contiguous area.

Since 1999, a portion of the property has been explored by KSL Exploration
(Yukon) Limited, including drilling, soil sampling and trenching. Before that,
United Keno Hill Mines Limited, a longstanding operator of gold and silver
properties, such as the Elsa and Keno Hill mines, invested significant effort on
the other portion of the property. Significant exploration work has been
conducted on the J.A.E. claim block by successive owners. Regional and
project-specific infrastructure includes good seasonal road access.

The area covers several mineralized vein systems, some shafts and a long
tunnel, and has been the subject of percussion drilling, soil geochemistry and
trenching. Various broad zones of disseminated mineralization have been
identified. The 2006 exploration objective was to consolidate and ground-truth
previous exploration results, advance knowledge of the mineral resources, take
advantage of extensive trenching in situ, identify future drill targets on a
systematic and expedited basis, and consolidate the property and mineral
interests through a strategic claim-staking program. Activities included
detailed mapping, extensive chip and soil sampling and geochemistry, evaluation
of more than 60 existing trenches and assessment of selected targets, and bulk
sampling and processing through the Eldorado test plant. A satellite camp was
installed to support project operations.



The 2006 field work confirmed the presence of multiple, continuous
gold-bearing structures that warrant testing by drilling. In addition, several
significant new gold-in-soil anomalies were identified in areas with no apparent
prior exploration.

Work at JAE in 2006 included extending the soil geochemical anomaly to the
southwest, mapping and chip sampling various new and existing trenches, and
processing two bulk samples from the Mitchell and Hunker Dome zones.  The
Mitchell sample consisted of 5.7 tonnes of rusty schist without quartz veining,
and returned 1.3 g/t gold.  This indicates potential for bulk mineable
material beyond the higher grade veins.  The Hunker Dome zone bulk sample
consisted of 2.3 tonnes across several narrow quartz veins, and returned 4.0 g/t
gold.

Klondike Star tested claims to the southeast of the JAE area with widespread
MMI soil geochemical survey lines, identifying several large areas of gold in
soil anomalies, up to 500 meters by 1000 meters.  The surveys successfully
confirmed some areas with known mineralization, and identified new areas with no
evidence of previous exploration.

Field work during the quarter ending August 31, 2007, is further confirming
the presence of multiple, continuous gold-bearing structures that warrant
testing by drilling. Work completed to date in 2007 consists of detailed
geological mapping, surveying, grid cutting, trenching, chip sampling and bulk
sampling.

Drilling is scheduled for September at the JAE claims using a rotary drill
rig with up to 10 holes totaling 1000 meters planned (weather dependent), which
lie at the headwaters of Dominion, Gold Bottom and Hunker creeks, all of which
have been significant producers of placer gold, and are still being actively
mined. This area of the Dominion project hosts at least seven parallel gold -
(silver) vein zones within an area of highly anomalous soil geochemistry that
measures about 1.5 kilometers/0.9 miles by 1 kilometer/0.6 mile. Two of these
zones, the Mitchell and Sheba have been outlined along hundreds of meters of
length by previous exploration efforts since 1900, including numerous trenches
and shallow shafts, direct shipping of hand selected silver-rich ore (7.2 tonnes
averaging 6090 g/t silver = 178 oz/ton), soil geochemistry and geophysics. Only
3 shallow drill holes, directed at the high grade silver have previously been
drilled on the property. The Mitchell - Sheba trend will be the initial focus of
the drilling. The Mitchell zone is well known for impressive specimens of
visible gold, but has never been drilled. It is expected that further surface
work on the other parallel zones will result in additional drill targets.

Six bulk samples have been collected and processed at the JAE property during
the second quarter ending August 31, 2007. The samples were collected from a
variety of targets, including major veins, subsidiary veins, and pyritic
alteration zones located near veins. The large size samples (up to 7 tonnes) are
effective at accurately indicating the grade of these targets, which contain
coarse free gold.

A grid with 15 kilometers/9.3 miles of line has been cut at the JAE property
for an IP geophysical survey. This survey will be conducted in the 2007 field
season by Aurora Geosciences Ltd. of Whitehorse. The results of the current
survey will be integrated with those of an IP survey conducted on widely spaced
lines at the site in 1990. IP geophysics is known from the earlier survey to be
appropriate for this area, as the mineralized quartz veins have gold-rich
pyritic haloes which responded well to this method.

Soil geochemical surveys and other investigations are in progress in select
areas of the Dominion project beyond the JAE property.

Klondike Star, in conjunction with the University of British Columbia Mineral
Deposit Research Unit has been developing an exploration model for this area
that combines an improved understanding of the structural geology with
compilation of other data including airborne geophysics, geochronology,
petrology and placer gold characteristics and distribution. A geological map at
1:20,000 scale has been produced for this area.

The major mineralized structures at the JAE property have a well-defined,
north- northwesterly trend and steep easterly dip, with local en echelon
offsets to the veins. This clearly defined structural setting lends itself to a
straight-forward exploration approach, with drill targets and hole orientations
easily selected. One highlight of the exploration this season has been the
rediscovery of substantial mineralized quartz veins that were trenched at some
time in the past, but were not recorded in any of the available property
assessment reports. A thorough compilation of the existing data has been ongoing
for the past two years, as well as conventional and differential GPS surveying
of the extensive network of overgrown roads, trails, trenches and vein deposits.

|                         | 2nd quarter-end August 31, 2007                                                                                                                                                                                                                                                                          | 1st quarter-end May 31, 2007                                                                                                                               | Year-end February 28, 2007                                                                                                                                 | Year-end February 28, 2006                                                                   | Year-end February 28, 2005                                | Change from year-end 2007 to Q1-end August 31, 2007
|------------------------ | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ---------------------------------------------------------------------------------------------------------------------------------------------------------- | ---------------------------------------------------------------------------------------------------------------------------------------------------------- | -------------------------------------------------------------------------------------------- | --------------------------------------------------------- | ---------------------------------------------------
|Total claims             | No change                                                                                                                                                                                                                                                                                                | 331                                                                                                                                                        | 331                                                                                                                                                        | 168                                                                                          | 112                                                       | None                                               
|Total area               | No change                                                                                                                                                                                                                                                                                                | 62.8 km2
    or 24.2 mi2                                                                                                                                   | 62.8 km2
    or 24.2 mi2                                                                                                                                   | 33.5 km2
    or 13 mi2                                                                       | 23.5 km2
    or 9 mi2                                     | None                                               
|Ownership                | No change                                                                                                                                                                                                                                                                                                | - 100% ownership of
    149 claims- 55% ownership of 97 claims with exclusive option for up to
    75%
    - exclusive option to acquire 100% of 85 claims | - 100% ownership of
    149 claims- 55% ownership of 97 claims with exclusive option for up to
    75%
    - exclusive option to acquire 100% of 85 claims | - 100% ownership of
    56 claims - 55% ownership with exclusive option of 75% of 112 claims | 55% with exclusive
    option for up to 75% of 112 claims | None                                               
|Exploration
    activity | Trenching (3
    totaling 100 meters); 50 chip samples, 209 soil samples; 15 line km grid cut
    for IP survey in September; roads upgraded and drill sites prepared for
    direct circulation rotary drilling starting September; detailed geological
    mapping, RTK-BPS and conventional surveying | Nil                                                                                                                                                        | Trenching, mapping,
    sampling including 2 bulk sampling, soil geochemistry and staking                                                                  |                                                                                              |                                                           | Full program of
    activity in progress           
|Bulk Sampling            | 6 bulk samples
    totaling 34.8 tonnes/30,746 kg                                                                                                                                                                                                                                                        | Nil                                                                                                                                                        | 2 bulk samples
    totaling 8 tonnes                                                                                                                       | Nil                                                                                          | Nil                                                       | 6 bulk samples
    totaling 34.8 tonnes/30,746 kg  

SPICE PROJECT

The Spice Project is an intermediate-stage gold exploration project that has
moved to an exploratory diamond drilling phase. As of May 31, 2007, the Spice
Project consists of 52 mineral claims totaling 10.9 km2 (4.2 mi2).
The property is located 28 km east of Ross River and 8 km south of the North
Canol Road in the Watson Lake Mining District, Yukon, Canada. The Spice Project
falls within the Tintina Gold Belt that hosts numerous gold deposits, producing
mines, notably the Fort Knox, Pogo and (former) Brewery Creek, as well as active
exploration projects.

The property has only been explored since 2000, when a regional geochemical
survey conducted by the Yukon Geological Survey, Yukon Government, identified
strong, coincident gold, silver and epithermal pathfinder elements. Follow-up
geochemical sampling identified an open-ended anomalous zone and samples assayed
up to 13.9 grams/tonne gold. An IP chargeability high and low resistivity
coincides with the highest geochemical values. The target is a low-sulphidation
epithrmal-style gold deposit hosted by rhyolite, similar to the Grew Creek
property being explored 60 km (37.3 mi) to the west.

Since acquiring the Spice properties, Klondike Star has increased exploration
efforts, and in the first quarter/spring 2006, a staking program also increased
the land base to 51 mineral claims totaling 10.9 square kilometers (4.2 square
miles), an increase of 63%. Exploration to date has involved till, soil, silt
and rock geochemistry, hand/blast pitting and trenching, ground magnetic,
induced polarization/resistivity and VLF-EM geophysical surveys, and during the
third quarter 2006 included additional soil geo-chemistry, a property
evaluation, the delineation of drill targets and petrography.

An exploratory diamond drilling program of identified targets proceeded in
the spring of 2007. Assay results are under review and a consolidated property
assessment report is being drafted.

|                                                           | 2nd quarter-end August 31, 2007 | 1st quarter-end May 31, 2007                              | Year-end February 28, 2007                                                    | Year-end February 28, 2006                   | Year-end February 28, 2005 | Change from year-end 2007 to Q2-end August 31, 2007            
|---------------------------------------------------------- | ------------------------------- | --------------------------------------------------------- | ----------------------------------------------------------------------------- | -------------------------------------------- | -------------------------- | ---------------------------------------------------------------
|Total claims                                               | No change                       | 52                                                        | 52                                                                            | 32                                           | 0                          | None                                                           
|Total area                                                 | No change                       | 10.9 km2/4.2 mi2                                          | 10.9 km2/4.2 mi2                                                              | 6.7 km2/2.6 mi2                              | 0                          | None                                                           
|Exploration activity                                       | No summer activity planned      | First-ever diamond drilling
    conducted on the property | Soil geochemistry and
    identification of targets for planned drill program |                                              |                            | Completion of test drilling
    program of identified anomalies
|Drilling - no. of diamond
    drill holes and total meters | No change                       | 3 holes totaling 439.5
    meters/1,441 feet              | Drill targets identified for
    spring 2007 drill program                    | 0                                            | 0                          | 100%                                                           
|Assay samples                                              | 362 core samples                |                                                           |                                                                               |                                              |                            | 362 core samples                                               
|Ownership                                                  | No change                       | Exclusive option for up to 75%
    ownership              | Exclusive option for up to 75%
    ownership                                  | Exclusive option for up to 75%
    ownership | 0                          | None                                                           

ULTRA PROJECT

The Ultra Project is an intermediate-stage base and precious metals
exploration project that has moved to a drill ready stage in exploration.
Following additional staking in the fall of 2005 and the fall of 2006, the Ultra
Project consists of 416 mineral claims totaling 81.7 km2 (31.6 mi2).
The targets include VMS zinc-copper-silver-gold and poly-metallic
nickel-copper-platinum-palladium-gold. Two significant discoveries were
announced following assessment of 2006 exploration results.

The property is located in southwest Yukon, 42 km (26.1 mi) northwest of
Haines Junction, Yukon, Canada, only 140 km (87 mi) from a deepwater port. Ten
kilometers (6.2 miles) west of the Alaska Highway, it is accessible by rough
gravel road. It is near the former nickel-platinum Wellgreen Mine. Ultra is also
in the same geological zone as the world-class zinc-copper-gold Windy Craggy
deposit in northern British Columbia.

In February 2007, based on the 2006 exploration program, the Company
announced the discovery of two volcanogenic massive sulphide zones including a
major VMS horizon with economically interesting grades and widths. The massive
sulphide grades up to 3.23% copper, 6.75% zinc, 17.8 ppm silver and 0.15 ppm
gold over a 4 meter thickness. Maximum values of 13.4% copper, 6.75% zinc, 56
ppm silver and 0.25 pp. gold were obtained from one zone. The second zone
reported results of 11.54% copper, 1514 ppm zinc and 7.2 ppm silver over a three
meter thickness.

During the 2006 exploration program, beep mat survey was also conducted,
along with hand trenching, blast trenching and soil geo-chemistry. Although
specific sites were prepared, diamond drilling was deferred due to
unavailability of required technical services including skilled labor. The
property is drill-ready based on a multi-year investment in prospecting,
mapping, sampling, airborne and ground geophysical surveys and geochemistry
analysis.

Klondike Star is evaluating the property's fit with the Company's new
strategic plan and discussing next steps with joint venture partners to make a
determination about whether to invest in further exploration.

|                                   | 2nd quarter-end August 31, 2007 | 1st quarter-end May 31, 2007                 | Year-end February 28, 2007                                             | Year-end February 28, 2006                   | Year-end February 28, 2005 | Change from 
    year-end 2007 to Q2-end August 31, 2007                 
|---------------------------------- | ------------------------------- | -------------------------------------------- | ---------------------------------------------------------------------- | -------------------------------------------- | -------------------------- | -------------------------------------------------------------------------
|Total claims                       | No change                       | 416                                          | 416                                                                    | 404 claims                                   | 0                          | None                                                                     
|Total area                         | No change                       | About 82 km2 or 31.7
    mi2                 | 82 km2 or 31.7 mi2                                                     | 82 km2 or 31.7 mi2                           | 0                          | None                                                                     
|Drilling                           | No change                       | No change                                    | Drill sites prepared                                                   | 0                                            | 0                          | None                                                                     
|Surface trenching and
    sampling | No change                       | No change                                    | 152 chip and 265 soil samples,
    along with hand and blast trenching | 86 rock and soil samples                     | 0                          | Doubling of rock samples and new
    soil sampling and trenching activity
|Ownership                          | No change                       | Exclusive option for up to 75%
    ownership | Exclusive option for up to 75%
    ownership                           | Exclusive option for up to 75%
    ownership | 0                          | None                                                                     

Early-stage exploration projects:

BONANZA PROJECT

On May 19, 2006, Klondike Star acquired a controlling interest in 269 mineral
claims in the Klondike region of the Yukon, Canada. Known as the Bonanza
Project, the property has been expanded through the re-assignment of additional
Company properties in adjacent areas bringing it to 400 mineral claims and 65.6
km2/25.3 mi2. It is located in the heart of the Klondike
gold fields and proven gold producing ground, 10 km from Dawson City.

Since 1999, building on previous exploration efforts, the majority of the
property has been explored by KSL Exploration (Yukon) Ltd, a wholly-owned
subsidiary of Klondike Source Limited, and PacRim Resources Limited (formerly
Barramundi Gold Ltd.) using advanced-exploration techniques, geological mapping
and geochemical soil surveys.

KSL Exploration (Yukon) Limited considers the property to have a number of
prospects on the basis of reasonably well-defined geochemical gold anomalies. In
an independent geologist's report, KSL (Yukon) Limited reported that: "These
surveys have identified several prospective targets with potential for hosting
large tonnage, primary gold mineralization." (Roy Cox & Associates, November 10,
2003).

Klondike Star has initiated a preliminary exploration program including
consolidation of mapping, sampling results, and all accessible assessment work
on the property. Mineral claim staking was undertaken in the third quarter ended
November 30, 2006, to supplement the property. During the quarter ending August
31, 2007, the Company recovered and processed previously untested diamond drill
core from 6 holes and commenced a soil sampling program

|             | 2nd quarter-end August 31, 2007                                                       | 1st quarter-end May 31, 2007                                                          | Year-end February 28, 2007 | Year-end February 28, 2006 | Change from 
    year-end 2007 to Q2-end August 31, 2007                             
|------------ | ------------------------------------------------------------------------------------- | ------------------------------------------------------------------------------------- | -------------------------- | -------------------------- | -------------------------------------------------------------------------------------
|Total claims | No change                                                                             | 400                                                                                   | 308                        | 0                          | Claims re-assigned from Lone
    Star Project                                        
|Total area   | No change                                                                             | 65.6 km2 or 25.3 mi2                                                                  | 47.0 km2 or 18.1 mi2       | 0                          | Area of re-assigned claims                                                           
|Drilling     | Untested diamond drill core from
    6 holes totaling 1358 meters/5044 feet recovered | Nil                                                                                   | Nil                        | 0                          | Untested diamond drill core from
    6 holes totaling 1358 meters/5044 feet recovered
|Sampling     | 74 soil samples                                                                       | Nil                                                                                   | Nil                        | 0                          | 74 soil samples                                                                      
|Assay        | 1,127 core samples                                                                    | Nil                                                                                   | Nil                        | 0                          | 1,127 core samples                                                                   
|Ownership    | No change                                                                             | 100% of 308 claims and 55% and
    exclusive option to acquire up to 75% of 92 claims | 100% registered            | 0                          | Ownership in claims re-assigned
    from Lone Star Project                           

INDIAN RIVER CONGLOMERATE PROJECT

The Indian River Quartz Project is an early-stage gold exploration property
for the Company. The property is located 40 km (24.9 mi) from Dawson City in the
heart of the Klondike gold-producing region of the Yukon and the Tintina Gold
Belt spanning Alaska and the Yukon. Access to the region is by good gravel road.

Additional geological mapping, rock and soil sampling and geochemistry
analysis, trenching and a magnetometer survey were completed from May to
September 2005. Auger drilling provided bedrock samples between January and
April 2005. This work built on extensive reconnaissance and geological mapping,
bulk sampling, diamond drilling and core analysis, and geochemical surveys
completed by previous exploration companies.

During 2006, additional baseline work was undertaken to consolidate and
ground-truth previous exploration results, with the focus on two claim blocks.
The first involved an eastern extension of 2005 soil and rock sampling done to
determine the presence of gold anomalies on the property (Reka claim block). The
second (RMB claim block) pursued 2005 rock chip assays with elevated PGM values,
targeting platinum group minerals to identify any PGM, as well as Ni, Cu and Au
targets.

Mineral claims with low probability of having exploration value were released
in the final quarter of the year-ended February 28, 2007.

Klondike Star is evaluating the property's fit with the new strategic plan,
the known and projected geological potential in light of exploration experience
and the Klondike Research Project being undertaken by U.B.C.'s Mineral Deposit
Research Unit and discussing next steps with joint venture partners to make a
determination about whether to invest in further exploration.

|                                        | 2nd quarter-end August 31, 2007 | 1st quarter-end May 31, 2007   | Year-end February 28, 2007       | Year-end February 28, 2006                                                                  | Year-end February 28, 2005 | Change from year-end 2007 to Q2-end August 31, 2007
|--------------------------------------- | ------------------------------- | ------------------------------ | -------------------------------- | ------------------------------------------------------------------------------------------- | -------------------------- | ---------------------------------------------------
|Total claims                            | No change                       | 248                            | 248 claims                       | 205 claims                                                                                  | 0                          | None                                               
|Total area                              | No change                       | 62.1 km2 or 24.0 mi2           | 62.1 km2 or 24.0 mi2             | 67.3 km2 or 26 mi2                                                                          | 0                          | None                                               
|Drilling - no. of auger drill
    holes | No change                       | No change                      | No change                        | 49 holes (winter season January
    - April)                                                | 0                          | None                                               
|Surface trenching and
    sampling      | No change                       | No change                      | 16 rock samples, 20 soil samples | 8 trenches totaling 1128 m3(1,475 yd3), 12 test pits, 52 rock samples, 333 soil
    samples | 0                          | None                                               
|Assay and other analysis                | No change                       | No change                      | Not available                    | 36 rock samples, 333 soil
    samples                                                       | 0                          | None                                               
|Ownership                               | No change                       | Exclusive option for up to 75% | Exclusive option for up to 75%   | Exclusive option for up to 75%                                                              | 0                          | None                                               

ELDORADO PLACER PROJECT

Located 20 km from Dawson City, Yukon, Canada, the Eldorado Placer Project is
a placer gold project situated within the boundaries of the Lone Star Project.
The placer mineral claims (surface) overlap some of Lone Star's quartz mineral
claims (subsurface).

The property is in the heart of a longstanding gold-producing area. There are
many placer mines operating in the general vicinity. The claims were originally
assembled by Canadian mine-finder Richard Hughes and optioned to the Company in
December 2003. The property has known placer gold potential. However, the
Company has not itself conducted substantive exploration work to date. Over the
last two years the right to conduct placer mining on the property has been
optioned to an experienced Klondike placer miner and this arrangement was
expected to continue.

Following an assessment in the second quarter ended August 31, 2006, the
Company has terminated this arrangement and taken direct responsibility for the
project. Currently, consideration is being given to entering into a joint
venture with an experienced Yukon placer miner to develop the property in 2008.

|             | 2nd quarter-end August 31, 2007 | 1st quarter-end May 31, 2007                      | Year-end February 28, 2007                        | Year-end February 28, 2006                        | Year-end February 28, 2005                        | Change from 
    year-end 2007 to Q2-end August 31, 2007
|------------ | ------------------------------- | ------------------------------------------------- | ------------------------------------------------- | ------------------------------------------------- | ------------------------------------------------- | --------------------------------------------------------
|Total claims | No change                       | 115 claims                                        | 115 claims                                        | 115 claims                                        | 114 claims                                        | None                                                    
|Total area   | No change                       | 6.9 km2 or 2.7 mi2                                | 6.9 km2 or 2.7 mi2                                | 6.9 km2 or 2.7 mi2                                | 6.5 km2 estimated or
    2.5 mi2                  | None                                                    
|Ownership    | No change                       | 55% and exclusive option to
    acquire up to 75% | 55% and exclusive option to
    acquire up to 75% | 55% and exclusive option to
    acquire up to 75% | 55% and exclusive option to
    acquire up to 75% | None                                                    

Future financial condition

Since 2003, the Company has raised capital successfully by way of private
placements. Through recent placements, the Company expects to have the resources
necessary to maintain its exploration programs. The Company has forged strong
relationships with financial professionals in order to provide adequate capital
investment for its projects with the goal of bringing new mining production
on-stream in the future.

As of August 31, 2007, the Company has material commitments for capital
expenditures in future years in support of the Oweinat project in the Arab
Republic of Egypt acting through the wholly-owned subsidiary, Klondike Star
Canada Inc. Pursuant to Klondike Star's 2008 business plan, resources are
targeted to corporate development priorities. Private placement initiatives
currently in progress are expected to raise additional funds in a timely manner.

The business plan for developing the Indian River Placer Mine currently being
prepared by the Company includes capital and cash flow requirements for 2008.
Commencing placer mining on the advanced-stage Indian River Placer Project would
create positive cash flow and change the status of the company to that of a
producer.

Company policy is to expense mineral rights acquisitions and exploration
activities to prove up resources and reserves as mineral exploration
expenditures. Typically, the mineral exploration industry is cyclical, based
upon the price of commodities and the demand for certain metals. The Company
considers that it has entered this business at a time that is favorable within a
long term commodity inflation cycle, and that it can sustain an enterprise in
the field of mineral exploration and mining production.

Ongoing financing activities are targeted existing and new investor markets
with specific private investment opportunities. During the quarter, the February
1, 2007, a private placement memorandum (Regulation D) for the sale of common
shares priced at the closing price (OTCBB) on the date of purchase was extended
to October 31, 2007. An April 6, 2007, private placement memorandum (Regulation
S) for sale of common shares priced at $2.25 to a major potential investor was
cancelled. The May 29, 2007, private placement memorandum (Regulation S) for the
sale of 4 million shares at $0.50 was extended to August 31st and
fully subscribed. The June 3, 2007, private placement memorandum (Regulation S)
for the sale of 2 million shares at $0.50 terminates September 30, 2007. The
August 8, 2007, private placement memorandum (Regulation S) allows for the
purchase of up to 3,000,000 units (a unit equals one common share and one
warrant for the purchase of common shares at $1.50) at the 5 day volume averaged
price preceding the date of purchase minus $0.10.

Gold market outlook

Indications are that global mineral exploration spending will reach a new
high-water mark in 2007 for the fifth straight year in a row. In a press release
issued September 10, 2007, Metals Economics Group has advised that worldwide
mineral exploration spending (excluding ferrous metal and uranium) will range
between $US9.3 billion and $US9.7 billion for calendar 2007. With worldwide
exploration spending totaling $US7.5 billion in 2006, spending in 2007 has
increased by approximately $US2 billion between 2006 and 2007. Not only an
indicator of the vibrancy of overall mineral industry health, the increase in
exploration spending is expected to lead to new mineral discoveries which in
turn help draw attention to the sector and eventually attract further
investment.

The outlook for the price of gold continues to be favorable. So far in 2007,
gold prices have remained above the $US600 mark, reaching a low for the period
of $US608 in early January. Gold prices broke through the $US700 barrier on
September 7 and remained above $US700 to months' end, reaching a high for the
year of $US743 on September 28.

Gold Price, January 1, 2000 to October 2, 2007:



At the outset of 2007, gold price forecasts by GFMS Ltd. and TD Economics
suggested that prices would range between $US643 and $US675 to the end of
calendar 2007. (Sources: GFMS Ltd. Gold Survey 2006 Update 2, January 2007 cites
$US 643 over period of January 1, 2007 to June 30, 2007; and, TD Economics
Quarterly Commodity Price Report, February 5, 2007 cites $US 650 - 675 over
period of April 1, 2007 to December 31, 2007). To the end of September 2007,
gold prices have averaged $665, making good on both start-of-year forecasts.

Both GFMS Ltd. and TD Economics remain bullish on gold prices to the end of
2007. GFMS Ltd. expects the price of gold to average $US690 in the second half
of calendar 2007. (Source: GFMS Ltd. Gold Survey 2007 Update 1, September 2007).
TD Economics expressed an even higher degree of optimism in its September 27
Weekly Commodity Price Report where it forecasts that the price of gold will
finish calendar 2007 at $US775. (Source: TD Economics Weekly Commodity Price
Report, September 27, 2007). The three-year moving average for the price of gold
to the end of September 2007 was $US552. (Source: World Gold Council, London PM
Fix over period of October 2004 to September 2007).

KSMD management continues to believe that the market price for gold will
remain strong. A severely weakened US dollar and continuing geo-political strife
are expected to bolster the traditional safe-haven status of gold leading to
increasing investment demand for the metal.

Corporate governance matters

In the first quarter ended May 31, 2007, a Company Whistleblower Policy was
adopted and action plans for the year-ended February 29, 2008, were developed
and approved for implementation of the Health and Safety Policy and the
Environment and Sustainable Development Policy. In the second quarter ended
August 31, 2007, Klondike Star's Board of Directors formally approved the
Strategic Plan, 2007-2009 and Planning and Management Guidelines.

Effective March 16, 2007, Klondike Star Mineral Corporation (the "Company")
incorporated a wholly owned Canadian subsidiary company, Klondike Star Canada
Inc., under the Canada Business Corporations Act. The new company has been
established to support planned growth and development including new mineral
exploration and development opportunities in Canada and globally.

ITEM 3. Quantitative and Qualitative Disclosures about Market Risk

The Company's functional currency is U.S. dollars. Monetary assets and
liabilities of the Company's foreign operations are translated into U.S. dollars
at the exchange rates as of the balance sheet date. Results of operations from
monetary revenues and expenses are translated at the average exchange rates
during the period, with non-monetary revenues and expenses translated at the
exchange rate in effect at the time of acquisition of the underlying
non-monetary asset or liability. Realized gains and losses from foreign currency
transactions are reflected in the results of operations.

ITEM 4. Controls and Procedures

As of August 31, 2007 ("evaluation date"), Company management has reviewed
the effectiveness of disclosure controls and procedures (as defined in Rule
13a-15(e) or 15d-15(e) promulgated under the Securities and Exchange Act of
1934, as amended). The Company has developed and implemented a number of
policies and procedures to assist in the consistent application of internal
controls. This includes the Board of Directors Charter, the Audit Committee
Charter, the Code of Business Ethics and Conduct, and the Authorization Policy.
During the quarter ended May 31, 2007, Klondike Star adopted a formal
Whistleblower Policy and for the quarter ended August 31, approved Planning and
Management Guidelines supporting Board and management planning, reporting and
accountability processes.

The Company has financial reporting procedures in place to assist in ensuring
reliable and accurate information is provided to shareholders and potential
investors and to ensure compliance with financial reporting to regulatory
oversight bodies. **At the same time, during preparation of the 10-Q
filing to August 31, 2007, Management identified an internal control weakness in
reporting information on the sales of unregistered securities between periodic
reports. The Company believes the weakness occurred when it exited the small
business filing system, and the threshold for reporting sales
was reduced. Management filed a Form 8-K on Item 3.02 and has updated internal
procedures to ensure timely reporting in the future.**

Notwithstanding the foregoing event,

As of August 31, 2007, the Company also maintains a system of internal
accounting controls that is designed to provide assurance that assets are
safeguarded and that transactions are executed in accordance with management's
authorization and properly recorded. This system is continually reviewed and is
augmented by written policies and procedures and the careful selection and
training of qualified personnel. During the three-month period ended August 31,
2007, there were no significant changes to this system of internal controls or
in other factors that could significantly affect those controls.

In anticipation of the requirement to complete and disclose Management's
assessment regarding internal controls over financial reporting in the annual
report for the year-ended February 29, 2008, the Audit Committee has approved a
project charter including terms of reference, deliverables, timetable and
establishment of a steering committee to review compliance with sections 302 and
404 of Sarbanes-Oxley Act of 2002 (SOX) and expedite necessary remediation, if
any. The Company's objective is not merely to comply with these requirements,
but to use them as a catalyst to examine financial, management and operational
processes and programs through the organization. Management believes that
executing a SOX compliance initiative that seeks to improve processes and
programs throughout the Company will achieve a net benefit in terms of improved
risk management, operational efficiency and effectiveness, and enhanced
shareholder confidence.



PART II

OTHER INFORMATION

ITEM 1. Legal Proceedings

There are no pending or material legal proceedings to which the Registrant is
a party or of which any of its property is subject. Klondike Star has secured
the assets of a diamond drilling company for reasons of safety, non-performance
and non-payment of its employees by the contractor.

ITEM 1A. Risk Factors

There are no material changes from the risk factors previously disclosed in
the Form 10-K report for the year-ended February 28, 2007, with respect to
Canadian operations. Although Klondike Star is commencing mineral exploration
and exploitation in the Arab Republic of Egypt through its wholly-owned Canadian
subsidiary, Klondike Star Canada Inc. additional risk factors are foreseen. They
include:

Risks related to Company business

Rights to mineral claims and leases involve uncertainties:

Rights to surface and subsurface mining properties involve certain inherent
risks due to the difficulties of determining the validity of certain claims, as
well as the potential for problems arising from the frequently ambiguous
conveyance history, characteristic of many mining properties. Although the
Company has taken steps to verify and protect the title to, and ownership
interests and options in the mineral properties in which it has an interest, in
accordance with industry standards for the current stage of exploration of such
properties, these procedures do not guarantee the Company's rights or interests.
These rights or interests may be subject to unregistered prior agreements or
transfers and be affected by undetected defects.

International operations involve complexities:

Mineral exploration is a relatively new area of activity for investment in
the Arab Republic of Egypt. Klondike Star Canada Inc. will be learning how to do
business effectively in the region. There is a degree of business risk and
uncertainty associated with operating in Egypt and implementing a major mineral
exploration and exploitation concession agreement in an orderly and effective
manner, while the government is concurrently modernizing investment and mining
laws and practices. While persons affiliated with the Company have experience in
Egypt, the Company has never undertaken exploration programs in a country
outside of Canada, and will be required to rely on local expertise for some of
its undertakings.

International political uncertainties:

While Egypt has benefited from political stability, the Middle East region
has seen increasing instability. If such instability continues to increase in
the region, it may adversely affect the ability of foreign companies to begin
mining operations.

Risks related to the mineral exploration and production industry

Adoption of new laws and government regulations relating to the mining
industry could harm the Company's business

The Company's business is subject to various Egyptian and Canadian local,
territorial, provincial, First Nations, national and international laws that
affect mining and the building of new mines. Other laws and regulations related
to health, safety, working conditions, environment, land and water use, and
other related laws and regulations may also affect the Company.

ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds

|Sales of unregistered securities
    by period | Exemption from registration             | Total common shares sold | Total warrants issued and outstanding convertible into
    common shares1 | Total cash value of shares sold ($USD)
|---------------------------------------------- | --------------------------------------- | ------------------------ | ------------------------------------------------------------------------- | --------------------------------------
|Year ended February
    29, 2004               | Rule 506, Regulation D                  | 1,040,000                | 0                                                                         | 2,600,000                             
|Year ended February
    28, 2005               | Rule 506, Regulation D                  | 1,090,000                | 0                                                                         | 2,725,000                             
|Year ended February
    28, 2006               | Rule 506, Regulation D                  | 3,423,000                | 1,300,000                                                                 | 8,029,068                             
|Year ended February
    28, 2007               | Rule 506, Regulation D                  | 3,752,982                | 3,032,982                                                                 | 9,090,299                             
|1st
    quarter ended May 31, 2007             | Rule 506, Regulation D and Regulation S | 0                        | 2,042,982                                                                 | 0                                     
|2nd
    quarter ended August 31, 2007          | Rule 506, Regulation D and Regulation S | 3,921,715                | 773,000                                                                   | 2,191,400                             

ITEM 3. Defaults upon Senior Securities

None

ITEM 4. Submission of Matters to a Vote of Securities Holders

None

ITEM 5. Other Information

The following announcements, made by press release and distributed over
various wire services, the Company website and shareholder and potential
investor distribution, may have qualified for disclosure on a Form 8-K during
the quarter ended August 31, 2007:

-

By means of a Form 8-K, , the Company reported a change in its certifying
accountant. Effective September 13, 2007, the Company dismissed its principal
accountant, Williams & Webster, P.S. and appointed PMB Helin Donovan as its
principal accountant. Williams & Webster's audit report dated May 25, 2007 on
our financial statements for the most recent fiscal years ended February 28,
2007 and February 28, 2006 did not contain an adverse opinion or disclaimer of
opinion, or qualification or modification as to uncertainty, audit scope, or
accounting principles. In connection with the audits of our financial statements
for the most recent years ended February 28, 2007, 2006 and 2005, and in the
subsequent interim periods through the date of resignation, there were no
disagreements, resolved or not, with Williams & Webster on any matters of
accounting principles or practices, financial statement disclosure or auditing
scope or procedures, which disagreements, if not resolved to the satisfaction of
William & Webster would have caused William & Webster to make reference to the
subject matter of the disagreement in connection with their report on the
financial statements for such years.

ITEM 6. Exhibits

Exhibits

31 Rule 13a-41(a)/15d-14(a) Certificates

32 Section 1350 Certifications

SIGNATURES

Pursuant to the requirements of the Securities and Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.

KLONDIKE STAR MINERAL CORPORATION



By , President

Date: October 22, 2007





By , Vice President, Operations

Date: October 22, 2007