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 May 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 May 31, 2007 there were 29,035,782 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
  
  
  May 31, 2007








---

























KLONDIKE STAR MINERAL CORPORATION

May 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 CASHFLOWS








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
  May 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.





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 three-month period ended May
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 ($93,493 US dollars at May 31, 2007). At May 31, 2007, the
Company exceeded the FDIC insured amount by approximately $17,000 and exceeded
the CIDC insured amount by approximately $412,000 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 May 31, 2007, the exploration costs expensed during the
Company's exploration stage have been approximately $12,189,000. 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.

Mineral Properties

Costs of acquiring mineral properties are capitalized by
project area upon purchase of the associated claims. Costs to maintain the
mineral rights and leases are expensed as incurred. When a property reaches the
production stage, the related capitalized costs will be amortized, using the
units of production method on the basis of periodic estimates of ore reserves.

Mineral properties are periodically assessed for impairment
of value and any diminution in value is charged to operations at the time of
impairment. Should a property be abandoned, its unamortized 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 abandoned or sold based on the proportion of claims
abandoned or sold to the claims remaining within the project area.

Property and Equipment

Property and equipment are stated at cost. Depreciation of property and
equipment is calculated using the straight-line method over the estimated useful
lives of the assets, which range from three to ten years. See Note 3.

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 $1,701,000 for the three months ended May 31, 2007 and has an
accumulated deficit of approximately $53,221,000 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 $553,000 in cash at May 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 May 31, 2007 |                             |               
|----------------------------------- | --------------------------- | --------------------------- | --------------
|                                    | Cost                        | Accumulated Depreciation    | Net Book Value
|                                    |                             |                             |               
|Depreciable Capital Assets:         |                             |                             |               
|Movable structures                  | $          
    970,696     | $              
    305,440 | 665,256       
|Leasehold improvements              | 916,010                     | 228,524                     | 687,486       
|Vehicles                            | 387,602                     | 191,034                     | 196,568       
|Heavy equipment                     | 290,294                     | 18,719                      | 271,575       
|Equipment                           | 287,963                     | 143,037                     | 144,926       
|All-terrain vehicles                | 123,606                     | 87,458                      | 36,148        
|Trailers                            | 94,550                      | 30,928                      | 63,622        
|Computer equipment                  | 39,822                      | 27,144                      | 12,678        
|Computer software                   | 19,333                      | 13,478                      | 5,855         
|Furniture and fixtures              | 19,527                      | 7,163                       | 12,364        
|Pack horses                         | 18,057                      | 8,327                       | 9,730         
|Total Depreciable Assets            |                             |                             |               
|                                    |                             |                             |               
|Non Depreciable
    Capital Assets: |                             |                             |               
|Gold samples                        | 77,350                      | -                           | 77,350        
|Total Capital Assets                | $ 3,244,810                 | $ 1,061,252                 | $ 2,183,558   

Total depreciation expense for the three months ending May 31, 2007, 2006 and
2005 is $177,416, $101,489 and $25,878 respectively.

NOTE 4 - RELATED PARTY TRANSACTIONS



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 $28,406 $110,148 and $14,465 at May 31, 2007, February
28, 2007 and February 28, 2006, respectively. During the three months ending May
31, 2007, the Company included in mineral exploration expense $36,263 ($154,379
for the three months ended May 31, 2006 and, $800 for the three months ended May
31, 2005) in transactions with a company controlled by an officer and director
of the Company. The transactions were recorded at fair market value. During the
three months ending May 31, 2007, the Company included in mineral exploration
expense payments to a director of $42,619 ($nil for the three months ended May
31, 2006 and $nil for the three months ended May 31, 2005).



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 $916,000
as of May 31, 2007, have been made to the barn and office.

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 May 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 May 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 May 31, 2007, February 28, 2007 and February 28, 2006, the
Company had 29,035,782; 29,035,782 and 25,202,800 shares of common stock
outstanding, respectively.



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 a total estimated cash proceeds of $1,500,000 with the
offering expiring on or before July 16, 2007.



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.



During the year ended February 28, 2007, the Company issued a
private placement memorandum to issue up to 7,500,000 common stock of the
Company, at a per share purchase price equal to the closing price of the
Company's common stock as quoted on the OTCBB, as of the date of purchase of the
shares. As of May 31, 2007 and February 28, 2007 the Company had issued not
shares against this private placement memorandum.



During the year ended February 28, 2007, the Company sold
through private placements 800,000 common shares at $2.50 per share for total
cash proceeds of $1,800,000; and sold 3,032,982 common shares and warrants at
$2.75 per unit for total net cash proceeds of $7,290,299.



From inception as an exploration stage company, the Company
has paid commissions on sale of stock in the amount of $2,242,390.



During the year ended February 28, 2006, the Company sold
through private placements 50,000 common shares at $1.25 per share for total
cash proceeds of $62,500; 2,073,000 common shares at $2.50 per share for total
net cash proceeds of $4,574,600; and 1,300,000 common shares at $2.75 per share
for total net cash proceeds of $3,391,700.



During the year ended February 28, 2005, the Company sold
through private placements 1,090,000 shares of its common stock at $2.50 per
share for total net cash proceeds of $2,371,607. Also during the year ended
February 28, 2005, the Company issued 200,000 shares of common stock having an
intrinsic value of $2.50 per share for a total value of $500,000 as part of a
mineral rights acquisition agreement.



During the year ended February 29, 2004, certain Company
shareholders elected to forgive $31,500 of unsecured, long-term debt bearing
interest at 10% per annum. The shareholders also elected to forgive $5,756 of
accrued interest on the debt and $16,156 of accounts payable owed them. The
aggregate amount of $53,412 for shareholder forgiveness has been recorded as a
contribution of capital on the Company's statement of stockholders' equity.



During the year ended February 29, 2004, the Company issued
3,800,000 shares at $1.25 per share of its common stock in connection with the
acquisition of certain mining claims in the Dawson Mining District of Yukon
Territory in Canada. Also, during the year ended February 29, 2004, the Company
sold in a private placement 1,040,000 shares of its common stock at $2.50 per
share for cash and subscriptions receivable of approximately $2,600,000.



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          | 0.3 years                       | 3.50                  
|Exercised                                      | -                  |                                 | -                     
|Rescinded or expired                           | (1,300,000)        |                                 | 3.50                  
|Outstanding and exercisable, February 28, 2007 | 3,032,982          | 0.3 years                       | $ 3.50                
|Issued                                         | -                  |                                 | -                     
|Exercised                                      | -                  |                                 | -                     
|Rescinded or expired                           | (990,000)          |                                 | 3.50                  
|Outstanding and exercisable, May 31, 2007      | 2,042,982          | 0.3 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 year ended February 28, 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 May
    31, 2007                                                               | 1,580,000                     | $       1.36                    | -                            
|Exercisable at May
    31, 2007                                                               | 1,580,000                     | $       1.36                    | -                            
|Weighted average
    fair value of options granted during the three months ended May 31, 2007 |                               | $          
    -               |                              



During the year ended February 28, 2006, the Company's board of directors
approved the 2005 Stock Incentive Plan for Consultants and Advisors ("the 2005
Stock Incentive Plan") to allow up to 2,800,000 shares of Company stock to be
issued. This plan enables the Company to grant stock options to eligible
consultants and advisors of the Company. The 2005 plan has a duration of 10
years and may be modified without shareholders' approval.

During the year ended February 28, 2005, the Company granted options, under
the 2003 plan, to purchase a total of 1,200,000 shares of common stock to its
employees and directors at $1.00 per share. During the year ended February 28,
2006, the Company amended the terms of the stock options granted to employees
and directors to allow the options to fully vest upon award. During the year
ended February 28, 2006, the Company granted options to purchase a total of
30,000 shares of common stock to an employee at $2.50 per share. These shares
are fully vested and exercisable over a five year term. The Company recognized
employee compensation expense of $2,793,010 during the year ended February 28,
2006 for all vested options.

During the year ended February 29, 2004, the Company's board of directors
approved the Stock Compensation Plan, subsequently renamed the "2003 Stock
Incentive Plan for Employees" ("the 2003 plan") to allow up to 2,800,000 shares
of company stock to be issued. This plan enables the Company to grant stock
options to directors, officers, employees and eligible consultants of the
Company. With a duration of 10 years, the plan may be modified without
shareholders' approval. In 2005, the Company amended the 2003 Stock Incentive
Plan for Employees, and authorized a post-effective amendment to the Statement
of Form S-8 Securities.



NOTE 8 - COMMITMENTS AND CONTINGENCIES



During the year ended February 28, 2007, the Company entered
into an agreement with JAE Resources Ltd to acquire a 100% option on certain
quartz claims within the Klondike region, Yukon Canada, with future cash
payments of $50,000 CDN by May 31, 2008; $60,000CDN by May 31, 2009; $80,000 CDN
by May 31, 2010; and work commitments totaling $300,000 CDN on the property
before May 31, 2011. The Company is required to pay a royalty equal to 3% of net
smelter returns.



During the year ended February 28, 2007, the Company entered
into an agreement with joint ventures collectively referred to as 19651 Yukon
Inc. to acquire an option for a 49% interest in certain placer properties within
the Klondike region, Yukon, Canada. The option agreement requires future annual
payments of $7,875 CDN by June 29 for the years 2007 to 2010. The Company is
entitled to charge a 15% administration fee on certain exploration work incurred
on the properties.



During the year ended February 28, 2007, the Company acquired
from Klondike Source Limited (NSX: KSL) subsidiary, KSL Exploration (Yukon)
Limited, the exclusive right to purchase an undivided 100% interest in one or
more claims in the DOM block located in the eastern part of the Klondike
goldfield. Purchase of any claim or claims will entitle KSL to a royalty of 2.5%
of net smelter returns.

During the year ended February 28, 2007, the Company modified the agreement
with a contractor, for project management for media and investor relation
services, originating in 2005, to grant stock options in lieu of shares. The
Company originally agreed to issue 100,000 shares at $2.50 per share with 50,000
shares issued upon signing of the contract and 50,000 shares to be issued no
earlier than June 1, 2005. During the year ended February 28, 2006, the Company
amended the share option offer to comply with the Company's 2005 Stock Incentive
Plan. At May 31, 2007, no shares have been issued on account of this agreement.

During the year ended February 28, 2007, the board of directors modified the
terms of the stock awards to certain consultants to granting of stock options,
fully vesting upon award. The Company has previously recognized $250,000 expense
against these stock awards. The board of directors also approved the granting of
stock options to certain consultants, subject to filing certain documentation
with the Securities and Exchange Commission.

During the year ended February 28, 2006, the Company acquired a 100% interest
in placer leases in the Indian River and Montana Creek area, along the southern
edge of the Klondike gold fields. The agreement is subject to a 10% royalty on
future production.

During the year ended February 28, 2006, the Company entered into an
agreement to acquire up to 75% interest in claims covering gold bearing quartz
pebble conglomerate in the Indian River area, along the southern edge of the
Klondike gold fields. The agreement requires cash payments totaling $145,000
over 5 years and certain work commitments to acquire a 55% interest. Producing a
bankable feasibility study and arranging project financing can earn a further
20% interest in the project.

During the year ended February 28, 2006, the Company entered into an
agreement to acquire up to 75% interest in certain claims covering an epithermal
gold target in the Tintina Gold Belt, Yukon, Canada. The agreement requires cash
payments to Klondike Gold Corp. (TSXV:KG) totaling $200,000 over 4 years and
work commitments totaling $500,000 to acquire a 55% interest. Producing a
bankable feasibility study and arranging project financing can earn a further
20% interest in the project.

During the year ended February 28, 2006, the Company entered
into an agreement to acquire up to 75% interest in certain claims covering
several copper-zinc and nickel-platinum group targets in the Kluane Mineral
Belt, Yukon, Canada. The agreement requires cash payments to Klondike Gold Corp.
(TSXV:KG) totaling $265,000 over 5 years and work commitments totaling
$2,225,000 to acquire a 55% interest. Producing a bankable feasibility study and
arranging project financing can earn a further 20% interest in the project.

During the year ended February 28, 2006, the Company approved the granting of
300,000 share options at $2.50 per share for future investor relations services.

During the year ended February 28, 2006, the Company amended
an agreement originating in October 2004, with a privately held company, which
received the first right of refusal to purchase the majority of gold produced by
the Company from the Klondike Mining District at a 2% discount from the LME spot
price. The right of first refusal is subject to the Company proceeding through
exploration, pre-feasibility, final feasibility and building of a producing mine
on mineral claims in the Klondike Mining District. In consideration for such
rights, the privately held company agreed to purchase 1,000,000 shares of the
Company's common stock at $2.50 per share before February 28, 2006. The Company
granted an extension to the privately held company to purchase the 1,000,000
common shares. Further, subject to the execution of agreements giving effect to
the transactions contemplated in the agreement, the privately held company shall
receive the option to make further subscriptions for shares, subject to the same
terms and conditions, following completion of the subscription of the first
1,000,000 shares, as follows:

1,000,000 shares at $3.50 by January 25, 2007 
1,000,000 shares at $4.50 by January 25, 2008
1,000,000 shares at $5.50 by January 25, 2009 
1,000,000 shares at $6.50 by January 25, 2010

The shares are subscribed for pursuant to the provisions of
Section 4(2) of the Securities Act of 1933 and Rule 506 of Regulation D
promulgated by the Securities and Exchange Commission. The offered shares are
restricted shares under the Securities Act of 1933 and the Exchange Act of 1934
and Rule 144 under the Securities Act of 1933.

As of February 2006, the Company had not received the full
consideration related to this agreement. The private company purchased some but
not all the shares offered under the original agreement. Therefore, the Company
deemed this agreement to be closed, while noting that the agreement has a
history of modification. The Company believed that future negotiations were
possible. As of the 10-QSB filing for the period ending November 30, 2006, the
Company reported it entered into negotiations to reactivate the agreement and
received cash towards the purchase of 200,000 common shares at $2.50 per share.
On February 26, 2007, following an agreement being reached with the privately
held company, the Company granted an extension for completing the purchase of a
total of 1,000,000 at $2.50 per share, to February 28, 2007. The private company
completed the purchase of the balance of the 1,000,000 shares on February 28,
2007.

The Company anticipates further negotiations with the private company with
regard to the time periods in which rights to purchase additional shares may be
exercised.

Compliance with Environmental Regulations

The Company's mining activities are subject to laws and regulations
controlling not only the exploration and mining of mineral properties, but also
the effect of such activities on the environment. Compliance with such laws and
regulations may necessitate additional capital outlays; affect the economics of
a project, and cause changes or delays in the Company's activities.

NOTE 9 - SUBSEQUENT EVENTS



Subsequent to the quarter ending May 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 a total estimated cash
proceeds of $1,000,000, with the offering expiring on or before July 31, 2007.

Subsequent to May 31, 2007, the Company received $250,000 as part of a
financing arrangement. Repayment terms are in negotiations.



---

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. 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. Finally, the Company has been
awarded a major mineral exploration and development concession in Egypt, an area
totaling 1,245 km2 or 481 mi2.

During the coming year, the company expects to continue increasing its land
holdings, projects and exploration effort.

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 eight
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.

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 point
  of view in a manner that meets and exceeds regulatory requirements; and

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

Currently, all of the mineral resource property rights are located in
Canada..

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 May 31, 2007 include:

Operational

- Completing winter drilling program and releasing results on the Indian
River Placer gold project;

- Completing the inaugural diamond drilling program on the Spice gold
project;

- Releasing exploration results from the 2006 exploration season on the
Dominion gold project confirming the presence of multiple, continuous
gold-bearing structures that warrant testing by drilling and identifying several
significant new gold-in-soil anomalies;

- Issuing a detailed progress report on the Lone Star gold project scoping
study.

- The Minister of Petroleum, Arab Republic of Egypt, announced that the
Company was awarded an exploration and exploitation concession in the Arab
Republic of Egypt, subject to finalization of an agreement and approval by the
People's Assembly of Egypt.

- Klondike Star Canada Inc., a wholly-owned Canadian subsidiary (incorporated
under the Canadian Business Corporations Act) was established to support planned
growth and development including new mineral exploration and development
opportunities in Canada and globally.

Financial

- The unaudited loss from operations for the three months ending May 31, 2007
was $1,701,000 ($0.06 per share) compared to unaudited operating loss of
$1,920,000 ($0.07 per share) for the three months ending May 31, 2006. The prior
year's operating loss included the fair value of $612,500 of employee and
consultant stock option grants;

- The unaudited operating cash flow for the three months ending May 31, 2007
was $1,705,000 ($0.06 per share) compared to $1,052,000 ($0.04 per share) in the
first quarter ending May 31, 2006;

- The changes in cash flow used in operations from May 2007, to May 2006,
relate to the increased activity on the Indian River Placer project and the
Spice project underway in the first quarter ending May 31, 2007 and the scope of
activities on certain initiatives as compared to May, 2006.

- 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 share under Regulation S, with the offering expiring
on or before July 6, 2007.

- The Company approved a private placement memorandum for the issuance of
3,000,000 shares of common stock at $0.50 per share under Regulation S, with the
offering expiring on or before July 16, 2007.

- Subsequent to the quarter ending May 31, 2007, the Company approved a
private placement memorandum for the issuance of 2,000,000 shares of common
stock at $0.50 per share under Regulation S, with the offering expiring on or
before July 31, 2007.

Financial indicators

|                                                                            | 1st quarter ended May 31, 2007 | Year-end
    February 28, 2007 | Year-end
    February 28, 2006 | From Inception of
    Exploration Stage December 8, 2003 to February 28, 2007
|--------------------------------------------------------------------------- | ------------------------------ | ------------------------------ | ------------------------------ | -----------------------------------------------------------------------------
|Total expenses                                                              | $ 1,766,978                    | $ 9,967,672                    | $ 8,778,272                    | $ 53,327,384                                                                 
|Net loss from continuing
    operations                                     | $ 1,701,472                    | $10,043,789                    | $ 8,741,926                    | $ 53,216,315                                                                 
|Cash used in operating
    activities                                       | $ 1,705,031                    | $ 8,621,116                    | $ 5,610,326                    | $ 18,316,322                                                                 
|Cash raised by financing
    activities                                     | $0                             | $ 9,090,299                    | $ 8,068,568                    | $ 22,130,474                                                                 
|Cash and cash equivalents on
    hand                                       | $ 552,554                      | $ 2,390,876                    | $ 3,514,176                    | $ 0                                                                          
|Net loss per common share: Basic
    and Diluted                            | $ (0.06)                       | $ (0.38)                       | $ (0.39)                       | $ 0                                                                          
|Weighted average number of
    common shares outstanding: Basic and diluted | 29,035,782                     | 26,512,538                     | 22,562,923                     | -                                                                            
|Cash dividends declared per
    common share                                | $ 0                            | $ 0                            | $ 0                            | $ 0                                                                          
|Property, plant and equipment,
    net book value                           | $2,183,558                     | $ 2,227,683                    | $ 1,211,137                    |                                                                              
|Long-term debt                                                              | $ 0                            | $ 0                            | $ 0                            | $ 0                                                                          
|Shareholders' equity                                                        | $2,569,669                     | $ 4,271,141                    | $ 4,612,131                    | -                                                                            

Investor relations indicators

|                                                                         | 1st quarter ended May 31, 2007  | Year-end February 28, 2007      | Year-end February 28, 2006      | Change from year-end 2007 to quarter-end May 31, 2007
|------------------------------------------------------------------------ | ------------------------------- | ------------------------------- | ------------------------------- | -----------------------------------------------------
|Common shares issued and
    outstanding                                 | 29,035,782                      | 29,035,782                      | 25,202,800                      | Nil                                                  
|Restricted shares                                                        | 9,903,734                       | 9,943,734                       | 18,025,906                      | Decrease of 40,000 or 0.4%                           
|Free trading shares                                                      | 19,132,048                      | 19,092,048                      | 7,176,894                       | Increase of 40,000 or 0.2 %                          
|Warrants outstanding and
    exercisable                                 | 2,042,982                       | 3,032,982                       | 1,300,000                       | Decrease of 990,000 or 32.6%                         
|Share price range by low and
    high                                    | Monthly range of $1.00 to $1.75 | Monthly range of $1.50 to $3.98 | Monthly range of $2.75 to $3.40 | Not applicable                                       
|Share volume monthly high                                                | 1,152,165                       | 4,223,025                       | 2,359,551                       | Not applicable                                       
|Shareholders                                                             | About 5,820                     | About 5,550                     | About 4,200                     | Increase of 275 or 5%                                
|Material event press releases
    and 8-K reports                        | 8                               | 36                              | 22                              | Not applicable                                       
|Share options authorized and
    unexercised (total in reporting period) | 1,580,000                       | 1,580,000                       | 1,230,000                       | Nil                                                  

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

(Source: Bell Globemedia Publishing Inc. 2007)

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                                       





Exploration and development projects

The mineral rights are organized into ninediscrete exploration and
development projects. As of May 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 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

|                                                 | 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 May 31,2007               
|------------------------------------------------ | ------------------------------ | ------------------------------ | ------------------------------ | ------------------------------- | ----------------------------------------------------------------------
|Exploration projects                             | 9                              | 8                              | 6                              | 2                               | Increase of 1 project                                                 
|Quartz mining claims                             | 2166                           | 2166                           | 1921                           | 1753                            | None                                                                  
|Total area of quartz claims and
    crown grants | 418.2/161.6                    | 418.3 km2/161.5 mi2            | 352 km2/
    135.9 mi2         | 239 km2(estimate)/
    92.3 mi2 | None                                                                  
|Placer mining claims                             | 338 plus 3 leases              | 329 plus 43 mi of leases       | 300 plus 43 miles of leases    | 114 plus 60 miles of leases     | Increase 9 claims or 2.7% and
    significant release of annual leases
|Total area of placer claims and
    leases       | 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 36.2%                                             
|Total area of mining concessions                 | 1245 km2/481 mi2               | 0                              | 0                              | 0                               | Awarded Oweinat, Egypt
    concession                                 

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
figures are reasonable and appropriate. These changes are made throughout this
report.

Operational indicators

|                            | 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
    Q1-end May 31, 2007
|--------------------------- | ------------------------------ | ---------------------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------------------- | -------------------------- | --------------------------------------------------------
|Health and safety incidents | 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 | 2                          | Not applicable                                          
|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, 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 and improve on 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 April 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.

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.

Permit applications to facilitate future mining operations have been
submitted and are under review by environmental assessment and regulatory
authorities. Based upon conventional mining methods and the nature of the
permitting regime for placer mining, it could be feasible to bring a placer mine
into production in the short-term. A placer mining operation could generate cash
flow for the Company to finance its major exploration and development
initiatives.

As of May 31, 2007, drilling crews and allied exploration personnel were
operating on the property from the Indian River exploration camp.

|                                                         | 1st quarter-end May 31, 2007                                                 | Year-end February 28, 2007                                                    | Year-end February 28, 2006                                                      | Change from
    year-end 2007 to Q1-end May 31, 2007                                                                      
|-------------------------------------------------------- | ---------------------------------------------------------------------------- | ----------------------------------------------------------------------------- | ------------------------------------------------------------------------------- | --------------------------------------------------------------------------------------------------------------------------
|Total claims                                             | 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 years leases as ground determined to be of limited value
|Total area                                               | 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 | 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 340 holes
    totaling 3,479 meters/11,414 feet                                          
|Bulk sampling                                            | Preparation of 2 test mining sites initiated                                 | 1 site of 7,249 cubic yards processed                                         | None                                                                            | None                                                                                                                      
|Ownership                                                | 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.

Assay results from the 2005 exploration season (drilling and bulk sampling)
were released sequentially October 6, 2005 to January 24, 2006.

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.

As of May 31, 2007, exploration personnel and drilling crews are operating on
the property from the main Eldorado camp complex.

|                                                           | 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 May 31, 2007
|---------------------------------------------------------- | --------------------------------------- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | -------------------------------------------------------------------------------------------------------------------------------------------------- | ----------------------------------------------------------------------------------- | ----------------------------------------------------
|Total claims and crown grants                              | 719                                     | 719                                                                                                                                                                                             | 1056                                                                                                                                               | 500                                                                                 | None                                                
|Total area                                                 | 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 | 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                                                                                   | None                                                
|Bulk sampling, surface
    trenching and sampling          | 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 | None                                                
|Assay and other analysis                                   | 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              | None                                                
|Ownership                                                  | 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 consists of 331 claims totaling 62.8 km2
(24.2 mi2). 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 an 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.

Drilling is proposed for 2007 at the JAE claim block. This lies 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 and silver
vein zones within an area of highly anomalous soil geochemistry that measures
about 1.5 km by 1 km (0.9 mi by 0.6 mi).  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 three shallow
drill holes, directed at the high-grade silver, have previously been drilled on
the property.  It is expected that further surface work on the other
parallel zones will result in additional drill targets, possibly during the 2007
program.

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.

|                     | 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 May 31, 2007
|-------------------- | -------------------------------------------------------------------------------------------------------------------------------------------------- | -------------------------------------------------------------------------------------------------------------------------------------------------- | -------------------------------------------------------------------------------------------- | --------------------------------------------------------- | ----------------------------------------------------
|Total claims         | 331                                                                                                                                                | 331                                                                                                                                                | 168                                                                                          | 112                                                       | None                                                
|Total area           | 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            | - 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 | Nil                                                                                                                                                | Trenching, mapping, sampling
    including 2 bulk sampling, soil geochemistry and staking                                                          |                                                                                              |                                                           | None                                                
|Bulk Sampling        | Nil                                                                                                                                                | 2 bulk samples totaling 8 tonnes                                                                                                                   |                                                                                              |                                                           | None                                                

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 stepped up
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 expected to be available in the second
quarter ended 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 May 31, 2007           
|---------------------------------------------------------- | --------------------------------------------------------- | ----------------------------------------------------------------------------- | -------------------------------------------- | -------------------------- | ---------------------------------------------------------------
|Total claims                                               | 52                                                        | 52                                                                            | 32                                           | 0                          | None                                                           
|Total area                                                 | 10.9 km2/4.2 mi2                                          | 10.9 km2/4.2 mi2                                                              | 6.7 km2/2.6 mi2                              | 0                          | None                                                           
|Exploration activity                                       | 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 | 3 holes totaling 435.5 meters/                            | Drill targets identified for
    spring 2007 drill program                    | 0                                            | 0                          | 100%                                                           
|Ownership                                                  | 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.

|                                   | 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 May 31, 2007                     
|---------------------------------- | -------------------------------------------- | ---------------------------------------------------------------------- | -------------------------------------------- | ------------------------------ | -------------------------------------------------------------------------
|Total claims                       | 416                                          | 416                                                                    | 404 claims                                   | 0                              | None                                                                     
|Total area                         | About 82 km2 or 31.7
    mi2                 | 82 km2 or 31.7 mi2                                                     | 82 km2 or 31.7 mi2                           | 0                              | None                                                                     
|Drilling                           | No change                                    | Drill sites prepared                                                   | 0                                            | 0                              | None                                                                     
|Surface trenching and
    sampling | 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                          | 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).

Although recently acquired, 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.

|             | 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 May 31, 2007      
|------------ | ------------------------------------------------------------------------------------- | -------------------------- | -------------------------- | -------------------------- | ----------------------------------------------------------
|Total claims | 400                                                                                   | 308                        | 0                          | 0                          | Claims re-assigned from Lone Star Project                 
|Total area   | 65.6 km2 or 25.3 mi2                                                                  | 47.0 km2 or 18.1 mi2       | 0                          | 0                          | Area of re-assigned claims                                
|Ownership    | 100% of 308 claims and 55% and exclusive option
    to acquire up to 75% of 92 claims | 100% registered            | 0                          | 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 quarters of the year-ended February 28, 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 May 31, 2007
|----------------------------------- | ------------------------------ | -------------------------------- | ------------------------------------------------------------------------------------------- | -------------------------- | ----------------------------------------------------
|Total claims                        | 248                            | 248 claims                       | 205 claims                                                                                  | 0                          | None                                                
|Total area                          | 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                        | 49 holes (winter season January - April)                                                    | 0                          | None                                                
|Surface trenching and sampling      | 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                      | Not available                    | 36 rock samples, 333 soil samples                                                           | 0                          | None                                                
|Ownership                           | 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 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 May 31, 2007
|------------ | --------------------------------------------- | --------------------------------------------- | --------------------------------------------- | --------------------------------------------- | ----------------------------------------------------
|Total claims | 115 claims                                    | 115 claims                                    | 115 claims                                    | 114 claims                                    | None                                                
|Total area   | 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    | 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 and warrants, the Company expects to have
the resources necessary to expand its exploration program, acquire new
properties and move ahead with mining feasibility planning and development. 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.





Capital resources

The Company has no material commitments for capital expenditures as of May
31, 2007. Pursuant to its 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 material capital requirements for 2008.
Commencing placer mining on the advanced-stage Indian River Placer Project would
create a 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.

Resource sector and gold market outlook

The outlook for resource industries is positive, as higher commodity prices
result in a return to profitability for corporations, particularly in the mines
and metals sector. As well, major mining companies are affected by depletion of
their reserves and resources, raising concerns about shortages of metals for the
future.

The outlook for gold specifically continues to be favorable, due to the
present supply/demand deficit. Management is of the current opinion that the
condition of declining world gold mine output may not find relief until
approximately 2011, when enough new mines can come on-stream to overcome the
depletion of existing mines.

7 Year Gold Price, January 1, 2000 to May 31, 2007:



The increasing price of gold and precious metals may result in a new area of
favorable economics in the mining industry. At a time when gold was averaging
$390, subject to certain assumptions, management considered that 1 gram of gold
per tonne of ore may be sufficient to achieve profitability, provided sufficient
scale under specific conditions.  If the future price of gold maintains
current higher levels, it could mean a new understanding of the threshold of
economics for large-scale gold mining operations.

The normal cyclical nature of a metals cycle is often a boom/bust scenario,
often with a 5 year average. Characteristically, major mining companies do not
make capital investment at the top of these cycles, rather at the bottom. Major
mining companies are investing heavily, and repositioning through the
acquisition of other companies and properties, as if this is going to be an
extended long-term cycle. This suggests long-term demand for copper, zinc and
particularly gold.

Exploration expenditures have increased globally and in all sectors and as
funding increases, particularly in the early part of the year, with high metals
prices and a strong market for mines and metal stocks.  This will lead
towards discoveries and results that will draw attention to the sector and
eventually attract further investment.

The gold price broke out of a range in the mid-$400's in November 2005, and
proceeded through various resistance levels to $500, $540, $570, $610 until it
encountered the $650-$680 distribution, visible back in the early 1980's. 
The brief move above $680 to an intra-day high of $740 was short-lived. 
The sell-off that followed carried gold down to $540, with good base building
between $570 and $650 since.

Current gold price forecasts by GFMS Ltd. and TD Economics suggest that
prices will range between $US 643 and $US 675 to the end of calendar 2007.
(Sources: GFMS Limited Gold Survey 2006 Update 2, January 18, 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). The market is pricing gold at US$681.20 in
one year. (Source: Esignal as reported in the Globe & Mail)

In 2006, the average price of gold was $US 603.93. During the first two
calendar months of 2007 daily gold prices averaged $647 .16, ranging from a low
of $US 608.40 to a high of $US 685.75. (Source: World Gold Council, London PM
Fix) The three-year moving average for the price of gold as of February 28, 2007
was $US 499.50. (Source: World Gold Council, London PM Fix over period of March
1, 2004 to February 28, 2007)

Management believes that the market price for gold will remain strong,
despite the recent fluctuations, given fundamental concerns about the
demand/supply gap, declining central bank reserves, persistent currency
debasement, geo-political strife and commodity inflation. The company maintains
a view that market conditions across the board will keep metal prices strong and
lead to higher metal prices in the future.

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.

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 May 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.
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 regulatory oversight
bodies. Based upon that review, Management has concluded that company disclosure
controls and procedures are effective for timely gathering, analyzing and
disclosing the information disclosed in reports filed under the Securities
Exchange Act of 1934. There have been no significant changes made in our
internal controls or in other factors that could significantly affect our
internal controls, in a negative manner, subsequent to the evaluation date.

As of May 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, the careful selection and training
of qualified personnel and an internal audit program to monitor its
effectiveness. During the three-month period ended May 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 28, 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 material or pending legal proceedings to which the Registrant is
a party or of which any of its property is subject.

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.

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                        |                                                                           | 0                                     

Note 1: The warrants are convertible at a fixed price of $3.50
within a period of up to12 months from the date of purchase of common shares at
price of $2.75 under a private placement.

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 May 31, 2007:

- Klondike Star Advances Dominion Gold Project, March 1, 2007

- Klondike Star Launches Drill Program at Spice Gold Project, May 8, 2007

- Klondike Star Releases Drilling Results on Indian River Placer Gold
  Project as it moves into Mine Development, May 10, 2007

- Klondike Star to Explore for Egyptian Gold, May 15, 2007

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
(Signature and Title)

Date July 13, 2007

, Vice President, Operations

By (Signature and Title)

Date July 13, 2007