Exhibit
99.3




Management’s
Discussion and Analysis
 
 The
following discussion is a review of the financial performance and position of
Claude Resources Inc. (“Claude” or the “Company”) for the years ended December
31, 2007 and 2006. This discussion is the responsibility of Management and the
information within this Management discussion and analysis is current to March
28, 2008.  The Board of Directors reviewed the disclosure presented
herein through the Audit Committee.  The discussion should be read in
conjunction with the Company’s audited consolidated financial statements and
notes to those statements. All amounts are expressed in Canadian dollars, except
where otherwise indicated.
 
 Overview
 
 Claude
Resources Inc. is a gold and oil & natural gas producer with shares listed
on both the Toronto Stock Exchange and American Stock Exchange. The Company’s
main revenue generating assets are the 100% owned Seabee gold project, located
in northern Saskatchewan, and working interests in oil & natural gas wells,
an associated gas plant and in gathering lines located in Alberta.
 
 The
Company’s primary mission is to become a recognized and valued exploration and
mining company with a producing asset base and strong balance sheet. It follows
three principal strategies to optimize its probability of
success:  maximizing the performance of its existing producing assets;
aggressive exploration efforts - both advanced and grass roots; and, maintaining
financial capacity.
 
 Maximization
of Existing Assets
 
 During
the year, the Company continued to invest in capital projects and equipment at
its Seabee gold properties.  To increase productivity, nearly $10
million was invested on mining equipment and infrastructure at the Seabee
project.  During the first quarter of 2007 the expansion of the Seabee
mill was completed. The increase in capacity will allow for greater flexibility
in mine planning as well as ensure available capacity for additional tonnage
from potential gold projects such as Santoy 8 and Porky Lake.
 
 Exploration
 
 Claude’s
objective is to fully assess the potential for high grade gold mineralization on
the Madsen property with the primary focus on de-watering the Madsen shaft to
provide underground access for drilling extensions of the historic high grade
number 8 zone plus other zones.  As well, the Company’s 2007 surface
drill program included 90 holes totaling 32,800 metres which targeted the
Treasure Box, Russett South and Fork zones.
 
 Claude’s
gold exploration efforts in the Seabee area continued to focus on satellite
deposits within trucking distance of the mill.  The completion of the
bulk sample on  Santoy 7 led to the successful transition to
commercial production at the start of the fourth quarter.  At Santoy
8, the drill program featured 147 holes totaling 31,700 metres.  The
Company is currently completing a 43-101 resource calculation, a critical step
in preparation for planned commercial production of Santoy 8 in
2009.
 
 Financial
Capacity
 
 The
Company intends to build its cash reserves and maintain access to financial
markets to ensure continued funding of exploration efforts and expansion of
mining projects.
 
 Subsequent
to the Balance Sheet date, the Company  announced plans to proceed
with a debenture offering for up to $20 million.  Funds will be used
to fund exploration programs at the Madsen property (including the dewatering of
the Madsen shaft), to address ongoing equipment and infrastructure upgrades at
the Seabee properties and for general corporate purposes.
 
 
 24
 
 2007
Mining Operations
 
 Seabee
Area - Operations
 
 For
the year ended December 31, 2007, the Seabee and Santoy mines milled 227,661
tonnes of ore, grading 6.35 grams per tonne, producing 44,323 ounces of
gold.  This compares to 253,614 tonnes of ore, grading 6.16 grams per
tonne, producing 47,034 ounces of gold in 2006.  Production in the
first two quarters of the year was below forecast, averaging only 8,533 ounces
per quarter.  As a result of  significant improvement during
the last half of the year, 13,629 average ounces per quarter, total year end
production came within 10% of our 48,000 ounces forecast.  Production
output was below target due to equipment availability issues, stope availability
and the geological complexity of the Santoy 7 deposit.
 
 Figure
1: 2007 Quarterly Gold Production Results
  Year
      To Date 2007
                
                
                
                Q1
                
                
                
                Q2
                
                
                
                Q3
                
                
                
                Q4Grand
      TotalsCombined
                
                
                Seabee
                
                
                Santoy
                
                
                Seabee
                
                
                Santoy
                
                
                Total
                
                
                Seabee
                
                
                Santoy
                
                
                Total
                
                
                Seabee
                
                
                Santoy
                
                
                Total
                
                
                Seabee
                
                
                Santoy
                
                
                TotalTonnes
                
                
                227,661
                
                
                
                196,338
                
                
                
                31,323
                
                
                
                42,129
                
                
                
                4,879
                
                
                
                47,008
                
                
                
                44,393
                
                
                
                5,047
                
                
                
                4
      9,440
                
                
                
                53,047
                
                
                
                12,648
                
                
                
                65,695
                
                
                
                56,769
                
                
                
                8,749
                
                
                
                65,518Tonnes
      / Day
                
                
                624
                
                
                
                538
                
                
                
                8
      6
                
                
                
                4
      68
                
                
                
                5
      4
                
                
                
                5
      22
                
                
                
                4
      88
                
                
                
                5
      5
                
                
                
                5
      43
                
                
                
                5
      77
                
                
                
                1
      37
                
                
                
                7
      14
                
                
                
                617
                
                
                
                95
                
                
                
                712Grade
                
                
                6.35
                
                
                
                6.43
                
                
                
                5
      .84
                
                
                
                5
      .06
                
                
                
                5
      .79
                
                
                
                5
      .13
                
                
                
                6
      .18
                
                
                
                8
      .11
                
                
                
                6
      .38
                
                
                
                7
      .71
                
                
                
                6
      .41
                
                
                
                7
      .46
                
                
                
                6.44
                
                
                
                3.70
                
                
                
                6.08Milled
      Ounces
                
                
                46,446
                
                
                
                40,569
                
                
                
                5,877
                
                
                
                6,847
                
                
                
                9
      09
                
                
                
                7
      ,756
                
                
                
                8
      ,820
                
                
                
                1
      ,316
                
                
                
                1
      0,136
                
                
                
                13,142
                
                
                
                2,608
                
                
                
                1
      5,750
                
                
                
                11,761
                
                
                
                1,044
                
                
                
                12,805Recovery
                
                
                95.4
                %
                
                
                95.4
                %
                
                
                95.5
                %
                
                
                94.1
                %
                
                
                94.1
                %
                
                
                94.1
                %
                
                
                96.4
                %
                
                
                96.4
                %
                
                
                96.4
                %
                
                
                95.8
                %
                
                
                95.8
                %
                
                
                95.8
                %
                
                
                95.0
                %
                
                
                95.0
                %
                
                
                95.0
                %Produced
      Ounces
                
                
                44,323
                
                
                
                38,709
                
                
                
                5,614
                
                
                
                6,442
                
                
                
                8
      55
                
                
                
                7
      ,297
                
                
                
                8
      ,501
                
                
                
                1
      ,268
                
                
                
                9
      ,769
                
                
                
                1
      2,592
                
                
                
                2,499
                
                
                
                1
      5,091
                
                
                
                11,174
                
                
                
                992
                
                
                
                12,166
   Total
mine operating costs increased 19% to $25.3 million from $21.3 million last
year.  This result was due to the increase in mining, maintenance,
material, and services costs within a very competitive market place for
labour. 2007 forecast costs increased by a similiar percentage also as a
result of these factors. The Company is investing in new mobile equipment and
infrastructure to improve productivity to contain future cost
increases.
 
 2007
saw the conversion of portions of the Seabee mine from shrinkage mining to
Avoca/Long Hole mining in order to reduce dilution and improve ore
recoveries.  On going design changes are being made to improve on the
initial designs to control dilution and improve head grade.
 
 Seabee
Production and Costs Statistics (2007-2004)
 
 2007
              
              
              2006
              
              
              2005Tonnes
      Milled
              
              
              227,661
              
              
              
              253,614
              
              
              
              236,427Head
      Grade (g/tonne)
              
              
              6.35
              
              
              
              6.16
              
              
              
              6.32Recovery
      (%)
              
              
              95.4
              %
              
              
              93.6
              %
              
              
              92.9
              %Gold
      Produced (oz)(1)
              
              
              44,323
              
              
              
              47,034
              
              
              
              44,623Gold
      Sold (oz)
              
              
              40,238
              
              
              
              47,410
              
              
              
              42,227Mine
      Operating Costs (million)
              
              $
              25.31
              
              
              $
              21.30
              
              
              $
              18.3Cash
      Operating Costs (per oz)
              
              $
              629
              
              
              $
              449
              
              
              $
              434
 
 (1)Includes ounces produced from Santoy 7
and Porky Lake bulk samples.
 (2) Includes
ounces sold from Santoy 7 and Porky Lake bulk samples.
 
 This
year’s underground drill program resulted in proven and probable reserves at the
Seabee mine totalling 934,098 tonnes, grading 6.69 grams per tonne or 201,039
ounces.  With the development of Santoy 7 on three separate horizons,
the reserves at year end were 114,332 tonnes at 6.74 grams per tonne or 24,766
ounces.  Compared to December 31, 2006, this represents a 51% increase
in reserve tonnage and 54% increase in reserve ounces.  The Company’s
mineral resources at its Seabee mining area included measured and indicated
mineral resources of 59,800 ounces while the inferred mineral resources totalled
491,344 ounces.  The decrease in mineral resources was a result of the
conversion of certain resources to the reserve category at Seabee and Santoy
7.
  The
Mineral Reserves and Mineral Resources estimates are conducted under the
direction of Qualified Person, Philip Ng, P.Eng., Vice President Mining
Operations.
  
 25
 
 Seabee
Mineral Reserves and Mineral Resources
 
 Figure
2: Seabee Mining Area Year End Reserves, 2004-2007
 
 
 
 Figure
3: Seabee Mining Area Mineral Reserves and Resources, 2007 and 2006
 Claude Resources Inc. - 2007 Mineral Reserves and ResourcesProven and Probable ReservesDecember 31,
      2007
                    December
      31, 2006Projects
                    Tonnes
                    Grade (g/t)
                    Ozs
                    Tonnes
                    Grade
      (g/t)
                    OzsSeabee
                    934,098
                    6.69
                    201,039
                    692,500
                    6.59
                    146,638Seabee
                    934,098
                    6.69
                    201,039
                    692,500
                    6.59
                    146,638Santoy
    7
                    114,322
                    6.74
                    24,766
                    -
                    -
                    -Totals
                    1,048,420
                    6.70
                    225,805
                    692,500
                    6.59
                    146,638Measured and Indicated Mineral ResourcesSantoy
    7
                    -
                    -
                    -
                    190,000
                    8.42
                    51,400Porky
      Main
                    160,000
                    7.50
                    38,600
                    160,000
                    7.50
                    38,600Porky West
      (GAS)
                    90,000
                    7.33
                    21,200
                    90,000
                    7.33
                    21,200Totals
                    250,000
                    7.44
                    59,800
                    440,000
                    7.86
                    111,200Inferred Mineral ResourcesSeabee
                    1,020,000
                    8.09
                    265,244
                    1,293,300
                    8.96
                    372,600Santoy
    7
                    10,000
                    10.00
                    3,200
                    10,000
                    10.00
                    3,200Santoy
    8
                    910,000
                    6.10
                    178,500
                    910,000
                    6.10
                    178,500Porky
      Main
                    70,000
                    10.43
                    23,500
                    70,000
                    10.43
                    23,500Porky West
      (GAS)
                    130,000
                    5.00
                    20,900
                    130,000
                    5.00
                    20,900Totals
                    2,140,000
                    7.14
                    491,344
                    2,413,300
                    7.72
                    598,700
  Environment
 
 In
addition to routine activities at the site, Claude made a concerted effort to
advance environmental considerations.  An Environmental Audit of
Seabee in 2006 led to several initiatives including the formal development of a
Hazardous Materials Management Plan, which has increased awareness regarding
hazardous goods and has led to the construction of several new storage
facilities.  Throughout 2007, quarterly audits were performed by an
external consultant, with the goal of further improving the plan, and to make
the handling and storage of hazardous materials more environmentally sound. The
development of an Environmental Management System was ongoing throughout 2007,
and will continue into 2008.
   
 26
  
 Upgrades
continued on the Triangle Lake Tailings Management Facility in the form of dam
extensions. Several options were investigated to increase capacity to handle
tailings.  In order to maximize capacity of the Tailings Management
Facilities in 2007, the water treatment plant was re-commissioned.
 
 Exploration
 
 The
Company continued to aggressively pursue its strategy of defining and developing
satellite ore bodies within trucking distance of the Seabee
mill.  Exploration activities focused on the Santoy 7 and Santoy 8
deposits, with Santoy 7 achieving commercial production in October
2007.   During 2007, 206 holes totaling 38,820 metres were
drilled, testing grassroots and/or advanced exploration targets in the Seabee
region.
 
 Control
of the Madsen mine property was reacquired during the third quarter of 2006 from
Goldcorp Canada Ltd., formerly Placer Dome Limited.  Data compilation,
shaft dewatering and exploration programs totaling 32,800 metres in 90 holes
continued throughout 2007.
 
 Exploration
activities were carried out under the direction of Judy Stoeterau, P. Geo., the
Qualified Person for Claude Resources.
 
 Madsen
 
 The
Madsen mine, having produced in excess of 2.6 million ounces over its 40 year
operating history, was the third largest gold producer in the Red Lake
camp.  The property comprises over 4,000 hectares (10,000 acres) and
includes a fully functional, 700 tonnes per day gold mill, 4,000 foot deep shaft
and permitted tailings facility.
 
 In
April 2007, an extensive data package was received from
Goldcorp.  Data review and compilation was on-going throughout 2007
and will continue into 2008.
 
 In
early 2007, a detailed drill program was initiated at the Treasure Box, 2.4
kilometres north of the Madsen mine complex.  Previous drilling by
Placer Dome had outlined a moderately steep, north-dipping, quartz-tourmaline
sheeted vein system that hosts significant visible gold.  Of the 27
holes, 21 returned 80 intercepts grading from 2.0 to 116.0 grams per tonne,
typically over 0.3 metre widths.  In 2007, Claude completed 51 holes
totaling 13,300 metres, testing the system to depths in excess of 350
metres.  Results included composite intervals of 16.66 grams per tonne
over 1.80 metres, 12.08 grams per tonne over 6.05 metres and 9.06 grams per
tonne over 3.55 metres.  The mineralized vein system was intercepted
over a strike length of 165 metres, although high-grade intercepts appear to
have relatively limited continuity.  Further drilling to test the
depth potential of the system is planned for 2008.
 
 Subsequent
to the Treasure Box program, drilling prioritized testing the contacts of the
main ultramafic  body for the up-plunge expression of high grade Zone
8 mineralization.  This zone was discovered and mined in the 1970’s on
the 22nd to
27th
level.  It is characterized by quartz veining and flooding associated
with tremolite-talc altered mafic/ultramafic rocks and has many similarities to
other high grade deposits in the Red Lake area, notably at Goldcorp’s Red Lake
Mine Complex.
 
 In
the Russett South area, a 22 hole drill program tested 600 metres of the
mafic/ultramafic contact.   The program resulted in the discovery
of significant gold mineralization, 29.08 grams per tonne over 2.0 metres, that
is open at depth and along strike to the south. Six hundred metres south of the
Russett South area, the Company drilled 19 holes for 10,600 metres testing the
Fork Zone target area.  The program expanded the strike length of
mineralization to 270 metres, intercepting mineralization ranging from 2 to 13
grams per tonne over 1.0 metre to 2.0 metre widths.  The results were
consistent with those reported by Placer Dome in 2003. Drilling in 2008
continues to expand the strike length of the system and has intercepted
significantly higher grades over expanded widths.  Gold mineralization
within the Fork Zone comprises sulphidized quartz-veins variably associated with
actinolite-biotite-garnet altered basalt in proximity to the ultramafic
contact.  Mineralization remains open along strike in both directions
and down plunge.
 
 27
 The
Company continues to review and compile historic data for the Madsen property.
As part of the long term development plans at Madsen, an updated NI 43-101
resource calculation has been initiated and is expected to be completed during
the latter half of 2008.
 
 Dewatering
of the mine was initiated in July of 2007.  Access to the 16th level,
as a platform for resource drilling and deep exploration drilling, is planned
for the first quarter of 2009. The 2008 drill program plans to test, from
surface, three advanced exploration targets and seven regional and or
conceptual targets.
 
 Santoy 8 and
8E
 
 The
Santoy 8 and 8E deposits are located approximately 14 kilometres east of the
Seabee mine with access via an all-weather road.  Previous drilling of
the Santoy 8 and 8E deposits defined an inferred resource of 910,000 tonnes at
8.7 grams per tonne uncut and 6.1 grams per tonne with a top cut of 30 grams per
tonne.
 
 In
2007, Claude carried out a drill program of 147 diamond drill holes totaling
31,670 metres in Santoy 8 (23,430 metres in 103 holes) and Santoy 8E (8,240
metres in 44 holes).  The program provided 25-metre infill data to a
depth of 250 metres on the deposits as well as testing strike and plunge
extensions.  Gold mineralization at Santoy 8 has been extended to a
strike length of 600 metres, a depth of 350 metres and remains open along strike
and down plunge to the north.
 
 Santoy
8E has been intercepted over a strike length of 200 metres, depth of 250
metres and remains open along strike and down plunge to the
north.  True thickness of Santoy 8 and 8E deposits varies from 1.5
metres to 30 metres. Gold mineralization is hosted in siliceous, skarnified,
shear structures with sulfide-chlorite-quartz veins and in silicified granitoid
sills.  The mineralized lenses dip moderately to steeply to the east
and are interpreted to be amenable to bulk mining techniques.
 
 The
Company is in the process of producing a revised NI 43-101 resource calculation
and completing environmental studies in preparation for planned commercial
mining in 2009.
 
 Santoy 7
 
 The
Santoy 7 deposit, accessed by all-weather road, is located 3 kilometres
northwest of Santoy 8 and 8E and approximately 11 kilometres east of the Seabee
mine. During 2007, a definition drill program comprising 52 holes and 4,600
metres was completed.
 
 Gold
mineralization is hosted within moderately-dipping to horizontal, stacked,
quartz vein systems associated with a dilatant jog in the Santoy shear
system.  Mineralization has been intercepted over a strike length of
400 metres, a depth of 150 metres and varies from 1.5 metres to 15 metres in
thickness. Bulk sampling of the deposit was initiated during the first quarter
and continued through to October when commercial production was
attained.  Mining is currently active on three levels at a production
rate of approximately 200 tonnes per day.
 
 The
successful transition from exploration through bulk sampling to commercial
production of Santoy 7 is one step towards the development of four satellite
deposits located within trucking distance of the expanded Seabee
mill.
 
 Shane
 
 The
Shane property is located approximately 5 kilometres east of the Seabee mine
along the all-weather road to the Santoy area. Claude has earned a 70%
interest in the property with Shane Resources Ltd. holding the remaining
30%.
  Gold
mineralization is hosted within steeply, west-plunging,
quartz-tourmaline-sulphide vein systems.  These mineralized structures
have been traced over a strike length of 1,300 metres.  During winter
2007, seven holes for 2,550 metres were completed.   Drill core
intercepts from the program included 26.06 grams per tonne over 1.1 metres and
11.42 grams per tonne over 1.0 metre.   To understand the
regional structural setting of mineralization, semi-regional (1:2,000) and
detailed (1:100) mapping of the mineralized trend was completed during the
summer field season.
 
 28
 
 The
Shane property hosts significant, near-surface gold mineralization within 200
metres of the all-weather road.  Further drilling is required to
define the extent and tonnage potential of the mineralized systems.
 
 Quality Assurance and
Quality Control Procedures
 
 Rigorous
quality assurance and quality control procedures have been implemented including
the use of blanks, standards and duplicates.  Geochemical analyses
were submitted to TSL Laboratory in Saskatoon, Saskatchewan, SGS Laboratories at
Red Lake, Ontario, and/or the Seabee minesite lab.  The former two
laboratories are ISO approved. Core samples were analyzed by a 30 gram gold fire
assay with an atomic absorption and gravimetric finish. Intercepts are reported
as drilled widths and range from 65% to 90% of true widths.  Composite
intervals were calculated using a 3.00 grams per tonne cut-off and may include
internal dilution.
 
 Oil
& Gas
 
 Claude
produces crude oil, natural gas and natural gas liquids (ngls) from properties
in Alberta and Saskatchewan.
 
 The
Company has various non-operated working interests in oil, ngls and natural gas
in Alberta. These Alberta properties provide 91% of the total production for oil
and ngls and 100% of the production of natural gas. The Nipisi Unit is a 166
well unitized oil field operated by Canadian Natural Resources Ltd. The Edson
Gas Unit has 52 producing gas wells and an associated gas plant, all operated by
Talisman Energy. In addition to these properties, the Company has interests in
producing oil and natural gas wells at a number of other Alberta
locations.
 
 In
Saskatchewan, the Company has a 75% working interest in six producing vertical
oil wells along with a 33.75% interest in four producing horizontal
wells.
 
 Oil
and ngls sales volume for 2007 was 64,600 barrels, 3% lower than the 66,600
barrels sold in 2006. Natural gas volume declined 5%, with volume levels
decreasing to 588 MMCF in 2007 from 616 MMCF in 2006.
 
 Operating
costs increased slightly to $2.4 million in 2007 from $2.3 million in
2006.
 
 Each
year the Company has its proven and probable oil, ngls and natural gas reserves
evaluated independently.  Crude oil and ngls proved and probable
reserves increased by 16% to 1,066,000 barrels at the end of 2007 from 917,000
barrels at the end of 2006.  The results during the year were
attributable to increases in petroleum prices realized and improved decline
rates.  Natural gas reserves decreased by 7% compared to the prior
year, to 7,387 MMCF in 2007 from 7,952 MMCF in 2006.  Decreases in the
current year were attributable to normal production declines.
 
 
 29
   Reserves(1)
                
                2007
                
                
                2006Crude
      oil and NGLs (mbbl)ProvedAlberta
                
                
                737
                
                
                
                578Saskatchewan
                
                
                51
                
                
                
                45788
                
                
                
                623ProbableAlberta
                
                
                266
                
                
                
                278Saskatchewan
                
                
                12
                
                
                
                16278
                
                
                
                294Total
                
                
                1,066
                
                
                
                917Natural
      gas (MMCF)ProvedAlberta
                
                
                5,987
                
                
                
                6,419ProbableAlberta
                
                
                1,400
                
                
                
                1,533Total
                
                
                7,387
                
                
                
                7,952Barrels
      of oil equivalent (mboe)(2)Proved
                
                
                1,786
                
                
                
                1,693Probable
                
                
                512
                
                
                
                549Total
                
                
                2,298
                
                
                
                2,242
 
 (1)Reserves at December 31, 2007 reviewed by Sproule Associates
      Limited using constant prices.
 (2)Conversion:  6 mcf = 1
boe
 
 Results
of Operations
 
 The
Company reports its results of operations based on Canadian Generally Accepted
Accounting Principles (“GAAP”).  The Company reports the results of
its operations in two reportable industry segments: (1) gold mining and
exploration, and (2) oil, natural gas liquids and natural gas
production.  A reconciliation of reported net sales is included in
Note21 to the financial statements.
 
 Financial
 
 For
the year ended December 31, 2007, the Company recorded a net loss of $7.0
million, or $0.08 per share, after a $1.7 million non-cash recovery related to
income tax benefits arising from the issue of flow-through
shares.  This compares to net earnings of $6.4 million, or $0.09 per
share, after a $5.9 million gain realized on the sale of certain portfolio
investments and a $2.7 million non-cash recovery related to income tax benefits
arising from the issue of flow-through shares for the comparable period in
2006.
 
 The
Santoy 7 project was declared in commercial production on October 1,
2007.  Prior to this date, gold sales net of expenditures were not
included in earnings but were offset against the carrying value of the
asset.
 
 Revenue
 
 Total
gross revenue for the year ended December 31, 2007 fell 6% to $39.0 million from
$41.4 million reported for the year ended 2006.  Gold operations
contributed $29.9 million to revenue, an 8% decline from the $32.5 million
reported in 2006.  The decrease was a result of lower gold sales
volume (2007 - 40,200 ounces; 2006 - 47,400 ounces) offset by a 9% improvement
in Canadian dollar gold prices realized:  2007 - $744 (US $692); 2006
- $685 (US $604).  The lower gold sales volume was attributable mainly
to lower tonnes processed during the period largely because of equipment
availability issues.
 
 Gross
oil, ngls and natural gas revenue for the year ended December 31, 2007 was $9.0
million, a 1% increase from the $8.9 million noted for the year ended December
31, 2006.  During 2007, there were normal production declines in oil,
ngls and natural gas.  These declines were offset by an increase in
petroleum prices realized.
 
 30
 Oil
and ngls sales volume for 2007 was 64,600 barrels, 3% lower than the 66,600
barrels sold in 2006. The average realized price per barrel of oil and ngls in
Canadian dollar terms increased 8% to CDN $71.52 (US $66.59) in 2007 from CDN
$66.04 (US $58.22) in the prior year.  Natural gas volumes fell 5% to
588 MMCF in 2007 from 616 MMCF in 2006. The average realized price in Canadian
dollar terms decreased by 4% to CDN $6.41 (US $5.97) in 2007 from CDN $6.68 (US
$5.89) in 2006.
 
 Expenditures
 
 For
the year ended December 31, 2007, the Company reported mine operating costs of
$25.3 million, a 19% increase from the $21.3 million recorded in
2006.  This increase was largely attributable to the Company
experiencing the industry wide challenges of increasing labour and consumable
costs.  Total cash cost per ounce increased 48% to US $586 (CDN $629)
per ounce this year from US $396 (CDN $449) in 2006.  This result was
due to a combination of higher operating costs, lower gold sales volume and a
stronger Canadian versus US dollar.  Oil, ngls and natural gas
operating costs were relatively unchanged year over year.
 
 Total Cash Costs(1) per Gold Ounce
Sold
  Years
      ended
                  
                  2007
                  
                  
                  2006Cash
      operating costs (CDN $ millions)
                  
                  $
                  25.3
                  
                  
                  $
                  21.3Divided
      by ounces sold
                  
                  
                  40,200
                  
                  
                  
                  47,400Total
      cash costs per ounce (CDN$)
                  
                  $
                  629
                  
                  
                  $
                  449CDN
      $ Exchange Rate
                  
                  
                  1.0741
                  
                  
                  
                  1.1342Total
      cash costs per ounce (US$)
                  
                  $
                  586
                  
                  
                  $
                  396
  (1)
              For
      an explanation of the use of non-GAAP performance measures refer to page
      18.
 
 Depreciation,
Depletion and Accretion
 
 For
the year ended December 31, 2007, gold depreciation, depletion and accretion
expense reported was $8.3 million, a 17% reduction over the $10.0 million
reported in 2006.  This decrease was largely due to the combination of
increased reserves and fewer tonnes mined and milled during the
period.
 
 The
increase, period over period, of depreciation, depletion and accretion of the
Company’s oil & natural gas assets was largely due to reserve base
changes.
 
 General
and Administrative Expense
 
 In
2007, costs increased to $3.6 million from $2.7 million in 2006. This was
largely a result of increased labour costs relating to added staff and
regulatory compliance costs.
 
 Stock
Compensation
 
 Year
to date, stock-based compensation was $0.6 million in 2007 compared with $0.5
million in 2006.  The increase is largely due to the higher costs of
stock options granted during 2007, as calculated by the Black Scholes option
pricing model.
 
 Loss
(Gain) on Sale of Assests
 
 During
the year, the Company realized a small loss on the sale of certain of its
available-for-sale investments.  In 2006, the Company realized a $4.8
million gain on the sale of certain of its available-for-sale investments and a
$1.1 million gain on the sale of an exploration property.
  Write
down of Exploration Properties
 
 The
write down of mineral properties of $0.6 million related to reduction in
carrying values of certain underground assets at the Madsen mine as well as
certain exploration properties in Saskatchewan.
 
 31
 Income
Taxes
 
 The
income tax recovery of $1.7 million was the estimated non cash income tax
benefit arising from the issuance of flow-through shares in 2006 and the
subsequent renouncement of those expenditures in 2007.  A similar
benefit of $2.7 million was recorded in 2006.
 
 Liquidity
& Financial Resources
 
 At
December 31, 2007, the Company had working capital of $11.9 million (December
31, 2006 - $8.0 million).  The working capital improvement was the
result of increased receivables and inventories, decreases in demand loans
offset by increased payables and other current liabilities.
 
 The
Company’s typical cash requirement over the first and second quarters of each
year is significant because of the winter road resupply, which includes
restocking diesel, propane and other large consumables as well as the continued
upgrading of the mining fleet and mine infrastructure.  To fund the
preceding  requirements and the continued exploration and dewatering
costs expected at the Madsen property, the Company announced plans to proceed
with a debenture offering of up to $20 million (subject to regulatory approval)
in March 2008. Subsequent to 2008, the Company believes operating cash
flows may not be sufficient to fund the continued exploration at Madsen and
ongoing capital improvements at the Seabee properties.  The Company
intends to divest of non core assets, the proceeds of which will decrease the
need for additional capital to be raised through equity issues.
 
 Investing
 
 Mineral
property expenditures during the year were $32.1 million, an $11.6 million
increase from 2006. Year to date, expenditures were comprised of the following:
Seabee mine development (including a special ventilation project) of $10.6
million (2006 - $8.6 million); exploration costs, focusing on the Madsen and
Santoy Lake exploration projects of $11.4 million; and, property, plant and
equipment charges of $10.1 million. Property, plant and equipment charges
include mining equipment, camp infrastructure, tailings management facility
expansion and Madsen dewatering charges.
 
 Pursuant
to the sale of a production royalty, the Company received a promissory note in
the amount of $25.6 million as part of the Red Mile transaction. The Company
received a similar promissory note during 2006 for $35.0
million.  This transaction is detailed in Note 9 to the annual
consolidated financial statements.
 
 Oil
& natural gas capital expenditures were $0.8 million during 2007, a decrease
from the $2.2 million reported during the comparable period of
2006.  This reduction is attributable to decreased drilling and
infrastructure spending on both the Nipisi and Edson properties.
 
 In
2007, $0.1 million was deposited towards the Company’s reclamation and
decommissioning requirements at the Seabee mine.
 
 Financing
 
 In
November 2007, the Company completed a private placement for the issuance of
3,783,784 common shares, issued on a flow-through basis for $1.85 per share, for
gross proceeds of $7.0 million.  These proceeds will be used to fund
exploration programs primarily at the Madsen property.  Management
believes it will have the funding in place to satisfy its exploration
requirements until the second quarter of 2008.
  In
April 2007, the Company completed a financing for the issue of 12,500,000 common
shares at a price of $1.60 per share for gross proceeds of
$20,000,000.  In addition, an over-allotment option to purchase an
additional 1,875,000 common shares at a price of $1.60 for gross proceeds of
$3,000,000 was exercised.  This resulted in a total of 14,375,000
common shares issued at a price of $1.60 for total gross proceeds of
$23,000,000.  These proceeds were used to fund the aggressive
exploration programs at the Madsen and Seabee properties plus development and
infrastructure upgrades at Seabee and for general corporate
purposes.
 
 32
 
 Cash
received on sale of a production royalty relates primarily to the $25.6 million
payment received on the Red Mile transaction.  Interest income earned
on the promissory note is sufficient to satisfy the royalty payments under the
obligation. The Company sold a similar production royalty at the end of
2006.
 
 Other
financing activities during 2007 included the issuance of 122,000 common shares
pursuant to the Company’s Employee Share Purchase Plan, the exercise of 270,000
employee stock options and the exercise of 2,174,000 common share purchase
warrants for total proceeds of $3.3 million.
 
 During
the year the Company repaid $2.0 million of its demand loans
outstanding.  The proceeds and repayments on capital lease obligations
relate primarily to production equipment.
 
 Derivative
Instruments and Hedging Activities
 
 To
mitigate the effects of price fluctuations in revenue, Claude may undertake
hedging transactions, from time to time, in respect of the price of gold and
foreign exchange rates.
 
 At
December 31, 2007 and 2006, the Company had no outstanding forward gold or
foreign exchange contracts.
 
 Contractual
Obligations
 
 The
Company’s contractual and other obligations as at December 31, 2007 are
summarized as follows:
  Payments/Commitments
      due by periodTotal
              
              
              Less
      than
                1
      year
              
              
              2-3
                years
              
              
              4-5
                years
              
              
              More
      than
                5
      yearsContractual
      ObligationDemand
      Loans (including interest)
              
              
              6,640,000
              
              
              
              2,375,000
              
              
              
              3,582,000
              
              
              
              683,000
              
              
              
              -Capital
      Lease Obligation
              
              
              2,530,000
              
              
              
              918,000
              
              
              
              1,438,000
              
              
              
              174,000
              
              
              
              -Office
      Lease
              
              
              183,000
              
              
              
              122,000
              
              
              
              61,000
              
              
              
              -
              
              
              
              -Flow-Through
      Expenditures
              
              
              6,047,000
              
              
              
              6,047,000
              
              
              
              -
              
              
              
              -
              
              
              
              -Royalty
      Obligations(1)
              
              
              141,351,000
              
              
              
              5,284,000
              
              
              
              11,109,000
              
              
              
              11,985,000
              
              
              
              112,973,000156,751,000
              
              
              
              14,746,000
              
              
              
              16,190,000
              
              
              
              12,842,000
              
              
              
              112,973,000
 
 (1)  To
repay the Royalty Obligations, funds are available from the Restricted
Promissory Notes.
 
 Accounting
Estimates
 
 Claude’s
significant accounting policies are contained in Note 2 and Note 3 to the
consolidated financial statements. The following is a discussion of the
accounting estimates that are critical in determining the Company’s financial
results.
  Reserves
 
 Estimation
of reserves involves the exercise of judgment. Forecasts are based on
geological, geophysical, engineering and economic data, all of which are subject
to many uncertainties and interpretations. The Company expects that, over time,
reserve estimates may be revised upward or downward based on updated
information. Such information may include revisions to geological data or
assumptions, a change in economic data, and the results of drilling and
exploration activities. Reserve estimates can have a significant impact on net
earnings, as they are a key component in the calculation of depreciation and
depletion. In addition, changes in reserve estimates, gold, petroleum or natural
gas prices and future operating and capital costs can have a significant impact
on the impairment assessments of the assets.
 
 33
 
 Valuation
of Properties
 
 Claude
assesses the carrying values of property, plant and equipment annually or
more frequently if warranted by a change in circumstances.  If it is
determined that carrying values of assets or goodwill cannot be recovered, the
unrecoverable amounts are written off against current
earnings.  Recoverability is dependent upon assumptions and judgments
regarding future prices, costs of production, sustaining capital requirements
and economically recoverable ore reserves.  A material change in
assumptions may significantly impact the potential impairment of these
assets.
 
 Asset
Retirement Obligations
 
 Claude’s
mining, exploration and development activities are subject to various levels of
federal and provincial law as well as environmental regulations, including
requirements for closure and reclamation. Management judgment and estimates are
made when estimating reclamation and closure costs. In some cases, these costs
will be incurred many years from the date of estimate. Estimates may be revised
as a result of changes in government regulations or assumptions.
 
 Shrinkage
Stope Platform Costs
 
 The
Company utilizes shrinkage stoping and long-hole mining as its primary mining
methods to mine the Seabee orebody. Under the shrinkage stoping method, ore used
as a working platform to access and mine further ore is valued at the lower of
cost and net realizable value. Under the long-hole mining method, costs incurred
to access the long-hole stope are inventoried and also valued at the lower of
cost and net realizable value.  Both amounts are recorded as shrinkage
stope platform costs on the balance sheet. Broken ore from the shrinkage stope
is reclassified to inventory once removed from the stope and taken to surface.
If actual tonnage and grade vary significantly from estimates or if the price of
gold declines, there could be a material impact on the profitability of mining
operations.
 
 Future
Tax Assets and Liabilities
 
 Future
income tax assets and liabilities are recognized for the future tax consequences
attributable to differences between the financial statement carrying value of
existing assets and liabilities and their respective tax basis. Future income
tax assets and liabilities are measured using enacted or substantively enacted
tax rates expected to apply to taxable income in the years in which those
temporary differences are expected to be recovered or settled.  The
effect on future income tax assets and liabilities of a change in tax rates is
recognized in earnings in the period which includes the enactment or substantive
enactment date.  Future income tax assets are recorded in the
financial statements if realization is considered more likely than
not.  The valuation of future income taxes is adjusted, if necessary,
by the use of a valuation allowance to reflect the estimated recoverable
amount.
 
 Business
Risk
 
 Claude’s
profitability is dependent on several factors: the quantity of gold and oil,
ngls and natural gas produced, related commodity prices, operating costs,
capital expenditures, exploration levels and environmental
regulations.
  Inherent
Exploration and Mining Risks
 
 The
exploration for and development of mineral deposits involves significant risks,
which even the combination of careful evaluation, experience and knowledge may
not eliminate. It is impossible to guarantee that current or future exploration
programs on existing mineral properties will establish reserves. Whether an
orebody will continue to be commercially viable depends on a number of factors.
These factors include particular attributes of the deposit, such as size, grade
and proximity to infrastructure, as well as metal prices, which cannot be
predicted and have been highly volatile in the past.
 
 34
 
 Non-Operator
Status of Alberta Oil and Gas Properties
 
 All
of Claude’s Alberta oil & natural gas properties are operated by others; as
such, the Company has little or no control over the operation of these assets.
The Company relies on the operators to ensure they are following best industry
practices and thereby mitigating potential risks. The risk factors inherent in
the Company’s oil & natural gas operations are similar to those of its gold
operations.
 
 Gold
Price Volatility
 
 The
economics of developing gold properties is affected by many factors, including
cost of operations variations in the grade of ore mined and the price of gold.
Depending on the price of gold, the Company may determine that it is impractical
to commence or continue commercial production. The price of gold has fluctuated
in recent years. During the year ended December 31, 2007, the market price for
gold ranged from a low of US $608 to a high of US $841, with an average price of
US $695.
 
 Any
significant drop in the price of gold adversely impacts Claude’s revenues,
profitability and cash flows. Also, sustained low gold prices may cause the
cessation of new mining projects; decrease the amount of capital available for
exploration activities; reduce existing reserves by rendering blocks with grades
marginally above mine cut-off uneconomic; or cause the write-off of an asset
whose value is impaired by the low price of gold.
 
 Foreign
Exchange Risk
 
 The
price of gold and oil & natural gas is denominated in US dollars and,
accordingly, Claude’s revenue from operations are denominated and received in US
dollars. As a result, fluctuations in the US dollar against the Canadian dollar
could result in unanticipated changes in the Company’s financial results, which
are reported in Canadian dollars. During the year ended December 31, 2007,
CDN$/US$ exchange rate ranged from a low of $0.9215 to a high of $1.1855, with
an average of $1.0750.
 
 Ore
Reserves and Ore Grade Estimates
 
 Claude
has assessed its mineral reserves and mineral resources, and while the Company
believes that the calculation methods used are appropriate, such calculations
are estimates. As well, estimates of mineral reserves and mineral resources are
inherently imprecise and depend to some extent on statistical inferences drawn
from limited drilling, which may prove unreliable. The indicated level for the
recovery of gold or other minerals may not be realized. Market price
fluctuations of gold or other minerals may render reserves and deposits
containing relatively lower grades of mineralization uneconomic. Moreover,
short-term operating factors related to the mineral reserves, such as the need
for orderly development of the deposits or the processing of new or different
grades, may cause mining operations to be unprofitable in any particular
period.
 
 Access
to Funding
 
 Claude’s plans
to continue or expand its exploration and development activities depend in part
on its ability to generate revenues from its operations or to obtain financing
through joint ventures, debt financing, equity financing, production sharing
arrangements or other means.
 
 If
the Company fails to meet its ongoing obligations on a timely basis, it could
result in the loss or substantial dilution of its interest (as existing or as
proposed to be acquired) in its properties. In addition, Management estimates
that $10.0 million is the minimum exploration expenditure required to fulfill
Claude’s intended 2008 exploration programs - primarily at its Madsen
project.
  As
a result of a flow-through share agreement entered into in 2007, the Company is
required to expend $7.0 million in qualifying Canadian Exploration Expenses, as
defined by the Canadian Income Tax Act, prior to December 31, 2008. At December
31, 2007, $6.0 million remains to be incurred.
 
 To
fund this year’s aggressive exploration program at the Madsen property
(including the dewatering of the Madsen shaft) and address ongoing equipment and
infrastructure upgrades at the Seabee properties, the Company has, subsequent to
December 31, 2007 and subject to regulatory approval, announced plans to proceed
with a debenture offering for up to $20 million.  Subsequent to 2008,
management believes operating cash flows may not be sufficient to fund the
continued exploration at Madsen and ongoing capital improvements at the Seabee
mine and area.  The Company intends to divest of non core assets, the
proceeds of which will decrease the need for additional capital to be raised
through the issuance of new equity.
 
 35
 
 Environmental
Risk
 
 In
connection with its operations and properties, Claude is subject to extensive
and changing environmental legislation, regulation and actions. The Company
cannot predict what environmental legislation, regulation or policy will be
enacted or adopted in the future or how future laws and regulations will be
administered or interpreted. The recent trend in environmental legislation and
regulation is generally toward stricter standards, a trend that is likely to
continue in the future, which may necessitate significant capital outlays. It
may also materially affect Claude’s results of operations and business, or cause
material changes or delays in the Company’s intended activities.
 
 Unfavourable
Government Regulatory Changes
 
 Claude
is affected to varying degrees by government regulations that relate to mining
operations, the acquisition of land, pollution control, environmental
protection, safety, production and expropriation of property. Changes in these
regulations or in their application are beyond the control of the Company and
may adversely affect its operations, business and results of operations. Failure
to comply with conditions set out in any permit or failure to comply with
applicable statutes and regulations may result in orders to cease or curtail
operations or to install additional equipment. The Company may be required to
compensate those suffering loss or damage by reason of its operating or
exploration activities.
 
 Operations
may also be affected by government regulations with respect to restrictions on
production, price controls, export controls, foreign exchange controls, income
taxes, expropriation of property, environmental legislation and mine
safety.
 
 Industry
Competition
 
 Claude’s
business is intensely competitive. The Company competes with other mining
companies, some of which have greater resources and experience. Competition in
the precious metals mining industry is primarily for mineral-rich properties
that can be developed and produced economically. There is also competition for
the technical expertise to find, develop and produce such properties; the labour
to operate them; and the capital to finance their development.
 
 If
the Company is unable to compete with other mining companies for these mineral
deposits, it could have a material adverse effect on Claude’s results of
operations and business.
 
 Personnel
Risk
 
 Many
of the projects undertaken by the Company rely on the availability of skilled
labour and the capital outlays required to employ such labour.  The
Company employs full-time and part-time employees, contractors and consultants
to assist in executing operations and providing technical
guidance.  In the event of a skilled labour shortage, various projects
of the Company may not become operational due to increased capital outlays
associated with labour.  Further, a skilled labour shortage could
result in operational issues such as production shortfalls and higher mining
costs.
  Flow
Through Securities
 
 Under
the Canadian Income Tax Act, companies are permitted to issue flow-through
shares pursuant to a written agreement under which the issuer agrees to incur
certain eligible Canadian exploration expenses within the time frame specified
in the agreement (generally, 12 to 24 months) and to flow-through or “renounce”
the related tax deduction to the investor.  The proceeds from the
issuance of flow-through shares must be expended on “qualifying expenditures,”
which are related to mineral exploration in Canada.
 
 In
the event that the Company is unable to expend the funds on qualifying
exploration expenditures, the investor may be subject to reassessment for any
related tax deduction taken by the investor and the Company could be liable to
the investor for damages in an action for breach of
contract.  However, there is no right of rescission of the
subscription contract that would result in a reversal of the share
issuance.  The investor may be entitled to damages (based on a breach
of contract claim), which may include amounts related to the increased tax
liability that the shareholder experienced resulting from the failure of the
Company to renounce the contracted qualifying expenditures.  In
addition, the Company could be required to pay a penalty and interest to the
Government of Canada for failure to make and renounce such qualifying
expenditures, within prescribed time limits.
 
 36
 
 Although
the Company believes it will make the qualifying expenditures and renounce the
related tax deduction for the benefit of the purchasers of its flow-through
shares, there can be no assurance that the Company will be able to make the
qualifying expenditures or renounce such deductions in a timely
manner.  The failure to make the qualifying expenditures or to
renounce such deductions in a timely manner could have a material adverse effect
on the Company’s business or its ability to raise additional financing through
the issuance of flow-through shares.
 
 Conflicts
of Interest
 
 Certain
of the directors of the Company are also directors and officers of other
companies engaged in mineral exploration and development and mineral property
acquisitions.  As such, situations may arise where such directors are
in a conflict of interest with the Company.  The Company will resolve
any actual conflicts of interest if and when the same arise in accordance with
governing legislation regarding conflicts of interest.
 
 Extreme
and Persistent Weather Conditions
 
 The
Seabee operation, certain of the Company’s oil and natural gas properties and
the Company’s exploration properties are all located in the northern portions of
Saskatchewan, Ontario, Manitoba and Alberta. Access to these properties and the
ability to conduct work on them can be affected by adverse weather conditions.
Adverse weather conditions can also increase the costs of both access and work
on the Company’s properties.
 
 Shareholder
Dilution
 
 As
of December 31, 2007, there were directors, officers, key employees and
consultant stock options outstanding to purchase an aggregate of 3,661,667
common shares. These common shares issuable under these options, if fully
exercised, would constitute approximately 3.6% of the Company’s resulting share
capital. The exercise of such options and the subsequent resale of such shares
in the public market could adversely affect the prevailing share market price
and the Company’s ability to raise equity capital in the future at a time and
price which it deems appropriate.  The Company may also enter into
commitments in the future which would require the issuance of additional common
shares and the Company may grant additional share purchase warrants and stock
options.  Any share issuances from the Company’s treasury could result
in immediate dilution to existing shareholders.
  Title
to Company Properties
 
 Acquisition
of title to mineral properties is a very detailed and time-consuming process.
Claude has investigated title to all of its mineral properties and has obtained
title opinions with respect to its most significant properties. To the best of
the Company’s knowledge, titles to all properties are in good standing. For the
Madsen properties, Claude has searched title records for any and all
encumbrances. For the Seabee property, the Company has examined property search
abstracts from Saskatchewan Industry & Resources as well as made inquiries
and reviewed lease files from the department. It has also received confirmation
of title from Saskatchewan Environment.
 
 The
title to the Company’s properties could be challenged or impugned. The
properties may have been acquired in error from parties who did not possess
transferable title, may be subject to prior unregistered agreements or
transfers, and title may be affected by undetected defects.
 
 37
 
 Insurance
 
 In
the course of exploration, development and production of mineral properties,
certain risks may occur, in particular, unexpected or unusual operating
conditions such as rock bursts, cave-ins, fire, flooding and earthquakes. It is
not always possible to fully insure against such risks and Claude may decide not
to insure as a result of high premiums or other reasons. Should such liabilities
arise, they could reduce or eliminate any future profitability and result in
increased costs and a decline in the value of the Company’s
securities.
 
 Outlook
 
 For
2008, the Company will continue to focus on the following:
 
 i)
              advancing
      the Madsen exploration property with a continuation of the shaft
      dewatering and surface drilling
programs;
 ii)
              continuing
      Seabee mine exploration and development to increase or sustain reserves
      and resources;
 iii)
              investing
      in capital projects to increase productivity, efficiency and effectiveness
      of the Seabee mine operations.
 
 Gold
production is forecast at 48,000 to 52,000 ounces for 2008 with mine cash
operating costs expected to increase to approximately $30 to $31
million.  Capital is expected to remain near current year levels as a
result of added investment at Madsen and the continued upgrades at the Seabee
mine and area.
  Oil,
ngls and natural gas revenues are expected to remain at 2007 levels or decline
slightly - a result of normal production declines combined with similar
petroleum and natural gas pricing.  Operating costs should remain
consistent or increase slightly.   Capital expenditures should
remain the same as 2007 .
 
 The
Company expects that a combination of operating cash flows and the debenture
offering announced subsequent to December 31, 2007 will provide sufficient
funding for its 2008 planned capital investments.
 
 Key
Sensitivities
 
 Earnings
from Claude’s gold and oil & natural gas operations are sensitive to
fluctuations in both commodity and currency prices. The key factors and their
approximate effect on earnings, earnings per share and cash flow, based on
assumptions comparable to 2007 actuals, are as follows:
  Gold
 
 For
a US $10 movement in gold price per ounce, earnings and cash flow will have a
corresponding movement of CDN $0.4 million, or $0.00 per share. For a $0.01
movement in the US$/CDN$ exchange rate, earnings and cash flow will have a
corresponding movement of $0.3 million, or $0.00 per share.
 
 Oil
& Natural Gas
 
 For
a US $5 price movement in oil price per barrel, earnings and cash flow will have
a corresponding movement of $0.3 million ($0.00 per share). For a US $1 price
movement in natural gas price per MCF, earnings and cash flow will have a
corresponding movement of $0.6 million, or $0.01 per share.  A $0.01
movement in the US$/CDN$ exchange rate does not have a material effect on
earnings and cash flow.
 
 Fourth
quarter Results and Selected Financial Information
 
 For
the quarter ended December 31, 2007, the Company recorded a net loss of $1.8
million, or $0.02 per share, compared to a $0.4 million loss or $0.01 per share,
for the comparable period last year.  For the three months ended
December 31, 2007, cash flow from operations, before net changes in non-cash
working capital items, was $1.6 million, or $0.02 per share.  For the
similar period in 2006, cash flow from operations, before net changes in
non-cash working capital items, was $0.5 million, or $0.01 per
share.
 38
 
 Total
revenue generated for the fourth quarter was $13.4 million, a 41% increase over
the $9.5 million reported for the same period in 2006.  The Seabee
mine contributed $11.0 million to revenue during the fourth quarter of this year
compared to $7.5 million reported for the same period in 2006.  This
was due to higher gold sales volume (Q4 2007 - 14,200 ounces; Q4 2006 - 10,700
ounces) and improved Canadian dollar gold prices realized:  Q4 2007 -
$776 (US $790); Q4 2006 - $707 (US $620).   The 27% increase in
the US dollar price of gold was partially offset by the appreciating Canadian
versus US dollar exchange rate.
 
 Oil,
ngls and natural gas revenue for the three months ended December 31, 2007
increased to $2.4 million in 2007 from $2.0 million in 2006. Despite production
declines, the Company experienced significant improvements in realized prices
for oil and ngls (Q4 2007 - CDN $80.00; Q4 2006 - CDN $59.29); however, it
experienced a decrease in natural gas prices (Q4 2007 - CDN $6.00; Q4 2006 - CDN
$6.51).  Alberta crown and overriding royalties in Q4 2007 were
comparable to those incurred in Q4 2006.
 
 For
the three months ended December 31, 2007, total mine operating costs increased
53% to $8.7 million from $5.7 million for the same period last
year.  The increase was due to increases in repairs and maintenance
and labour costs. These operating costs and lower gold sales volume resulted in
a 33% increase in US dollar cash operating cost per ounce:  Q4 2007 -
US $621 (CDN $610); Q4 2006 - US $468 (CDN $533).  Oil, ngls and
natural gas operating costs were relatively unchanged period over
period.
 
 During
the fourth quarter of 2007, depreciation, depletion and accretion of the
Company’s gold assets of $2.3 million was relatively unchanged from the
comparable period in 2006.  This was due to a combination of a larger
asset base offset by increased reserves. Depreciation, depletion and accretion
of oil & natural gas assets was relatively unchanged period over
period.
 
 For
the fourth quarter of 2007, general and administrative costs were 13% higher,
increasing to $0.9 million this period from $0.8 million in 2006.
 
 The
write down of mineral properties of $0.6 million related to a reduction in
carrying values of certain underground assets at the Madsen mine as well as
certain exploration properties in Saskatchewan.
 
 Quarterly
Information
 December
      31
              
              
              September
      30
              
              
              June
      30
              
              
              March
      31Unaudited
      ($ millions)
              
              2007
              
              
              2006
              
              
              2007
              
              
              2006
              
              
              2007
              
              
              2006
              
              
              2007
              
              
              2006Gold
      sales
              
              
              11.0
              
              
              
              7.5
              
              
              
              8.2
              
              
              
              7.7
              
              
              
              5.0
              
              
              
              8.9
              
              
              
              5.7
              
              
              
              8.4Oil
      and gas sales
              
              
              2.4
              
              
              
              2.0
              
              
              
              2.1
              
              
              
              2.3
              
              
              
              2.3
              
              
              
              1.9
              
              
              
              2.2
              
              
              
              2.8Net
      earnings (loss)
              
              
              (1.8
              )
              
              
              (0.4
              )
              
              
              (1.8
              )
              
              
              -
              
              
              
              (3.4
              )
              
              
              2.4
              
              
              
              -
              
              
              
              4.4Net earning (loss)
      per share(1)
              
              
              (0.02
              )
              
              
              (0.01
              )
              
              
              (0.02
              )
              
              
              -
              
              
              
              (0.04
              )
              
              
              0.03
              
              
              
              (0.00
              )
              
              
              0.06Average
      realized gold price (US$)
              
              
              790
              
              
              
              620
              
              
              
              689
              
              
              
              627
              
              
              
              633
              
              
              
              621
              
              
              
              653
              
              
              
              556Ounces
      sold(2)
              
              
              14,200
              
              
              
              10,700
              
              
              
              11,400
              
              
              
              11,000
              
              
              
              7,100
              
              
              
              12,700
              
              
              
              7,500
              
              
              
              13,000Tonnes
      milled(3)
              
              
              65,500
              
              
              
              66,900
              
              
              
              65,700
              
              
              
              59,400
              
              
              
              49,400
              
              
              
              65,500
              
              
              
              47,000
              
              
              
              61,800Ounces produced(3)
              
              
              12,200
              
              
              
              10,900
              
              
              
              15,100
              
              
              
              11,100
              
              
              
              9,800
              
              
              
              12,900
              
              
              
              7,300
              
              
              
              12,100Grade
      processed (gpt)
              
              
              6.08
              
              
              
              5.44
              
              
              
              7.46
              
              
              
              6.14
              
              
              
              6.38
              
              
              
              6.52
              
              
              
              5.13
              
              
              
              6.58Cash
      cost per ounce(4)
      (US$oz)
              
              
              621
              
              
              
              468
              
              
              
              566
              
              
              
              417
              
              
              
              661
              
              
              
              362
              
              
              
              539
              
              
              
              353CDN$/US$
      Exchange
              
              
              0.9818
              
              
              
              1.1393
              
              
              
              1.0448
              
              
              
              1.1212
              
              
              
              1.0984
              
              
              
              1.1224
              
              
              
              1.1714
              
              
              
              1.1545
 
 (1)Basic
and diluted, calculated based on the number of shares issued and outstanding
during the quarter.
 (2)Excludes ounces sold from Santoy 7 and Porky Lake bulk
samples.
 (3)Includes ounces produced and tonnes milled from Santoy 7 and Porky Lake
bulk samples.
 (4)For an explanation of non-GAAP performance measures refer to "Non-GAAP
Performance Measures" on page 18.
 The
financial results for the last eight quarters reflect the following general
trends: improving gold sales over the latter half of 2007; improvement in
average realized gold prices partially offset by the strengthening Canadian
dollar; relatively constant gold production notwithstanding the poor first half
of 2007; improving oil and gas sales - a combination of higher realized
petroleum prices offset by normal production declines; and increasing cash cost
per ounce - a result of increased mine operating costs and lower gold sales
volume (primarily during the first half of 2007).
  39
 
 Dec
      31/07
              
              
              Dec
      31/06Gross
      revenues
              
              
              38,951
              
              
              
              41,388Nets
      earnings (loss)
              
              
              (6,967
              )
              
              
              6,422Net
      earnings (loss) per share, basic and diluted
              
              
              (0.08
              )
              
              
              0.09Total
      assets(1)
              
              
              199,434
              
              
              
              145,717Total
      long-term liabilities(2)
              
              
              94,889
              
              
              
              64,318
  (1)Includes $81.6
million in restricted promissory notes.
 (2) Includes $82.8 million
in royalty obligation, funded by the promissory notes
receivable.
  Balance
Sheet
 
 The
Company’s total assets were $199.4 million at December 31, 2007, compared to
$145.7 million at year-end 2006.  The $53.7 million increase was
comprised largely of the following:  $25.6 million Restricted
Promissory Note representing proceeds received from the sale of a production
royalty - the interest earned on the note is sufficient to pay the royalty
obligation; $23.9 million in Mineral Properties largely comprised of development
and property, plant and equipment costs at the Seabee mine as well as
exploration and mine dewatering costs at the Madsen property; and, $4.9 million
Accounts Receivable (including interest receivable on restricted promissory
notes), largely attributable to interest income receivable on the outstanding
promissory notes and, offsetting these, a $2.7 million decrease in cash and cash
equivalents.
 
 Total
liabilities were $111.3 million at December 31, 2007, compared to $80.1 million
at December 31, 2006.  The $31.2 million increase was comprised
largely of the following: $26.3 million Royalty Obligations representing the
royalty sold on Seabee production (interest earned on the Company’s restricted
promissory notes - discussed above - will be sufficient to fund the expected
royalty payments over the remaining years of the royalty obligation agreements);
$2.8 million Deferred Revenue (current portion included) representing indemnity
fees and interest income to be recognized in income over the life of the royalty
agreement; and, $1.7 million Obligations under Capital Leases (current portion
included) representing amounts borrowed during the year, primarily to acquire
production equipment at the Seabee properties.
 
 Shareholders’
equity increased by $22.5 million to $88.1 million at the end of 2007, from
$65.6 million at December 31, 2006. The increase is largely attributable to an
increase in share capital of $29.6 million, due primarily to equity issues
and  warrant exercises offset by the net loss of $7.0
million.
  Outstanding
Share Data
 
 At
March 28, 2008, there were 97,112,030 common shares outstanding. In addition,
there were 3.7 million directors, officers, key employees and consultant stock
options outstanding, with exercise prices ranging from $0.53 to $2.10 per
share.
 
 Disclosure
Controls & Procedures and internal controls over financial
reporting
 
 As
of December 31, 2007, we evaluated our disclosure controls and procedures as
defined in the rules issued by the US Securities and Exchange Commission and the
Canadian Securities Administrators.  This evaluation was carried out
under the supervision and participation of Management, including the President
and Chief Executive Officer and the Chief Financial Officer.  Based on
that evaluation, the President and Chief Executive Officer and Chief Financial
Officer concluded that the design and operation of these disclosure controls and
procedures were effective.
 
 No
significant changes were made in our internal controls over financial reporting
during the year ended December 31, 2007 that have materially affected, or are
reasonably likely to materially affect, our internal control over financial
reporting.
    40
  Changes
In Accounting Policies/Recent Accounting Pronouncements
 
 Refer
to Note 3 to the consolidated financial statements for information pertaining to
accounting changes effective in 2007 and for information on issued accounting
pronouncements that will be effective in future years.
 
 Non-Gaap
Performance Measures
 
 The
Company reports its cash operating costs on a per-ounce basis, based on uniform
standards developed by the Gold Institute. Management uses this measure to
analyze the profitability, compared to average realized gold prices, of gold
operations. Investors are cautioned that the above measures may not be
comparable to similarly titled measures of other companies, should these
companies not follow Gold Institute standards.
 
 Caution
Regarding Forward-Looking Information
 
 This
Management’s Discussion & Analysis contains “forward-looking statements”
that are based on Claude Resources Inc.’s expectations, estimates and
projections as of the dates the statements were made. Generally, these
forward-looking statements can be identified by the use of terminology such as
“outlook”, “anticipate”, “project”, “forecast”, “target”, “believe”, “estimate”,
“expect”, “intent”, “should”, “could” and similar expressions. These
forward-looking statements are subject to known and unknown risks and
uncertainties and other factors which may cause actual results, levels of
activity and achievements to differ materially from those expressed or implied
by such statements. Such factors include, but are not limited to, gold price and
foreign currency exchange rate volatility and to uncertainties and costs related
to: exploration and development activities, production rates, cash and total
costs of production, or the ability to obtain necessary permitting or
financing.
  A
discussion of these and other factors that may affect Claude’s actual results,
performance, achievements or financial position is contained in the filings by
Claude Resources with the Canadian provincial securities commissions and the
United States Securities and Exchange Commission.
 
 This
list is not exhaustive of the factors that may affect Claude’s forward-looking
statements. These and other factors should be considered carefully and readers
should not place undue reliance on forward-looking statements. Claude Resources
Inc. does not undertake any obligation to update publicly or to revise any of
the included forward-looking statements, whether as a result of new information,
future events or otherwise, except in accordance with applicable securities
law.
 
 Additional
Information
 
 Additional
information related to the Company, including the Annual Information Form, is
available on SEDAR at www.sedar.com, on EDGAR at www.sec.gov and on
www.clauderesources.com.
 
  41