##### 



EXHIBIT 3
 Management Responsibility for Consolidated Financial Statements
       
  Auditors Report to the Shareholders
    18




---



##### 



Comments by Auditor for U.S. Readers on Canada-U.S. Reporting Difference
    
 19




---



##### 



DECEMBER 31 (CANADIAN DOLLARS IN THOUSANDS)
 2005
    
    
    2004AssetsCurrent assets:Cash
    
    $
    1,448
    
    
    $
    1,045Receivables
    
    
    4,359
    
    
    
    1,667Inventories (Note 2)
    
    
    5,953
    
    
    
    4,828Shrinkage stope platform costs (Note 3)
    
    
    8,941
    
    
    
    7,903Prepaids
    
    
    397
    
    
    
    364Other assets (Note 4)
    
    
    599
    
    
    
    13921,697
    
    
    
    15,946Oil and gas properties (Note 5)
    
    
    7,681
    
    
    
    6,101Mineral properties (Note 6)
    
    
    42,471
    
    
    
    34,327Investments (Note 7)
    
    
    549
    
    
    
    668Promissory notes (Note 8)
    
    
    20,383
    
    
    
    6,843Deposits for reclamation costs (Note 12)
    
    
    2,097
    
    
    
    2,061$
    94,878
    
    
    $
    65,946Liabilities and Shareholders EquityCurrent liabilities:Bank indebtedness (Note 9)
    
    $
    2,543
    
    
    $
    1,388Payables and accrued liabilities
    
    
    6,380
    
    
    
    4,580Demand loan (Note 9)
    
    
    4,261
    
    
    
    Other liabilities (Note 10)
    
    
    1,609
    
    
    
    53614,793
    
    
    
    6,504Obligations under capital lease (Note 11)
    
    
    156
    
    
    
    Royalty obligations (Note 8)
    
    
    20,513
    
    
    
    6,974Deferred revenue (Note 8)
    
    
    1,316
    
    
    
    563Asset retirement obligations (Note 12)
    
    
    2,311
    
    
    
    2,046Shareholders equity:Share capital (Note 13)
    
    
    53,109
    
    
    
    43,966Contributed surplus (Note 13)
    
    
    622
    
    
    
    330Retained earnings
    
    
    2,058
    
    
    
    5,56355,789
    
    
    
    49,859Commitments and contingency (Note 17 and Note 18)
    
    $
    94,878
    
    
    $
    65,946
 See accompanying notes to consolidated financial statements.
  /s/  Arnie E. Hillier
Arnie E. Hillier
    
    /s/  Jon R. MacNeillJon R. MacNeillChairman
    
    Director
 20




---



##### 



YEARS ENDED DECEMBER 31 (CANADIAN DOLLARS IN THOUSANDS)
 2005
    
    2004
    
    2003Revenues:Gold
    
    $
    23,121
    
    
    $
    22,470
    
    
    $
    25,807Oil and gas:Gross revenue
    
    
    11,142
    
    
    
    9,745
    
    
    
    9,368Crown royalties
    
    
    (2,616
    )
    
    
    (2,209
    )
    
    
    (2,346
    )Alberta Royalty Tax Credit
    
    
    500
    
    
    
    442
    
    
    
    539Overriding royalties
    
    
    (5,247
    )
    
    
    (4,618
    )
    
    
    (4,077
    )Net oil and gas revenue
    
    
    3,779
    
    
    
    3,360
    
    
    
    3,48426,900
    
    
    
    25,830
    
    
    
    29,291Expenses:Gold
    
    
    18,296
    
    
    
    15,904
    
    
    
    18,041Oil and gas
    
    
    1,946
    
    
    
    1,574
    
    
    
    1,260Depreciation, depletion and accretion:Gold
    
    
    9,704
    
    
    
    6,023
    
    
    
    5,369Oil and gas
    
    
    746
    
    
    
    653
    
    
    
    507General and administrative
    
    
    2,290
    
    
    
    2,332
    
    
    
    2,152Interest and other (Note 14)
    
    
    129
    
    
    
    (58
    )
    
    
    10133,111
    
    
    
    26,428
    
    
    
    27,430Earnings (loss) before the undernoted item
    
    
    (6,211
    )
    
    
    (598
    )
    
    
    1,861Gain on sale of investments
    
    
    1,386
    
    
    
    
    
    
    
    Earnings (loss) before income taxes
    
    
    (4,825
    )
    
    
    (598
    )
    
    
    1,861Income tax recovery (expense)
    
    
    1,320
    
    
    
    
    
    
    
    (63
    )Net earnings (loss)
    
    $
    (3,505
    )
    
    $
    (598
    )
    
    $
    1,798Net earnings (loss) per share (Note 16)Basic and diluted
    
    $
    (0.05
    )
    
    $
    (0.01
    )
    
    $
    0.03Weighted average number of common
shares outstanding (000s) (Note 16)Basic
    
    
    66,342
    
    
    
    59,769
    
    
    
    53,851Diluted
    
    
    66,342
    
    
    
    59,769
    
    
    
    54,727
 See accompanying notes to consolidated financial statements.
 21




---



##### 



YEARS ENDED DECEMBER 31 (CANADIAN DOLLARS IN THOUSANDS)
 2005
    
    2004
    
    2003Retained earnings, beginning of year
    
    $
    5,563
    
    
    $
    6,161
    
    
    $
    4,363Net earnings (loss)
    
    
    (3,505
    )
    
    
    (598
    )
    
    
    1,798Retained earnings, end of year
    
    $
    2,058
    
    
    $
    5,563
    
    
    $
    6,161
 See accompanying notes to consolidated financial statements
 22




---



##### 



2005
    
    2004
    
    2003Cash provided from (used in):Operations:Net earnings (loss)
    
    $
    (3,505
    )
    
    $
    (598
    )
    
    $
    1,798Non-cash items:Depreciation, depletion and accretion
    
    
    10,296
    
    
    
    6,533
    
    
    
    5,743Accretion of asset retirement obligations
    
    
    154
    
    
    
    143
    
    
    
    133Stock-based compensation
    
    
    120
    
    
    
    136
    
    
    
    65Gain on sale of investments
    
    
    (1,386
    )
    
    
    
    
    
    
    Income tax recovery
    
    
    (1,320
    )
    
    
    
    
    
    
    Net change in non-cash working capital:Receivables
    
    
    (1,852
    )
    
    
    845
    
    
    
    (338
    )Inventories
    
    
    (1,125
    )
    
    
    (1,027
    )
    
    
    (435
    )Shrinkage stope platform costs
    
    
    (1,038
    )
    
    
    (1,225
    )
    
    
    (826
    )Prepaids
    
    
    (33
    )
    
    
    (105
    )
    
    
    69Payables and accrued liabilities
    
    
    1,800
    
    
    
    15
    
    
    
    2,625Cash from operations
    
    
    2,111
    
    
    
    4,717
    
    
    
    8,834Investing:Mineral properties
    
    
    (17,622
    )
    
    
    (13,330
    )
    
    
    (14,864
    )Oil and gas properties
    
    
    (2,287
    )
    
    
    (1,964
    )
    
    
    (1,828
    )Promissory notes
    
    
    (14,000
    )
    
    
    (6,982
    )
    
    
    Investments
    
    
    1,505
    
    
    
    992
    
    
    
    (1,041
    )Short-term investments
    
    
    
    
    
    
    
    
    
    
    300Increase in reclamation deposits
    
    
    (36
    )
    
    
    (111
    )
    
    
    (525
    )(32,440
    )
    
    
    (21,395
    )
    
    
    (17,958
    )Financing:Issue of common shares, net of issue costs
    
    
    10,635
    
    
    
    5,116
    
    
    
    14,181Sale of production royalties:Proceeds
    
    
    14,000
    
    
    
    7,113
    
    
    
    Receivable
    
    
    (840
    )
    
    
    
    
    
    
    Deferred revenue
    
    
    1,336
    
    
    
    906
    
    
    
    Bank indebtedness
    
    
    1,155
    
    
    
    1,388
    
    
    
    Demand loan:Proceeds
    
    
    5,000
    
    
    
    
    
    
    
    Repayments
    
    
    (739
    )
    
    
    
    
    
    
    (110
    )Obligations under capital lease:Proceeds
    
    
    269
    
    
    
    
    
    
    
    Repayment
    
    
    (84
    )
    
    
    (59
    )
    
    
    (60
    )30,732
    
    
    
    14,464
    
    
    
    14,011Increase (decrease) in cash
    
    
    403
    
    
    
    (2,214
    )
    
    
    4,887Cash, beginning of year
    
    
    1,045
    
    
    
    3,259
    
    
    
    (1,628
    )Cash, end of year
    
    $
    1,448
    
    
    $
    1,045
    
    
    $
    3,259
 23




---



##### 



2005
    
    2004
    
    2003Supplemental cash flow disclosure:Interest paid
    
    
    396
    
    
    
    98
    
    
    
    111Income taxes paid
    
    
    
    
    
    
    
    
    
    
    63
 See accompanying notes to consolidated financial statements.
 24




---



##### 



YEARS ENDED DECEMBER 31
TABULAR DOLLAR AMOUNTS IN THOUSANDS OF CANADIAN DOLLARS, EXCEPT AS OTHERWISE NOTED
 Operations:
 SEABEE GOLD MINE
  OIL & GAS
   1. Significant Accounting Policies:
   CONSOLIDATION PRINCIPLES
  CASH
  INVESTMENTS
  DEPOSITS FOR RECLAMATION COSTS
  INVENTORIES
  SHRINKAGE STOPE PLATFORM COSTS
  25




---



##### 



OIL & GAS OPERATIONS
     MINERAL PROPERTIES
     ASSET RETIREMENT OBLIGATIONS
  REVENUE RECOGNITION
 26




---



##### 



FOREIGN CURRENCY TRANSLATION
  HEDGING TRANSACTIONS
     INCOME TAXES
  FLOW-THROUGH SHARES
  PER SHARE AMOUNTS
  27




---



##### 



STOCK-BASED COMPENSATION PLANS
  2. Inventories:
 2005
    
    2004Bullion in-circuit
    
    $
    1,293
    
    
    $
    347Stockpiled ore
    
    
    364
    
    
    
    364Materials and supplies
    
    
    4,296
    
    
    
    4,117$
    5,953
    
    
    $
    4,828
 3. Shrinkage Stope Platform Costs:
 2005
    
    2004Stope Platform Costs
    
    $
    8,941
    
    
    $
    7,903
  4. Other Assets:
 2005
    
    2004Current portion of promissory notes
    
    $
    599
    
    
    $
    139
 5. Oil & Gas Properties:
  Accumulated
    
    
    
    
    
    
    
    
    
    Accumulateddepreciation,
    
    
    
    
    
    
    
    
    
    depreciation,depletion and
    
    2005
    
    
    
    
    
    depletion and
    
    2004Cost
    
    write-down
    
    Net
    
    Cost
    
    write-down
    
    NetProperty acquisition
and drilling costs
    
    $
    13,694
    
    
    $
    10,282
    
    
    $
    3,412
    
    
    $
    12,434
    
    
    $
    9,994
    
    
    $
    2,440Gas plant and
production equipment
    
    
    9,789
    
    
    
    5,520
    
    
    
    4,269
    
    
    
    8,762
    
    
    
    5,101
    
    
    
    3,661$
    23,483
    
    
    $
    15,802
    
    
    $
    7,681
    
    
    $
    21,196
    
    
    $
    15,095
    
    
    $
    6,101
   28




---



##### 



December 31, 2005
    
    $
    123,464,000December 31, 2004
    
    $
    118,217,000
 6. Mineral Properties:
  Accumulated
    
    
    
    
    
    
    
    
    
    Accumulateddepreciation,
    
    
    
    
    
    
    
    
    
    depreciation,depletion and
    
    2005
    
    
    
    
    
    depletion and
    
    2004Cost
    
    write-down
    
    Net
    
    Cost
    
    write-down
    
    NetProperty acquisition
and mine
development costs
    
    $
    69,000
    
    
    $
    50,878
    
    
    $
    18,122
    
    
    $
    61,309
    
    
    $
    43,974
    
    
    $
    17,335Buildings, plant and
equipment
    
    
    68,752
    
    
    
    56,805
    
    
    
    11,947
    
    
    
    63,349
    
    
    
    54,158
    
    
    
    9,191Exploration properties
    
    
    17,320
    
    
    
    4,918
    
    
    
    12,402
    
    
    
    12,610
    
    
    
    4,809
    
    
    
    7,801$
    155,072
    
    
    $
    112,601
    
    
    $
    42,471
    
    
    $
    137,268
    
    
    $
    102,941
    
    
    $
    34,327
    7. Investments:
 2005
    
    2004Investments
    
    $
    549
    
    
    $
    668
  8. Promissory Notes and Royalty Obligations:
    29




---



##### 



9. Bank Indebtedness and Demand Loan:
   10. Other Liabilities:
 2005
    
    2004Deferred revenue (Note 8)
    
    $
    927
    
    
    $
    344Royalty obligations
    
    
    599
    
    
    
    138Obligations under capital lease (Note 11)
    
    
    83
    
    
    
    54$
    1,609
    
    
    $
    536
 11. Obligations under Capital Lease:
  12. Asset Retirement Obligations:
  2005
    
    2004Asset retirement obligation, beginning
    
    $
    2,046
    
    
    $
    1,903Accretion expense
    
    
    154
    
    
    
    143Revisions in estimated cash flows
    
    
    111
    
    
    
    Asset retirement obligation, ending
    
    $
    2,311
    
    
    $
    2,046
  13. Shareholders Equity:
 AUTHORIZED
 30




---



##### 



ISSUED AND OUTSTANDING COMMON SHARES
 2005
    
    
    
    
    
    2004
    
    
    
    
    
    2003Number
    
    Amount
    
    Number
    
    Amount
    
    Number
    
    AmountBeginning of year
    
    
    61,691,707
    
    
    
    43,966
    
    
    
    58,341,627
    
    
    $
    38,850
    
    
    
    49,459,477
    
    
    $
    24,525ESPP (a)
    
    
    104,607
    
    
    
    136
    
    
    
    61,597
    
    
    
    120
    
    
    
    159,130
    
    
    
    230Exercise of stock options (b)
    
    
    95,000
    
    
    
    107
    
    
    
    
    
    
    
    
    
    
    
    35,000
    
    
    
    23Exercise of warrants (c)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,550,770
    
    
    
    3,176Fair value of broker warrants
    
    
    
    
    
    
    74
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Private placement (d)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,500,000
    
    
    
    3,750Issue costs
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (223
    )Exercise of warrants (d)
    
    
    
    
    
    
    
    
    
    
    1,138,450
    
    
    
    2,106
    
    
    
    137,250
    
    
    
    254Flow-through shares (e)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,000,000
    
    
    
    2,500Issue costs
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (49
    )Private placement (f)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,500,000
    
    
    
    5,000Issue costs
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (119
    )
    
    
    
    
    
    
    (336
    )Flow-through shares (g)
    
    
    
    
    
    
    
    
    
    
    1,000,000
    
    
    
    1,500
    
    
    
    
    
    
    
    Issue costs
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (107
    )
    
    
    
    
    
    
    Flow-through shares (h)
    
    
    
    
    
    
    
    
    
    
    1,150,033
    
    
    
    1,725
    
    
    
    
    
    
    
    Issue costs
    
    
    
    
    
    
    (26
    )
    
    
    
    
    
    
    (109
    )
    
    
    
    
    
    
    Flow-through shares (i)
    
    
    
    
    
    
    (1,320
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Private placement (j)
    
    
    8,570,373
    
    
    
    9,025
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Issue costs
    
    
    
    
    
    
    (878
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Flow-through shares (k)
    
    
    1,999,999
    
    
    
    2,100
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Issue costs
    
    
    
    
    
    
    (75
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    End of year
    
    
    72,461,686
    
    
    $
    53,109
    
    
    
    61,691,707
    
    
    $
    43,966
    
    
    
    58,341,627
    
    
    $
    38,850
 (a) EMPLOYEE SHARE PURCHASE PLAN (ESPP)
  (b) SHARE OPTION PLAN
   31




---



##### 



2005
    
    Average
    
    2004
    
    AverageOptions
    
    Price
    
    Options
    
    PriceBeginning of year
    
    
    2,660,000
    
    
    $
    1.15
    
    
    
    2,425,000
    
    
    $
    1.13Options granted
    
    
    345,000
    
    
    
    .98
    
    
    
    235,000
    
    
    
    1.40Options exercised
    
    
    (95,000
    )
    
    
    .57
    
    
    
    
    
    
    
    Options lapsed
    
    
    (155,000
    )
    
    
    1.74
    
    
    
    
    
    
    
    End of year
    
    
    2,755,000
    
    
    $
    1.11
    
    
    
    2,660,000
    
    
    $
    1.15
  Weighted Average
    
    Weighted Average Per ShareOptions Price
    
    Number
    
    Exercise Price
    
    Remaining Life$0.53-$0.96
    
    
    1,226,000
    
    
    $
    0.68
    
    
    6.87 years$1.05-$1.38
    
    
    1,194,000
    
    
    
    1.30
    
    
    4.18 years$1.71-$3.05
    
    
    335,000
    
    
    
    2.05
    
    
    2.94 years2,755,000
    
    
    $
    1.11
    
    
    5.23 years
  (c) PRIVATE PLACEMENT
  (d) PRIVATE PLACEMENT
  (e) FLOW-THROUGH SHARES
  (f) PRIVATE PLACEMENT
  32




---



##### 



(g) FLOW-THROUGH SHARES
  (h) FLOW-THROUGH SHARES
  (i) FLOW-THROUGH SHARES
  (j) FLOW-THROUGH SHARES
  (k) FLOW-THROUGH SHARES
  (l) CONTRIBUTED SURPLUS
  2005
    
    
    2004Contributed surplus, beginning of year
    
    $
    330
    
    
    $
    225Add: stock options expense
    
    
    120
    
    
    
    136fair value of broker warrants
    
    
    246
    
    
    
    Less: stock options exercised
    
    
    
    
    
    
    (31
    )broker warrants exercised
    
    
    (74
    )
    
    
    Contributed surplus, end of year
    
    $
    622
    
    
    $
    330
 33




---



##### 



14. Interest and Other:
 2005
    
    
    2004
    
    
    2003Interest expense
    
    $
    396
    
    
    $
    98
    
    
    $
    111Less: interest and other income
    
    
    (267
    )
    
    
    (156
    )
    
    
    (10
    )Interest and other
    
    $
    129
    
    
    $
    (58
    )
    
    $
    101
 15. Income Taxes:
  2005
    
    
    2004Future income tax assets:Mineral properties
    
    $
    26,732
    
    
    $
    29,250Non-capital loss carryforwards
    
    
    1,712
    
    
    
    3,941Asset retirement obligations
    
    
    878
    
    
    
    777Share issue costs
    
    
    573
    
    
    
    525Royalty obligation
    
    
    8,022
    
    
    
    2,702Deferred revenue
    
    
    852
    
    
    
    344Future income tax assets before valuation allowance
    
    
    38,769
    
    
    
    37,539Valuation allowance
    
    
    (38,769
    )
    
    
    (37,539
    )Future income tax assets
    
    $
    
    
    
    $
    
  2005
    
    
    2004
    
    
    2003Earnings (loss) before income taxes
    
    $
    (4,825
    )
    
    $
    (598
    )
    
    $
    1,861Combined federal and provincial tax rate
    
    
    40
    %
    
    
    42
    %
    
    
    44
    %Expected tax expense (recovery)
    
    
    (1,930
    )
    
    
    (251
    )
    
    
    819Increase (decrease) in taxes resulting from:Crown royalties
    
    
    715
    
    
    
    696
    
    
    
    929Alberta Royalty Tax Credit
    
    
    (200
    )
    
    
    (155
    )
    
    
    (224
    )Resource allowance
    
    
    (695
    )
    
    
    (751
    )
    
    
    (1,121
    )Other permanent differences
    
    
    (505
    )
    
    
    770
    
    
    
    419Effect of change in effective tax rates
    
    
    65
    
    
    
    (37
    )
    
    
    7,049Valuation allowance
    
    
    1,230
    
    
    
    (272
    )
    
    
    (7,871
    )(1,320
    )
    
    
    
    
    
    
    Large corporations tax
    
    
    
    
    
    
    
    
    
    
    63Provision (Recovery) for income taxes
    
    
    (1,320
    )
    
    $
    
    
    
    $
    63
  16. Per Share Amounts:
  34




---



##### 



2005
    
    
    2004
    
    
    2003Basic earnings (loss) per share:Net earnings (loss) available to
common shareholders
    
    $
    (3,505
    )
    
    
    (598
    )
    
    $
    1,798Weighted average number of
common shares outstanding
    
    
    66,342
    
    
    
    59,769
    
    
    
    53,851$
    (0.05
    )
    
    $
    (0.01
    )
    
    $
    0.03Diluted earnings (loss) per share:Net earnings (loss) available to
common shareholders
    
    $
    (3,505
    )
    
    $
    (598
    )
    
    $
    1,798Weighted average number of
common shares outstanding
    
    
    66,342
    
    
    
    59,769
    
    
    
    54,727$
    (0.05
    )
    
    $
    (0.01
    )
    
    $
    0.03
     17. Financial Instruments:
      18. Commitment and Contingency:
 (a) COMMITMENT
  35




---



##### 



(b) CONTINGENCY
  19. Segmented Information:
  2005(millions)
    
    Gold
    
    
    Oil & Gas
    
    
    TotalRevenue
    
    $
    23.1
    
    
    $
    11.1
    
    
    $
    34.20Royalties
    
    
    
    
    
    
    (7.8
    )
    
    
    (7.8
    )Alberta Royalty Tax Credit
    
    
    
    
    
    
    .5
    
    
    
    .5Net Revenue
    
    
    23.1
    
    
    
    3.80
    
    
    
    26.90ExpensesOperating
    
    
    18.3
    
    
    
    2.0
    
    
    
    20.30Depreciation, depletion
and reclamation
    
    
    9.7
    
    
    
    .7
    
    
    
    10.40Non-segmented expenses
    
    
    
    
    
    
    
    
    
    
    2.4Earnings (loss) before income taxes and
gain on sale of investment
    
    
    (4.9
    )
    
    
    1.1
    
    
    
    (6.2
    )Gain on sale of investments
    
    
    
    
    
    
    
    
    
    
    1.4Income tax recovery
    
    
    
    
    
    
    
    
    
    
    1.3Net earnings (loss)
    
    
    (4.9
    )
    
    
    1.1
    
    
    
    (3.5
    )Assets
    
    
    85.8
    
    
    
    9.1
    
    
    
    94.9Capital expenditures for the year
    
    $
    17.6
    
    
    $
    2.3
    
    
    $
    19.9
 2004(millions)
    
    Gold
    
    
    Oil & Gas
    
    
    TotalRevenue
    
    $
    22.5
    
    
    $
    9.7
    
    
    $
    32.20Royalties
    
    
    
    
    
    
    (6.8
    )
    
    
    (6.8
    )Alberta Royalty Tax Credit
    
    
    
    
    
    
    .4
    
    
    
    .4Net Revenue
    
    
    22.5
    
    
    
    3.30
    
    
    
    25.80ExpensesOperating
    
    
    15.9
    
    
    
    1.6
    
    
    
    17.50Depreciation, depletion
and reclamation
    
    
    6.0
    
    
    
    .7
    
    
    
    6.70Non-segmented expenses
    
    
    
    
    
    
    
    
    
    
    2.2Net earnings (loss)
    
    
    .6
    
    
    
    1.0
    
    
    
    (.6
    )Assets
    
    
    58.3
    
    
    
    7.6
    
    
    
    65.9Capital expenditures for the year
    
    $
    13.3
    
    
    $
    2.0
    
    
    $
    15.3
 36




---



##### 



2003(millions)
    
    Gold
    
    
    Oil & Gas
    
    
    TotalRevenue
    
    $
    25.8
    
    
    $
    9.4
    
    
    $
    35.20Royalties
    
    
    
    
    
    
    (6.4
    )
    
    
    (6.4
    )Alberta Royalty Tax Credit
    
    
    
    
    
    
    .5
    
    
    
    .5Net Revenue
    
    
    25.8
    
    
    
    3.50
    
    
    
    29.30ExpensesOperating
    
    
    18.0
    
    
    
    1.3
    
    
    
    19.30Depreciation, depletion
and reclamation
    
    
    5.4
    
    
    
    .5
    
    
    
    5.90Non-segmented expenses
    
    
    
    
    
    
    
    
    
    
    2.2Earnings before income taxes
    
    
    2.4
    
    
    
    1.7
    
    
    
    1.9Income tax recovery (expense)
    
    
    
    
    
    
    
    
    
    
    (.1
    )Net earnings
    
    
    2.4
    
    
    
    1.7
    
    
    
    1.8Assets
    
    
    45.7
    
    
    
    6.1
    
    
    
    51.8Capital expenditures for the year
    
    $
    14.9
    
    
    $
    1.8
    
    
    $
    16.7
 20. Comparative Figures:
  21. Differences From United States Accounting Principles:
  a) Balance Sheets
 2005
    
    
    2004Mineral Properties  under Canadian GAAP
    
    $
    42,471
    
    
    $
    34,327Cumulative exploration expenditures expensed under U.S. GAAP (i)
    
    
    (12,352
    )
    
    
    (7,797
    )Cumulative depreciation and depletion adjustment (ii)
    
    
    1,502
    
    
    
    1,364Cumulative write-down adjustment (ii)
    
    
    (1,825
    )
    
    
    (1,825
    )Mineral Properties  under U.S. GAAP
    
    
    29,796
    
    
    
    26,069Investments  under Canadian GAAP
    
    
    549
    
    
    
    668Unrealized gain on available-for-sale securities (iii)
    
    
    6,138
    
    
    
    3,214Investments  under U.S. GAAP
    
    
    6,687
    
    
    
    3,882Payables and accrued liabilities  under Canadian GAAP
    
    
    6,380
    
    
    
    4,580Cumulative unrealized gain on derivative instruments (vi)
    
    
    
    
    
    
    (227
    )Cumulative liability for flow-through shares (vii)
    
    
    366
    
    
    
    628Payables and accrued liabilities  under U.S. GAAP
    
    $
    6,746
    
    
    $
    4,981Shareholders equityShare capital  under Canadian GAAP
    
    $
    53,109
    
    
    $
    43,966Reduction of stated capital (v)
    
    
    55,000
    
    
    
    55,000Adjustment for flow-through shares (vii)
    
    
    1,320
    
    
    
    Adjustment for flow-through share premiums (vii)
    
    
    (1,664
    )
    
    
    (1,298
    )Share capital  under U.S. GAAP
    
    
    107,765
    
    
    
    97,668Contributed SurplusContributed Surplus  Under Canadian GAAP
    
    
    622
    
    
    
    330
 37




---



##### 



2005
    
    
    2004Cumulative stock compensation costs (iv)
    
    
    (25
    )
    
    
    (25
    )Contributed Surplus  under U.S. GAAP
    
    
    597
    
    
    
    305Retained earnings  under Canadian GAAP
    
    
    2,058
    
    
    
    5,563Reduction of stated capital (v)
    
    
    (55,000
    )
    
    
    (55,000
    )Cumulative exploration expenses (i)
    
    
    (12,352
    )
    
    
    (7,797
    )Cumulative depreciation and depletion adjustment (ii)
    
    
    1,502
    
    
    
    1,364Cumulative write-down adjustment (ii)
    
    
    (1,825
    )
    
    
    (1,825
    )Cumulative stock compensation costs (iv)
    
    
    25
    
    
    
    25Cumulative impact of flow-through shares (vii)
    
    
    (1,320
    )
    
    
    Cumulative renunciation of tax deductions on flow-through shares (vii)
    
    
    1,298
    
    
    
    670Deficit  under U.S. GAAP
    
    
    (65,614
    )
    
    
    (57,000
    )Accumulated other comprehensive incomeUnrealized gain on available-for-sale securities (iii)
    
    
    6,138
    
    
    
    3,214Derivative instruments (vi)
    
    
    
    
    
    
    227Shareholders equity  under U.S. GAAP
    
    $
    48,886
    
    
    $
    44,414
 b) Statements of Earnings (Loss)
 2005
    
    
    2004
    
    
    2003(restated  Note iv(b))Net earnings (loss) - under Canadian GAAP
    
    $
    (3,505
    )
    
    $
    (598
    )
    
    $
    1,798Exploration expenditures (i)
    
    
    (4,555
    )
    
    
    (3,690
    )
    
    
    (2,603
    )Depreciation and depletion adjustment (ii)
    
    
    138
    
    
    
    125
    
    
    
    284Stock compensation expense (iv)
    
    
    
    
    
    
    
    
    
    
    95Derivative instruments (vi)
    
    
    
    
    
    
    
    
    
    
    440Tax liability of flow-through shares (vii)
    
    
    (1,320
    )
    
    
    
    
    
    
    Renunciation of tax deductions on flow-through shares (vii)
    
    
    628
    
    
    
    253
    
    
    
    417Net earnings (loss) before cumulative effect of change in
accounting principle
    
    
    (8,614
    )
    
    
    (3,910
    )
    
    
    431Cumulative effect of change in accounting principle (viii)
    
    
    
    
    
    
    
    
    
    
    995Net earnings (loss)  under U.S. GAAP
    
    
    (8,614
    )
    
    
    (3,910
    )
    
    
    1,426Available-for-sale securities (iii)
    
    
    2,924
    
    
    
    1,453
    
    
    
    1,352Derivative instruments (vi)
    
    
    (227
    )
    
    
    12
    
    
    
    215Comprehensive earnings (loss) under U.S. GAAP
    
    
    (5,917
    )
    
    
    (2,445
    )
    
    
    2,993Net earnings (loss) per share under U.S. GAAPBasic and diluted
    
    $
    (0.13
    )
    
    $
    (0.07
    )
    
    $
    0.03
 i) Mineral Property Exploration Expenditures
  ii) Write-down of Mineral Properties
  iii) Available-for-Sale Securities
 38




---



##### 



iv) Stock-Based Compensation
    v) Reduction of Stated Capital
  vi) Accounting for Derivative Instruments and Hedging Activities
   vii) Flow-through Share Premiums
  viii) Cumulative Effect of a Change in Accounting Policy
  39




---



##### 



ix) New Accounting Pronouncements
     40
        41




---



##### 



Arnie E. Hillier  Chairman
 Neil McMillan  President & Chief Executive Officer
 Rick Johnson  Vice President Finance & Chief Financial Officer
 Pat Hannon  Vice President Exploration
 Brian Groves  Vice President Corporate Development
 Ronald G. Walker  Director
 Jon R. MacNeill  Director
 Bob Termuende  Director
 Claude Resources Inc.
 (CRJ - TSX)
(CGR - AMEX)
200, 224 - 4th Avenue S., Saskatoon,
Saskatchewan, Canada
S7K 5M5
306.668.7505
306.668.7500 Fax
 Incorporation
 Canada Business
Corporations Act
 Capitalization
and Listings
 72,461,686
common shares
outstanding
Exempt issuer under
SEC Regulation
12g3-2(b)
 Directors & Officers
 Arnie E. Hillier
Neil McMillan
Ronald G. Walker
Jon R. MacNeill
Bob Termuende
 42




---



##### 



Rick Johnson
Pat Hannon
Brian Groves
 Transfer Agents
 Valiant Trust Company
Calgary, Canada
 Auditors
 KPMG LLP
Saskatoon, Canada
 Solicitors
 MacPherson Leslie & Tyerman
Saskatoon, Canada
 Bank
 Canadian Western Bank
Saskatoon, Canada
 The Annual General Meeting of the shareholders of Claude Resources Inc. will be held in Saskatoon
at the Sheraton Cavalier Hotel at the Top of the Inn at 10:00 a.m. on Tuesday, May 9, 2006.
 Shareholders are encouraged to attend. Those unable to attend should complete the form of proxy
included with the Shareholder Information Circular and forward it to Valiant Trust Company at the
address specified on the form of proxy for receipt no later than 24 hours before the meeting.
 AMEX Corporate
The Companys common shares are listed on the American Stock Exchange (AMEX). Section 110 of the
AMEX company guide permits AMEX to consider the laws, customs and practices of foreign issuers in
relaxing certain AMEX listing criteria, and to grant exemptions from AMEX listing criteria based on
these considerations. A description of the significant ways in which the Companys governance
practices differ from those followed by U.S. domestic companies pursuant to AMEX standards is
contained on the Companys website
 www.clauderesources.com
  Claude Resources Inc.
200, 224 - 4th Avenue South
Saskatoon, Saskatchewan, Canada S7K 5M5
P 306.668.7505 F 306.668.7500
www.clauderesources.com
clauderesources@clauderesources.com
 43