August 5, 2008

The National Bank Financial Daily Bulletin

Kodiak Exploration Limited

KXL (TSX) Cdn$2.40
Stock Rating: Outperform (Unchanged)
Target: Cdn$5.50 (Unchanged)
Risk Rating: Speculative (Unchanged)

Drilling Expands Mineralization at Golden Mile Regional targets also yielding significant results

Drilling significantly expands the Golden Mile Zone The Golden Mile system now extends over 2.0 km along strike and to depths of at least 450 metres. Almost every hole drilled hit mineralization and about 10-15% of the holes yielded significant intersections > 10 g/t (grams/tonne). We view this ratio of drill hits as typical of a high-grade Archean gold system that contains coarse gold mineralization.

Possible extensions found to the Golden Mile system

Prospecting 3.0 km northwest of the Golden Mile has discovered a large system of strongly mineralized quartz veining that is on strike with the Golden Mile. This potential extension could more than double the strike length of the Golden Mile to over 5.0 km. Exploration has also begun southwest of the Golden Mile, exploring geophysically indicated structures in an area where historic grab sampling yielded up to 46.22 g/t gold.

Regional targets starting to take shape The company has made several regional discoveries, the most significant of which appears to be Solomon’s Pillar, where channel sampling cut 5.5 metres at 12.82 g/t including 0.9 metres at 25.1 g/t. A 3,000-metre drilling program has commenced and the first holes have intercepted 20 to 30-metre thick zones of mineralized banded iron formation (assays are pending).

The drill rigs on site will increase from five to eight Kodiak plans to have up to five drill rigs active on the Hercules project, and three additional rigs will test regional targets.

Update on Geraldton-Beardmore Exploration Activities

Last Friday (Aug. 1) afternoon, Kodiak provided an update on its exploration activities in the Geraldton-Beardmore area of northwestern Ontario. Results were provided from the Hercules project where drilling has expanded the Golden Mile Zone by about 600% and several new discoveries have been made. In addition, initial exploration results were announced on several other stand alone regional targets.

At Hercules, the company is now about half way through this year’s 60,000-metre drill program, and results were announced from 94 holes. Gold bearing mineralization was noted in almost every hole. In addition the program continues to be successful in extending the strike and depth extents of several gold zones, it has now intersected significant gold mineralization deep in the Golden Mile and Lucky Strike and on multiple other structures, including the WLGZ, Seven of Nine and Marino gold zones.

Based on success achieved to date, Kodiak plans to increase the number of drill rigs on site from five to eight and to increase the size of its work force, which already stands at well over 100 personnel in the field.

Hercules Project − Drilling and Exploration Highlights

Gold mineralization previously identified on the surface at the Golden Mile has now been confirmed to extend well over 2,000 metres along strike and to depths of at least 450 metres in drill holes. The dimensions of the Golden Mile mineralized zone has increased over 600% since March 2008 and remains open. Drilling in the eastern portion of the Golden Mile has discovered a very large body of gold mineralization that is open at depth and is currently being drilled to define its full extent.

A new high grade zone has been discovered to depths of almost 350 metres in the Golden Mile; highlights from this zone include 16.98 g/t over 1.3 metres including 63.67 g/t over 0.3 metres in drill hole HR08-171. This high-grade zone has the same northwesterly rake as the central Golden Mile high-grade zone and remains open at depth. In fill drilling continues to intercept high grades as well with 9.3 metres grading 14.78 g/t including 3.3 metres grading 32.22 g/t in HR08-161.

Drilling on the blind Lucky Strike structure, located parallel to the Golden Mile, has discovered a broad zone of gold mineralization totalling up to 41 metres wide (HR08-137, 1.2 g/t), indicating the potential for shallow, bulk-mineable gold mineralization at Hercules.

This zone appears to be hosted in a pervasively silicified, more mafic phase of the Elmhirst intrusion, and is accompanied by minor pyrite and quartz veining. In addition, the Lucky Strike structure appears to have a steeper dip then the Golden mile, and drilling is planned to test the intersection of these two structures at depth.

Early prospecting 3,000 metres northwest of the Golden Mile has discovered a large system of strongly mineralized quartz veining that is on strike with the Golden Mile. This potential extension could more than double the strike length of the Golden Mile to over 5.0 km. Assays from recent sampling are pending and advanced follow up exploration is underway.

In addition, mineralized quartz vein float has been found across the lake and on strike approximately 500 metres northwest of the central Golden Mile (Figure 3). This lake currently marks the most northwesterly limit of the drilling to date on the Golden Mile. Drilling on this newly discovered extension is planned to commence in the immediate future.

Stripping, sampling and drilling has also begun southwest of the Golden Mile, exploring multiple parallel geophysically indicated structures in an area where historic sampling produced grab samples with up to 46.22 gpt gold (1.348 opt). Drilling in this area has commenced, intersecting several broad altered structures and quartz veining corresponding to the interpreted linear magnetic features, verifying the geophysical interpretation. Assays are pending.

On the WLGZ Gold Zone, drill hole HR08-145 has intercepted 3.3 metres grading 22.26 g/t including 0.8 metres grading 90.00 g/t further defining the geometry of this gold mineralized area, additional drilling is planned to define the full extent of this significant zone.

Drilling on the parallel Seven of Nine vein system, immediately adjacent to previously announced high grade gold mineralization found in the Marino vein system (HR07-16; 1.6 metres grading 38.47 gpt), has intercepted significant gold mineralization including 12.85 g/t over a width of 1.1 metres including 0.3 metres grading 53.24 g/t (HR08-113). These systems remain open, drilling on the Marino and Seven of Nine veins continues. Initial drilling on the Yellow Brick Road vein intersected broad mineralized structures at a depth of 250 metres over a width of approximately 10 metres. This system remains open, assays are pending.

A table of select drill results form the Hercules project is shown below.

GM - Golden Mile; lS - Lucky Strike; WLZ - Wilkinson Lake Zone

Source: Company Reports

Regional Exploration Highlights

The company is quite excited by initial results from the Solomon’s Pillar project. First pass channel sampling results have identified a strong zone of gold mineralization that extends at least 500 metres along strike that remains open. Channel sampling highlights at Solomon’s Pillar include channel SPX-19 which cuts 5.5 metres grading 12.82 g/t including 0.9 metres grading 25.1 g/t.

A 3,000-metre drilling program has commenced and the first holes have intercepted 20 to 30 metre thick zones of intensely mineralized banded iron formation and sheared clastic rock; assays are pending. According to Kodiak, their current work appears to be verifying historical exploration results (surface sampling and drilling) obtained by Inco.

At the GMO project, located in the western portion of the Beardmore-Geraldton gold district, a series of new gold bearing quartz veins have been discovered containing visible gold with grab samples grading up to 41.5 g/t. These veins are approximately 2,000 metres west of and along strike with the high grade Northern Empire mine. This new vein system has a strike length of at least 350 metres and widths of up to 2 metres and remains open. Drilling is in progress to test its economic potential.

At Kodiak’s West Geraldton-Kenogamsis project located just west of the town of Geraldton, the newly discovered Goldstrike and Drexel zones have been stripped over a strike length of over 300 metres and remain open. A historic drill hole (Hole 2) by Lafayette Long Lac GML cut the Goldstrike zone and intercepted 2.04 metres grading 327.79 g/t; Kodiak plans to verify this historic intercept and test other targets by diamond drilling soon. A second zone of strong mineralization located 500 metres west of the Goldstrike zone has also been discovered. These structures are characterized by quartz veining with arsenopyrite over broad widths where historic grab samples have graded up to 129.5 g/t. Additional stripping and channel sampling is ongoing; drilling has commenced.

Summary – lots of exploration news to come

We view this news as positive as the company has successfully extended mineralization at the Golden Mile along strike and at depth. Almost every hole drilled intersected gold mineralization and approximately 10-15% of the drill holes appear to have returned significant intersections (> 10 g/t). We view this ratio of drill hits as typical of a high-grade Archean gold system that contains coarse gold mineralization. The ultimate grade may have to be determined from a bulk sample.

The company has also made several regional discoveries that have the potential to host economic deposits. In addition, numerous companies are active in the Geraldton-Beardmore area, and Kodiak often ties on to these explorers, which could bode well for making other regional discoveries.

On a go forward basis, Kodiak plans to have 4 to 5 drill rigs active on the Hercules project. Two or three rigs will continue at Golden Mile, likely with the intent of expanding the known zones of mineralization and testing for intersecting structures and vertical flexures that may control higher grade zones. In addition, one rig will continue in the Marino-Yellow Brick road area, and one will test other targets in the Elmhirst intrusion.

On a regional basis, one drill will be working at Solomon’s Pillar, one at West Geraldton, and a third portal rig may be used to test more inaccessible target areas.

At present, Kodiak has $45 million in working capital, and is well financed to continue exploring its holdings in the Geralton-Beardmore area. We anticipate further positive newsflow in the coming months, and we are maintaining our Outperform rating and Cdn$5.50 target price.