Capital Resources and Cash flows

The Company continues to work towards its mine and mill development plans and to carry out its planned exploration programs.

During the most recently completed quarter ending June 30th , 2008 the Company reported a use of cash from operations of $10.7 MM and $18.0 MM for the YTD (2007 - $4.9 MM and $11.8 MM prior YTD) – this arises from the noted operating loss of $12.8 MM for the quarter and $23.7 MM for the year to date (2007 - $9.4 MM and $16.5 MM prior YTD) including non-cash items with respect to accretion, amortization and depletion, as well as share based compensation. Share based compensation was comparable in the most recently completed quarter and as noted the item is being expensed on an accelerated basis over the three year vesting period.

Investing activities include a use of cash of $1.3 MM on account of the purchase of various equipment during the quarter and $2.7 MM for the year to date (2007 - $0.9 MM and $2.8 MM prior YTD) and the capitalization of exploration and development on the mine properties of $1.6 MM for the quarter and $4.3 MM for the year to date (2007 - $1.9 MM prior YTD - $5.7 MM). Investing activities also include a source of cash from marketable securities of $6.7 MM for the quarter and $12.4 MM for the year to date arising from the maturity of various short term investments and utilization of the resultant proceeds in operations. The comparative period last year saw the investment of $8.1 MM die to the Q2 equity raise with a prior YTD amount of $9.1MM.

Financing activities during the quarter consisted of proceeds from shares issued of $8.0 MM primarily as the result of warrants exercised; $135,000 principal value of subordinate debentures were converted to shares as well. The Company also entered into two new capital leases/loans during the quarter. Financing activities were a net source of cash of $8.7 MM during the quarter and $9.3 MM for the YTD. This compares to them being a source of cash of $21.3 MM in the same quarter last year and $23.5 MM for the prior year to date – difference due to the financing undertaken at this time last year.

Significant projects completed during the quarter and year to date and recorded in capital include:
• Completion of 2 additional camp facilities for housing mine employees and contract mine workers.
• Purchase of new cone crusher parts and materials.
• Purchase of new scoop trams.
• Aforementioned development work on permanent openings at SG1, Cartwright and Rice Lake Mines.

The Company has plans for improvements to its main hoist infrastructure at the Rice Lake Mine. Upgrades are scheduled for the fourth quarter of 2008. These upgrades are expected to result in improved reliability of hoist operations. The Company has set aside $1.3 MM for mechanical improvements and installation of the hoist and related components. The Company is also planning upgrades to its jaw crusher and cone crusher. The Company is planning for continued underground development of $8 MM, camp upgrades and a small amount of equipment of approximately $0.9 MM. Some monies are required to continue with feasibility work on the aforementioned discovery of high grade gold bearing quartz veins. No capital budget has been allocated for this project as of the date of this report. The Company is also undergoing planning activities on enhancement to the transformer and electrical capacities of its physical plant. Funding for known items has been obtained and is currently invested in short term, minimum risk securities described in Note 3 – Marketable Securities – in the Company’s annual audited financial statements.