UNITED STATES

10-Q 1 kdsm10q_053107.htm 10-Q UNITED STATES
UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE

SECURITIES EXCHANGE ACTS OF 1934

For the quarterly period ended May 31, 2007

Commission File Number 000-30965

KLONDIKE STAR MINERAL CORP.

(Exact name of registrant as specified in its charter)

Delaware	91-198708
(State or other jurisdiction of	(I.R.S. Employer
Incorporation or Organization)	Identification Number)

Box 20116, 1031 - Ten Mile Road

Whitehorse, Yukon Y1A 7A2

(Address of principal executive offices)

(800) 579-7580

(Registrant's telephone number, including area code)

(Former name, former address, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes [X] No [ ]

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, on a non-accelerated filer. See definition of "accelerated filer and large accelerated filer" in Rule 12b-2 of the Exchange Act. (Check One)

Large accelerated filer [ ] Accelerated filer [ ] Non-accelerated filer [X]

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act) Yes [ ] No [X]

As of May 31, 2007 there were 29,035,782 shares of the registrant's Common Stock, par value $.0001 per share, outstanding.

FORWARD LOOKING STATEMENTS

Some of the information presented in this quarterly report constitutes forward-looking statements within the meaning of the private Securities Litigation Reform Act of 1995. Statements that are not historical facts, including statements about management's expectations for fiscal year 2003 and beyond, are forward looking statements and involve various risks and uncertainties. Although the Company believes that its expectations are based on reasonable assumptions within the bounds of its knowledge, there can be no assurance that actual results will not differ materially from the Company's expectations. Factors that could cause the actual results to differ materially from expectations are discussed in the Company's Annual Report on Form 10-K and in other filings with the Securities and Exchange Commission.

Item 1. Financial Statements

KLONDIKE STAR MINERAL CORPORATION

CONSOLIDATED FINANCIAL STATEMENTS

May 31, 2007

KLONDIKE STAR MINERAL CORPORATION

May 31, 2007

TABLE OF CONTENTS

FINANCIAL STATEMENTS

CONSOLIDATED BALANCE SHEETS . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . 1

CONSOLIDATED STATEMENTs OF OPERATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

CONSOLIDATED StatementS of Stockholders' Equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

CONSOLIDATED StatementS of Cash Flows . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . 4

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 5

KLONDIKE STAR MINERAL CORPORATION

(An Exploration Stage Company)

CONSOLIDATED BALANCE SHEETS

The accompanying condensed notes are an integral part of these consolidated interim financial statements.

KLONDIKE STAR MINERAL CORPORATION

(An Exploration Stage Company)

CONSOLIDATED STATEMENTS OF OPERATIONS

The accompanying condensed notes are an integral part of these consolidated interim financial statements.

KLONDIKE STAR MINERAL CORPORATION

(An Exploration Stage Company)

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

The accompanying condensed notes are an integral part of these consolidated interim financial statements.

KLONDIKE STAR MINERAL CORPORATION

(An Exploration Stage Company)

CONSOLIDATED STATEMENTS OF CASHFLOWS

The accompanying condensed notes are an integral part of these consolidated interim financial statements.

KLONDIKE STAR MINERAL CORPORATION

(An Exploration Stage Company)

Condensed Notes to the Consolidated Financial Statements

May 31, 2007

NOTE 1 - DESCRIPTION OF BUSINESS

Klondike Star Mineral Corporation (hereinafter "the Company") is engaged in mineral exploration in the Yukon Territory, Canada. The Company was originally incorporated in 1999 under the laws of the State of Delaware. The Company was also registered in the Yukon Territory, Canada effective June 22, 2004. The Company maintains its head office in Whitehorse, Yukon Territory, Canada.

The Company was originally incorporated as Cyberbiz, Inc., later changed its name to Urbanfind, Inc. and again in 2004 changed its name to Klondike Star Mineral Corporation. The Company's fiscal year-end is the last calendar day of February.

Historically, the Company had been principally engaged in an internet-based business. Upon its acquisition of certain mining claims in December 2003, the Company began a new exploration stage as a minerals exploration company.

As the Company is in the exploration stage, it has not realized any revenues from its planned operations.

On March 16, 2007, the Company incorporated a wholly owned subsidiary, Klondike Star Canada Inc.("Klondike Star Canada") under the Canada Business Corporations Act. Klondike Star Canada maintains its head office in Whitehorse, Yukon Territory, Canada.

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The foregoing unaudited interim financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Regulation S-K as promulgated by the Securities and Exchange Commission ("SEC"). Accordingly, these financial statements do not include all of the disclosures required by generally accepted accounting principles in the United States of America for complete financial statements. These unaudited financial statements should be read in conjunction with the audited financial statements for the year ended February 28, 2007. In the opinion of management, the unaudited interim financial statements furnished herein include all adjustments, all of which are of a normal recurring nature, necessary for a fair statement of the results for the interim period presented. Operating results for the three-month period ended May 31, 2007 are not necessarily indicative of the results that may be expected for the year ending February 29, 2008.

This summary of significant accounting policies is presented to assist in understanding the financial statements. The financial statements and notes are representations of the Company's management, which is responsible for their integrity and objectivity. These accounting policies conform to accounting principles generally accepted in the U.S. and have been consistently applied in the preparation of the financial statements.

Accounting Methods

The Company's financial statements are prepared using the accrual basis of accounting in accordance with accounting principles generally accepted in the United States of America.

Basis of Presentation

These consolidated interim financial statements are prepared in accordance with accounting principles generally accepted in the United States of America. The Company consolidates more-than-50% owned subsidiaries that it controls and entities over which control is achieved through means other than voting rights. These consolidated financial statements include the accounts of the Company and its wholly-owned subsidiary Klondike Star Canada Inc. (incorporated under the Canada Business Corporations Act). All significant transactions and balances among the companies included in the consolidated financial statements have been eliminated.

Concentration of Risk

The Company maintains its cash in a commercial bank in Bellevue, Washington, and in a commercial bank in Whitehorse, Yukon Territory. The account in Washington is guaranteed by the Federal Deposit Insurance Corporation (FDIC) up to $100,000. The Canadian dollar accounts in Yukon Territory are guaranteed by the Canadian Deposit Insurance Corporation (CIDC) up to $100,000 Canadian ($93,493 US dollars at May 31, 2007). At May 31, 2007, the Company exceeded the FDIC insured amount by approximately $17,000 and exceeded the CIDC insured amount by approximately $412,000 U.S.

Mineral Exploration and Development Costs

In accordance with accounting principles generally accepted in the United States of America, the Company expenses lease exploration costs as incurred. As of May 31, 2007, the exploration costs expensed during the Company's exploration stage have been approximately $12,189,000. Significant property acquisition payments for active exploration properties are capitalized. If no minable ore body is discovered, previously capitalized costs are expensed in the period the property is abandoned. Expenditures to develop new mines, to define further mineralization in existing ore bodies, and to expand the capacity of operating mines, are capitalized and amortized on a units of production basis over proven and probable reserves.

Should a property be abandoned, its capitalized costs are charged to operations. The Company charges to operations the allocable portion of capitalized costs attributable to properties sold. Capitalized costs are allocated to properties sold based on the proportion of claims sold to the claims remaining within the project area.

Mineral Properties

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

Mineral properties are periodically assessed for impairment of value and any diminution in value is charged to operations at the time of impairment. Should a property be abandoned, its unamortized capitalized costs are charged to operations. The Company charges to operations the allocable portion of capitalized costs attributable to properties sold. Capitalized costs are allocated to properties abandoned or sold based on the proportion of claims abandoned or sold to the claims remaining within the project area.

Property and Equipment

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

Use of Estimates

The preparation of financial statements in accordance with generally accepted accounting principles requires the use of estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities known to exist as of the date the financial statements are published, and the reported amounts of revenues and expenses during the reporting period. Uncertainties with respect to such estimates and assumptions are inherent in the preparation of the Company's financial statements; accordingly, it is possible that the actual results could differ from these estimates and assumptions which could have a material effect on the reported amounts of the Company's financial position and results of operations.

Going Concern

As shown in the financial statements, the Company incurred a net loss of approximately $1,701,000 for the three months ended May 31, 2007 and has an accumulated deficit of approximately $53,221,000 since inception of the Company's exploration stage (December 8, 2003). The Company currently has no revenues and no operating mining properties.

These factors indicate that the Company may be unable to continue in existence. The financial statements do not include any adjustments related to the recoverability and classification of recorded assets, or the amounts and classification of liabilities that might be necessary in the event the Company cannot continue in existence. Management's plans include actively seeking additional capital and management believes that new properties can ultimately be developed to enable the Company to continue its operations. However, there are inherent uncertainties in mining operations and management cannot provide assurances that it will be successful in its endeavors.

The Company's management believes that it will be able to generate sufficient cash from public or private debt or equity financing for the Company to continue to operate based on current expenditure projections of $11,000,000 for fiscal year ending in 2008. The Company has approximately $553,000 in cash at May 31, 2007.

NOTE 3 - PROPERTY AND EQUIPMENT

Capital assets are recorded at cost. Depreciation is calculated using the straight-line method over three to ten years. The following is a summary of property, equipment, and accumulated depreciation:

	Balances as at May 31, 2007
	Cost	Accumulated Depreciation	Net Book Value	Net Book Value February 28, 2007	Net Book Value February 28, 2006

Depreciable Capital Assets:
Movable structures	$ 970,696	$ 305,440	665,256	$ 697,267	$ 579,123
Leasehold improvements	916,010	228,524	687,486	616,788	207,178
Vehicles	387,602	191,034	196,568	228,869	137,185
Heavy equipment	290,294	18,719	271,575	276,254	-
Equipment	287,963	143,037	144,926	168,923	107,618
All-terrain vehicles	123,606	87,458	36,148	46,449	49,322
Trailers	94,550	30,928	63,622	68,350	24,290
Computer equipment	39,822	27,144	12,678	15,896	19,854
Computer software	19,333	13,478	5,855	7,565	7,792
Furniture and fixtures	19,527	7,163	12,364	13,340	8,523
Pack horses	18,057	8,327	9,730	10,632	14,242
Total Depreciable Assets

Non Depreciable Capital Assets:
Gold samples	77,350	-	77,350	77,350	56,010
Total Capital Assets	$ 3,244,810	$ 1,061,252	$ 2,183,558	$ 2,227,683	$ 1,211,137

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

NOTE 4 - RELATED PARTY TRANSACTIONS

On occasion, the Company's shareholders or directors pay corporate expenses and/or provide services to the Company. Related party payables are unsecured and non-interest bearing, and are due on demand. Related party payables totaled $28,406 $110,148 and $14,465 at May 31, 2007, February 28, 2007 and February 28, 2006, respectively. During the three months ending May 31, 2007, the Company included in mineral exploration expense $36,263 ($154,379 for the three months ended May 31, 2006 and, $800 for the three months ended May 31, 2005) in transactions with a company controlled by an officer and director of the Company. The transactions were recorded at fair market value. During the three months ending May 31, 2007, the Company included in mineral exploration expense payments to a director of $42,619 ($nil for the three months ended May 31, 2006 and $nil for the three months ended May 31, 2005).

Effective June 2004, the Company signed an agreement for the right of occupancy of a barn and property from one of the directors of the Company and his spouse ("the Owner"), for the shelter of pack horses and an office. The right of occupancy term is five years, renewable yearly thereafter. Rent is $1 per month. Prior to the expiration of the right of occupancy, the Owner may require the Company at the Company's sole cost and expense, to remove any alterations, installations, additions or improvements made by the Company. At the expiration of the lease, the Owner is obligated to pay to the occupier the fair market value of the buildings less 75 % and shall be entitled to pay such sum over a 20 year period in equal monthly installments without interest.

Leaseholds improvements, which total approximately $916,000 as of May 31, 2007, have been made to the barn and office.

NOTE 5 - PREFERRED STOCK

The Company is authorized to issue 20,000,000 shares of $0.0001 par value preferred stock. The Company previously issued 2,000,000 preferred stock convertible to 10 common shares of common stock, non-cumulative and non-dividend bearing. The Company's board of directors will determine the specific features of each additional issuance of preferred shares. At May 31, 2007, February 28, 2007 and February 28, 2006, the Company had 2,000,000 shares of preferred convertible stock issued and outstanding.

On January 12, 2007 the Company modified the terms of the issued and outstanding preferred stock. Each Series A convertible preferred stock ("Series A") is convertible into one (1) common stock and one (1) Series B preferred stock; non-cumulative, non-dividend bearing, non-voting and is subordinate to common stock in the event of liquidation, dissolution, or wind-up. Each Series A shall be convertible, at the holders option, into one common stock and one Series B preferred stock, in the event the Company receives a notice of tender, as defined pursuant to Regulation 14D of the Securities Exchange Act of 1934, to purchase the majority of the issued and outstanding common stock of the Company. The Company shall not issue fractional shares of common stock resulting from conversion; a cash payment in lieu of fractional shares shall be made. The conversion price shall be adjusted for any common stock dividends, subdivisions, combinations, or other adjustment.

Series B preferred stock is non-dividend bearing, non-convertible into any other class of Company stock, and is not eligible to participate in the distribution of Company assets in the event of liquidation, dissolution, or wind-up. Each Series B preferred stock is entitled to vote for directors either at special or annual general meetings of shareholders. Each Series B preferred stock is entitled to vote such number of votes per share as shall equal four (4) shares of common stock.

At May 31. 2007, February 28, 2007 and February 28, 2006, the Company had no Series B preferred shares issued and outstanding.

NOTE 6 - COMMON STOCK

As approved by the shareholders at the Company's 2006 annual general meeting, the Company's authorized common stock was increased to 120,000,000 shares of $0.0001 par value common stock. Each holder of common stock has one, non-cumulative vote per share on all matters voted upon by the shareholders. At May 31, 2007, February 28, 2007 and February 28, 2006, the Company had 29,035,782; 29,035,782 and 25,202,800 shares of common stock outstanding, respectively.

Effective May 29, 2007, the Company issued a private placement memorandum for the issuance of up to 3,000,000 common stock of the Company, at $0.50 per share, under Regulation S, for a total estimated cash proceeds of $1,500,000 with the offering expiring on or before July 16, 2007.

During the three months ended May 31, 2007, the Company approved a private placement memorandum for the issuance of 13,200,000 shares of common stock at $2.25 per shares under Regulation S, with the offering expiring on or before July 6, 2007.

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

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

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

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

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

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

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

Warrants

During the year ended February 28, 2006, the Company executed a private placement memorandum to issue up to 4,000,000 shares of common stock at $2.75 per share with one warrant attached to each share to purchase an additional share at a minimum conversion price of $3.50. Each warrant must be exercised within one year from date of the original investment. Using the Black-Scholes formula, the Company made the following assumptions to value the warrants for the year ended February 28, 2007; risk-free interest rate of 4.5%; volatility of 31%; life of one year; no dividends.

	Number of Warrants	Weighted Average Remaining Life	Average Exercise Price
Outstanding and exercisable, February 28, 2006	1,300,000	0.0 years	$ 3.50
Issued	3,032,982	0.3 years	3.50
Exercised	-		-
Rescinded or expired	(1,300,000)		3.50
Outstanding and exercisable, February 28, 2007	3,032,982	0.3 years	$ 3.50
Issued	-		-
Exercised	-		-
Rescinded or expired	(990,000)		3.50
Outstanding and exercisable, May 31, 2007	2,042,982	0.3 years	$ 3.50

NOTE 7 - STOCK-BASED COMPENSATION AND STOCK OPTIONS

During the year ended February 28, 2007, the Company granted options to employees to purchase a total of 250,000 shares of common stock at $2.50 per share. These shares are fully vested and exercisable over a five year term. The Company recognized employee compensation expense of $437,500. The Company also granted options to consultants to purchase a total of 100,000 shares of common stock at $2.50 per share and recognized $175,000 compensation expense during the year.

In accordance with Statement of Financial Accounting Standards No. 123, the fair value of the options granted was estimated using the Black-Scholes Option Price Calculation. The following assumptions were made to value the stock options:

Risk-free Interest Rate	4.5%
Expected Life	5 years
Expected Volatility	30.8%
Dividends to be paid	Nil

The Black-Scholes option valuation model was developed for use in estimating the fair value of traded options, which are fully transferable.

In addition, option valuation models require the input of subjective assumptions including the expected stock price volatility. Because the Company's employee stock options have characteristics significantly different from those of traded options and because changes in the subjective input assumptions can materially affect the fair value estimate, in management's opinion, the existing models do not necessarily provide a reliable single measure of the fair value of its employee stock options.

Following is a summary of the status of the stock options during the year ended February 28, 2007:

	2003 Stock Incentive Plan		2005 Stock Incentive Plan		Total
	Number of Shares Under Option	Weighted Average Exercise Price	Number of Shares Under Option	Weighted Average Exercise Price	Number of Shares Under Option	Weighted Average Exercise Price
Outstanding February 28, 2004	-	$ -	-	$ -	-	$ -
Granted	1,200,000	1.00	-	-	1,200,000	1.00
Exercised	-	-	-	-	-	-
Rescinded or expired	-	-	-	-	-	-
Outstanding February 28, 2005	1,200,000	1.00	-	-	1,200,000	1.00
Granted	30,000	2.50	-	-	30,000	2.50
Exercised	-	-	-	-	-	-
Rescinded or expired	-	-	-	-	-	-
Outstanding February 28, 2006	1,230,000	1.04	-	-	1,230,000	1.40
Granted	350,000	2.50	-	-	350,000	2.50
Exercised	-	-	-	-	-	-
Rescinded or expired	-	-	-	-	-	-
Outstanding at February 28, 2007	1,580,000	1.36	-	-	1,580,000	1.36
Granted	-	-	-	-	-	-
Exercised	-	-	-	-	-	-
Rescinded or expired	-	-	-	-	-	-
Outstanding at May 31, 2007	1,580,000	$ 1.36	-	$ -	1,580,000	$ 1.36
Exercisable at May 31, 2007	1,580,000	$ 1.36	-	$ -	1,580,000	$ 1.36
Weighted average fair value of options granted during the three months ended May 31, 2007		$ -		$ -		$ -

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

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

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

NOTE 8 - COMMITMENTS AND CONTINGENCIES

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Compliance with Environmental Regulations

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

NOTE 9 - SUBSEQUENT EVENTS

Subsequent to the quarter ending May 31, 2007, the Company issued a private placement memorandum for the issuance of up to 2,000,000 common stock of the Company at $0.50 per share, under Regulation S, for a total estimated cash proceeds of $1,000,000, with the offering expiring on or before July 31, 2007.

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

ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

Overview

Klondike Star Mineral Corporation is an exploration and development enterprise currently with eight gold, base and precious metal projects totaling about 446 km² or 172.5 mi² in the Yukon, located in the northwest corner of Canada. The Company is developing extensive surface and subsurface mineralized zones on a 353.4 km² or 136.6 mi² land position underlying in the site of the world-renowned Klondike gold producing region, and 92.6 km² or 35.9 mi² of select high potential targets in other parts of the Yukon. Finally, the Company has been awarded a major mineral exploration and development concession in Egypt, an area totaling 1,245 km² or 481 mi².

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

Description of the Business

From inception as a mineral exploration stage enterprise in December 2003, the Company has acquired mineral properties, negotiated joint ventures, established financing arrangements, and planned and conducted exploration activities involving 8 different projects in the Yukon, Canada. In addition, opportunities in other countries are being actively pursued, including Egypt.

Mineral exploration and mine development includes such activities as conventional prospecting, geological/geophysical surveys and research, as well as excavation, diamond and auger drilling, analysis of core, soil, mini and bulk samples, milling and testing of processing technologies, mineral resource assessment, facility construction and maintenance, equipment acquisition and maintenance, road and access construction, scoping studies and environmental monitoring for potential mine development.

In its first year as a mineral exploration company, Klondike Star earned a 55% and controlling interest in the Lone Star Project in the Dawson Mining District, Yukon. This property includes the site of the original Klondike Gold Rush. Since then, the Company has expanded systematically to a total of eight exploration and development projects: six gold prospects in the Klondike region of the Yukon and two gold, base and precious mineral properties in other parts of the Yukon; and one major exploration project in Egypt.

In support of its mission, Klondike Star has established corporate goals relating to mineral production, capital formation and durable investor relationships, employer of choice, sustainable development and good corporate governance.

Klondike Star is advancing its projects operating under a multi-prong strategy. This involves a long-term, systematic and results-oriented approach towards exploration research, supported by a scaled expansion of field operations on carefully selected assets, combined with a concurrent investment in planning for potential mine development. The strategy is founded on and features such elements as:

* undertaking mineral exploration and development within a sustainable development paradigm;

* selecting and advancing quality mineral exploration projects managed and evaluated by a team of qualified industry professionals;

* establishing links with internationally recognized university-based geology resources for expertise and access to leading technology in geological science;

* demonstrating substantive focus on good corporate governance and best practices;

* forging strong relationships with financial professionals in order to provide adequate capital investment for its projects with the goal of bringing new mining production on-stream in the future;

* investing in relationships with and collaborative efforts involving First Nations, local suppliers and contractors;

* acquiring and supporting a large and growing shareholder base;

* practicing proactive, balanced and timely disclosure addressing what is newsworthy from a shareholder point of view in a manner that meets and exceeds regulatory requirements; and

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

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

On March 16, Klondike Star established Klondike Star Canada Inc., a wholly owned Canadian subsidiary. The new company was established to support planned growth and development including new mineral exploration and development opportunities in Canada and globally.

The Company currently has a year-round full-time equivalent labour force of about 15-20 employees that expands to 60-70 employees, not including contractors and consultants during the summer/fall exploration season, with a winter seasonal labour force of about 10 employees.

Klondike Star Mineral Corporation is listed on the NASD.OTCBB trading under the symbol "KDSM".

Overall Performance

Highlights for the three-months ending May 31, 2007 include:

Operational

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

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

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

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

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

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

Financial

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

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

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

- During the three months ended May 31, 2007, the Company approved a private placement memorandum for the issuance of 13,200,000 shares of common stock at $2.25 per share under Regulation S, with the offering expiring on or before July 6, 2007.

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

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

Financial indicators

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

Investor relations indicators

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

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

(Source: Bell Globemedia Publishing Inc. 2007)

Quarter High Quarterly Price Low Quarterly Price

Q1, 2004 March - May	3.69 2.90
Q2, June - August	3.30 3.00
Q3, September - November	3.75 3.05
Q4, December - 2005 February	3.74 2.80
Q1, 2005 March - May	3.70 2.55
Q2, June - August	3.15 2.50
Q3, September - November	3.85 2.85
Q4, December - 2006 February	3.50 2.70
Q1, 2006 March - May	3.98 3.00
Q2, June - August	3.92 3.50
Q3, September - November	3.72 2.50
Q4, December - 2007 February	2.70 1.50
Q1, 2007 March - May	1.75 1.00

Exploration and development projects

The mineral rights are organized into nine discrete exploration and development projects. As of May 31, 2007, the Company has a majority ownership interest in five projects and an exclusive option to explore, earn or purchase an ownership interest in three projects in Canada; and has been awarded rights to a major exploration property in Egypt.

Property Synopsis
Project	Exploration stage	Location	Metal	Total area	Ownership
CANADA
Indian River Placer	advanced and pre-development	Klondike	gold	21.1 km²/8.2 mi²	100% ownership of 194 placer claims and 3 leases and 49% ownership of 29 placer claims
Lone Star Quartz	advanced	Klondike	gold	135.1 km²/52.2 mi²	55% and exclusive option to acquire up to 75% of 719 mineral claims and crown grants
Dominion Quartz	intermediate with one advanced target	Klondike	gold and silver	62.8 km²/24.2 mi²	100% ownership of 149 mineral claims, 55% ownership of 97 claims with exclusive option to acquire 75%, exclusive option to purchase 100% of 85 claims
Spice Quartz	intermediate	East Yukon	gold	10.9 km²/4.2 mi²	Exclusive option to acquire 75% ownership of 52 mineral claims
Ultra Quartz	intermediate	West Yukon	multiple precious and base	81.7 km²/31.7 mi²	Exclusive option to acquire 75% ownership of 416 mineral claims
Bonanza Quartz	early	Klondike	gold	65.6 km²/25.3 mi²	100% registered interest in 400 mineral claims
Indian River Quartz	early	Klondike	gold	62.1 km²/24 mi²	Exclusive option to acquire 75% ownership in 248 claims
Eldorado Placer	early	Klondike	gold	6.9 km²/2.7 mi²	55% ownership and exclusive option to acquire up to 75% ownership in 115 placer claims
EGYPT
Oweinat	early	Egypt	gold and iron ore	1,245 km²/481 mi²	Exclusive right to explore and exploit, subject to terms of concession agreement

Mineral rights indicators¹

	1^st quarter ended May 31, 2007	Year-end February 28, 2007	Year-end February 28, 2006	Year-end February 28, 2005	Change from year-end 2007 to period-end May 31,2007
Exploration projects	9	8	6	2	Increase of 1 project
Quartz mining claims	2166	2166	1921	1753	None
Total area of quartz claims and crown grants	418.2/161.6	418.3 km²/161.5 mi²	352 km²/ 135.9 mi²	239 km²(estimate)/ 92.3 mi²	None
Placer mining claims	338 plus 3 leases	329 plus 43 mi of leases	300 plus 43 miles of leases	114 plus 60 miles of leases	Increase 9 claims or 2.7% and significant release of annual leases
Total area of placer claims and leases	28 km²/10.9 mi²	43.9 km²/17 mi²	42 km²/ 16.2 mi²	21 km² (estimate)/ 8.1 km²	Decrease of 15.9 or 36.2%
Total area of mining concessions	1245 km²/481 mi²	0	0	0	Awarded Oweinat, Egypt concession

Note ¹: The mining claim and total areas for year-end February 28, 2007, have been adjusted to reflect changes resulting from the re-allocation of claims between projects and to ensure comparisons with Q1 to May 31, 2007 figures are reasonable and appropriate. These changes are made throughout this report.

Operational indicators

	1^st quarter ended May 31, 2007	Year-end February 28, 2007	Year-end February 28, 2006	Year-end February 28, 2005	Change from year-end 2007 to Q1-end May 31, 2007
Health and safety incidents	0	1 with lost time; 2 incident with no injury or lost time; 3 vehicle incidents with no injuries or lost time; 1 incident for geophysical contractor	2 vehicle accidents, no injuries or lost time	2	Not applicable
Environmental incidents	0	0	0	0	0

Footnote 1: Definitions of exploration stage

Where a project fits on the spectrum of exploration and development is in part a matter of judgment exercised by management;

Early stage exploration - grass roots prospecting, mapping, analysis of regional/site geology, trenching and chip sampling, staking of claims possibly with a few holes drilled with useful results;

Intermediate stage exploration - exploration continues including mini-bulk sampling, soil chemistry, geophysical surveys and analysis as appropriate with more holes drilled with useful results;

Advanced stage exploration - full-scale bulk sampling, mineral assessment establishes resource development potential, scoping or pre-feasibility study completed or nearing completion with positive results, environmental baseline research and assessment in progress;

Early development - bulk sampling and test mining, on-site testing of processing technology for throughput and mineral recovery; decision made to proceed with pre- or full feasibility study in progress or completed; scoping of environmental assessment and permitting completed and necessary steps initiated;

Development - environmental assessment completed, permits obtained, financing lined up, construction to begin in the next 6 - 12 months; or mine under construction through commissioning;

Production - operating mine with sales and revenue.

Early development-stage projects:

INDIAN RIVER PLACER PROJECT

The Indian River Placer Project is an early development-stage placer gold property. It is located 40 km from Dawson City in the heart of the Klondike gold-producing region of the Yukon, Canada. The Company's objective is to develop a large-scale placer mine.

The Indian River Placer Project consists of 223 mineral claims plus 3 leases totaling 21.1 km² (8.2 mi²). The Indian River is emerging as one of the active areas of new investment and productive placer mining in the Klondike region. With the exception of a 49% interest in a small group of 29 claims acquired in the second quarter, Klondike Star holds 100% ownership of the project.

During the 2005-2006 winter drilling program, the Company completed 184 holes (double the 2004-2005 drilling) for a cumulative total of 274 holes or 2,426 meters. The winter drilling recovered gold from 90% of the holes, with gold recovered from 100% of the holes drilled in the main target area along the Indian River. In 2005, drilling resulted in gold recovery from 87% of the holes drilled.

During 2006, bulk sampling and testing of conventional processing technology (for throughput and gold recovery) proceeded alongside a business planning study to determine the economic viability of the mineralized area. Test mining is being supervised by an established Canadian firm specializing in mine engineering and processing technology. Initial results from the first stage of test mining were announced in November 2006. The Company believes the test mining results, at this one site, correlate and improve on the general findings of the previous drill-holes on the site. The grade indicated by auger drilling is only an indication of true grade, and in the Company's opinion, it must be checked and calibrated by test mining. The test resulted in the recovery of 45.08 ounces of raw placer gold. A conventional sluicing system was used to assess throughput and gold recovery, and the findings will be used in mine planning.

Klondike Star completed upgrading and extension of the access road, set up a camp, and identified additional bulk sample test sites for the 2007 test mining program.

The third consecutive winter drilling program commenced in late November 2006 and concluded in April 2007. Klondike Star completed 141 holes totaling 967 meters (3,173 feet), almost entirely in the main target zone. This increases the cumulative three-year total to 415 holes encompassing 3,393 meters (11,132 feet). Gold was recovered from 100% of the holes in the main target area (107 holes), an extension of the ground where gold was recovered from 100% of the holes in 2006. In 2005, drilling resulted in gold recovery from 87% of the holes drilled.

The target zone forms a wedge that is 300 meters (984 feet) at the beginning and broadens to a width of over 1,500 meters (4,921 feet). To date, the mineralized zone extends over a distance of more than 3 kilometers (1.9 miles) and remains open to expansion to the east and south. Gold appears to be consistently distributed within this broad area with consistent gold values across the entire width of the property. The overburden is relatively thin and bedrock is about 7.7 meters (25 feet) deep on average, which indicates a modest amount of waste stripping.

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

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

	1^st quarter-end May 31, 2007	Year-end February 28, 2007	Year-end February 28, 2006	Change from year-end 2007 to Q1-end May 31, 2007
Total claims	223 and 3 leases	214 claims and 17 leases	185 claims and 17 leases	Increase of 9 claims due to staking or 4% and decrease in one years leases as ground determined to be of limited value
Total area	About 21.1 km² (8.2 mi²)	37.0 km² (14.3 mi²)	35 km² (13.5 mi²)	Decrease of 15.9 km² (6.1 mi²) or 42.7%
Drilling - no. of auger drill holes and total meters	15 holes totaling 86 meters/282 feet after spring break-up	141 holes totaling 967 meters/3,173 feet (winter season December - April)	184 holes totaling 2,426 meters/7,959 feet (winter season December - April)	Increases cumulative drilling to 340 holes totaling 3,479 meters/11,414 feet
Bulk sampling	Preparation of 2 test mining sites initiated	1 site of 7,249 cubic yards processed	None	None
Ownership	100% ownership of 194 claims and 3 leases and 49% ownership of 29 claims	100% ownership of 185 claims and 17 leases and 49% ownership of 29 claims	100%	Increase in 100% ownership of 9 claims; low value placer leases allowed to lapse

Advanced-stage exploration projects:

LONE STAR PROJECT

The Lone Star Project is an advanced-stage gold exploration property that is being studied for potential mine development. The Project consists of 719 mineral claims and crown grants totaling 135.1 km²(52.2 mi²). Lone Star is the largest project of six in the gold-producing Klondike region of Yukon, Canada.

The property is situated in the Tintina Gold Belt which spans Alaska and the Yukon and includes producing mines and major deposits. The Lone Star Project is located 20 km (12.4 mi) from Dawson City and is accessible by summer-maintained, graded gravel roads linking to the Klondike Highway.

First assembled by Canadian mine-finder Richard Hughes, the initial 500 mineral claims in the Klondike were optioned to Klondike Star in December 2003. It is the site of the former producing Lone Star Mine (1912-14) and decades of previous exploration.

Since acquiring the property, the Company has become the majority owner and operator, increased the size of the project from 500 to 719 mineral claims and crown grants, constructed a 65-person exploration complex, with core processing and milling infrastructure on site, and completed extensive soil, chip and bulk sampling, diamond drilling, IP (induced polarization) geophysical surveys, assay and other analysis.

Exploration results and professional analysis to date indicate that the Lone Star Project represents an extensive mineralized area with a large-tonnage, low-grade gold target augmented by higher grade zones that warrants an expanded exploration effort and intensive evaluation for potential mine feasibility and development. The Company is working towards a mineral resource assessment consistent with industry and international standards and best practices.

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

A full-scale scoping study is in progress to assess the economic viability of the Lone Star mineral deposit, provide a baseline assessment of environmental and socio-economic considerations for development permitting applications, establish mine design concepts, analyze options to address key factors (energy, water supply, reclamation), and identify capital and operating cost estimates.

During the May to October, 2006 summer exploration program, the focus was on diamond drilling, bulk sampling, and ground and airborne geophysical surveys along with continuation of the sponsored Klondike Research Project with the Canadian University of British Columbia Mineral Deposit Research Unit (UBC MDRU). The drilling program was designed to further delineate the extent of the known gold bearing ore body in the primary zones of interest, including the Lone Star and extensions, the Buckland between Gay Gulch and 27 Pup, and the Nugget zone above Oro Grande Gulch. New infrastructure, including a camp accommodation annex, a fitness and recreation centre, and expanded kitchen and dining facilities were constructed in the vicinity of the Eldorado Camp.

Progressive exploration results, including the discovery of a new target, the JF Zone, were announced between December 2006 and February 2007. A progress report on scoping study findings to date was released in March 2007 (filed with the SEC as an 8-K report, dated March 21, 2007). A summary report on the UBC MDRU geological studies on the Klondike region was released in March 2007.

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

	1^st quarter-end May 31, 2007	Year-end February 28, 2007	Year-end February 28, 2006	Year-end February 28, 2005	Change from year-end 2007 to Q1-end May 31, 2007
Total claims and crown grants	719	719	1056	500	None
Total area	135.1 km²/52.2 mi²	135.1 km²/52.2 mi²	152 km²/58.7 mi²	100 km² estimated/38.6 mi²	None
Drilling - no. of diamond drill holes and total meters	Nil	23 holes totaling 2,892 meters/9,488 feet; 17 holes totaling 2,100 meters/6,890 feet	32 holes totaling 4830 meters/15,846 feet	0	None
Bulk sampling, surface trenching and sampling	Nil	16 bulk samples totaling 78 tonnes; trenching; 640 chip samples, 393 soil samples; 3 IP geophysical grids totaling 35 km or 21.7 mi of line; 470 rock samples, and 134 soil samples	14 trenches totaling 2858 m³/3,738 yd³, 421 soil samples, 551 trench samples, 23 rock samples and 57 bulk chip samples	17 trenches totaling 1,300 m³/1,700 yd³, 1,024 rock samples, 1,165 soil samples	None
Assay and other analysis	Nil	2866 core samples shipped for assay; 1,883 core samples shipped for assay	5095 core samples from drilling and core fire assays (1^st round) at 1250 samples, trench ICP totaled 551 samples and 92 trench fire assays	1165 soil samples by ICP; also refer to the 2004 assessment report	None
Ownership	55% with exclusive option up to 75%	55% with exclusive option up to 75%	55% with exclusive option up to 75%	55% with exclusive option up to 75%	None

Intermediate-stage exploration projects:

DOMINION PROJECT

An intermediate-stage gold and silver exploration project at the headwaters of Dominion Creek, the Dominion Project consists of 331 claims totaling 62.8 km² (24.2 mi²). Klondike Star holds 100% or majority interest in 246 claims and an additional exclusive option to purchase an undivided 100% interest in 85 claims acquired in the first quarter ending May 31, 2006 and the second quarter ending August 31, 2006.

On April 27, 2006, the Company announced the acquisition from Klondike Source Limited's (KSL) subsidiary, KSL Exploration (Yukon) Limited, of the exclusive right to purchase an undivided 100% interest in up to 56 quartz claims in the DOM block located on Hunker Dome in the eastern part of the Klondike goldfield. On August 8, 2006, Klondike Star announced the acquisition of the exclusive option to explore and purchase the J.A.E. claim group on King Solomon's Dome bordering on mineral claims already held by the Company. The Company has also staked an additional claims to further consolidate the property into a single contiguous area.

Since 1999, a portion of the property has been explored by KSL Exploration (Yukon) Limited, including drilling, soil sampling and trenching. Before that, United Keno Hill Mines Limited, a longstanding operator of gold and silver properties, such as the Elsa and Keno Hill mines, invested significant effort on the other portion of the property. Significant exploration work has been conducted on the J.A.E. claim block by successive owners. Regional and project-specific infrastructure includes good seasonal road access.

The area covers several mineralized vein systems, some shafts and a long tunnel, and has been the subject of percussion drilling, soil geochemistry and trenching. Various broad zones of disseminated mineralization have been identified. The 2006 exploration objective was to consolidate and ground-truth previous exploration results, advance knowledge of the mineral resources, take advantage of extensive trenching in situ, identify future drill targets on a systematic and expedited basis, and consolidate the property and mineral interests through a strategic claim staking program. Activities included detailed mapping, extensive chip and soil sampling and geochemistry, evaluation of more than 60 existing trenches and assessment of selected targets, and bulk sampling and processing through the Eldorado test plant. A satellite camp was installed to support project operations.

The 2006 field work confirmed the presence of multiple, continuous gold-bearing structures that warrant testing by drilling. In addition, several significant new gold-in-soil anomalies were identified in areas with no apparent prior exploration.

Drilling is proposed for 2007 at the JAE claim block. This lies at the headwaters of Dominion, Gold Bottom and Hunker creeks, all of which have been significant producers of placer gold, and are still being actively mined. This area of the Dominion project hosts at least seven parallel gold and silver vein zones within an area of highly anomalous soil geochemistry that measures about 1.5 km by 1 km (0.9 mi by 0.6 mi). Two of these zones, the Mitchell and Sheba have been outlined along hundreds of meters of length by previous exploration efforts since 1900, including numerous trenches and shallow shafts, direct shipping of hand selected silver-rich ore (7.2 tonnes averaging 6090 g/t silver = 178 oz/ton), soil geochemistry and geophysics. Only three shallow drill holes, directed at the high-grade silver, have previously been drilled on the property. It is expected that further surface work on the other parallel zones will result in additional drill targets, possibly during the 2007 program.

Work at JAE in 2006 included extending the soil geochemical anomaly to the southwest, mapping and chip sampling various new and existing trenches, and processing two bulk samples from the Mitchell and Hunker Dome zones. The Mitchell sample consisted of 5.7 tonnes of rusty schist without quartz veining, and returned 1.3 g/t gold. This indicates potential for bulk mineable material beyond the higher grade veins. The Hunker Dome zone bulk sample consisted of 2.3 tonnes across several narrow quartz veins, and returned 4.0 g/t gold.

Klondike Star tested claims to the southeast of the JAE area with widespread MMI soil geochemical survey lines, identifying several large areas of gold in soil anomalies, up to 500 meters by 1000 meters. The surveys successfully confirmed some areas with known mineralization, and identified new areas with no evidence of previous exploration.

	1^st quarter-end May 31, 2007	Year-end February 28, 2007	Year-end February 28, 2006	Year-end February 28, 2005	Change from year-end 2007 to Q1-end May 31, 2007
Total claims	331	331	168	112	None
Total area	62.8 km² or 24.2 mi²	62.8 km² or 24.2 mi²	33.5 km² or 13 mi²	23.5 km² or 9 mi²	None
Ownership	- 100% ownership of 149 claims - 55% ownership of 97 claims with exclusive option for up to 75% - exclusive option to acquire 100% of 85 claims	- 100% ownership of 149 claims - 55% ownership of 97 claims with exclusive option for up to 75% - exclusive option to acquire 100% of 85 claims	- 100% ownership of 56 claims - 55% ownership with exclusive option of 75% of 112 claims	55% with exclusive option for up to 75% of 112 claims	None
Exploration activity	Nil	Trenching, mapping, sampling including 2 bulk sampling, soil geochemistry and staking			None
Bulk Sampling	Nil	2 bulk samples totaling 8 tonnes			None

SPICE PROJECT

The Spice Project is an intermediate-stage gold exploration project that has moved to an exploratory diamond drilling phase. As of May 31, 2007, the Spice Project consists of 52 mineral claims totaling 10.9 km² (4.2 mi²). The property is located 28 km east of Ross River and 8 km south of the North Canol Road in the Watson Lake Mining District, Yukon, Canada. The Spice Project falls within the Tintina Gold Belt that hosts numerous gold deposits, producing mines, notably the Fort Knox, Pogo and (former) Brewery Creek, as well as active exploration projects.

The property has only been explored since 2000, when a regional geochemical survey conducted by the Yukon Geological Survey, Yukon Government, identified strong, coincident gold, silver and epithermal pathfinder elements. Follow-up geochemical sampling identified an open-ended anomalous zone and samples assayed up to 13.9 grams/tonne gold. An IP chargeability high and low resistivity coincides with the highest geochemical values. The target is a low-sulphidation epithrmal-style gold deposit hosted by rhyolite, similar to the Grew Creek property being explored 60 km (37.3 mi) to the west.

Since acquiring the Spice properties, Klondike Star has stepped up exploration efforts, and in the first quarter/spring 2006, a staking program also increased the land base to 51 mineral claims totaling 10.9 square kilometers (4.2 square miles), an increase of 63%. Exploration to date has involved till, soil, silt and rock geochemistry, hand/blast pitting and trenching, ground magnetic, induced polarization/resistivity and VLF-EM geophysical surveys, and during the third quarter 2006 included additional soil geo-chemistry, a property evaluation, the delineation of drill targets and petrography.

An exploratory diamond drilling program of identified targets proceeded in the spring of 2007. Assay results are expected to be available in the second quarter ended August 31, 2007.

	1^st quarter-end May 31, 2007	Year-end February 28, 2007	Year-end February 28, 2006	Year-end February 28, 2005	Change from year-end 2007 to Q1-end May 31, 2007
Total claims	52	52	32	0	None
Total area	10.9 km²/4.2 mi²	10.9 km²/4.2 mi²	6.7 km²/2.6 mi²	0	None
Exploration activity	First-ever diamond drilling conducted on the property	Soil geochemistry and identification of targets for planned drill program			Completion of test drilling program of identified anomalies
Drilling - no. of diamond drill holes and total meters	3 holes totaling 435.5 meters/	Drill targets identified for spring 2007 drill program	0	0	100%
Ownership	Exclusive option for up to 75% ownership	Exclusive option for up to 75% ownership	Exclusive option for up to 75% ownership	0	None

ULTRA PROJECT

The Ultra Project is an intermediate-stage base and precious metals exploration project that has moved to a drill ready stage in exploration. Following additional staking in the fall of 2005 and the fall of 2006, the Ultra Project consists of 416 mineral claims totaling 81.7 km² (31.6 mi²). The targets include VMS zinc-copper-silver-gold and poly-metallic nickel-copper-platinum-palladium-gold. Two significant discoveries were announced following assessment of 2006 exploration results.

The property is located in southwest Yukon, 42 km (26.1 mi) northwest of Haines Junction, Yukon, Canada, only 140 km (87 mi) from a deepwater port. Ten kilometers (6.2 miles) west of the Alaska Highway, it is accessible by rough gravel road. It is near the former nickel-platinum Wellgreen Mine. Ultra is also in the same geological zone as the world-class zinc-copper-gold Windy Craggy deposit in northern British Columbia.

In February 2007, based on the 2006 exploration program, the Company announced the discovery of two volcanogenic massive sulphide zones including a major VMS horizon with economically interesting grades and widths. The massive sulphide grades up to 3.23% copper, 6.75% zinc, 17.8 ppm silver and 0.15 ppm gold over a 4 meter thickness. Maximum values of 13.4% copper, 6.75% zinc, 56 ppm silver and 0.25 pp. gold were obtained from one zone. The second zone reported results of 11.54% copper, 1514 ppm zinc and 7.2 ppm silver over a three meter thickness.

During the 2006 exploration program, beep mat survey was also conducted, along with hand trenching, blast trenching and soil geo-chemistry. Although specific sites were prepared, diamond drilling was deferred due to unavailability of required technical services including skilled labor. The property is drill-ready based on a multi-year investment in prospecting, mapping, sampling, airborne and ground geophysical surveys and geochemistry analysis.

	1^st quarter-end May 31, 2007	Year-end February 28, 2007	Year-end February 28, 2006	Year-end February 28, 2005	Change from year-end 2007 to Q1-end May 31, 2007
Total claims	416	416	404 claims	0	None
Total area	About 82 km² or 31.7 mi²	82 km² or 31.7 mi²	82 km² or 31.7 mi²	0	None
Drilling	No change	Drill sites prepared	0	0	None
Surface trenching and sampling	No change	152 chip and 265 soil samples, along with hand and blast trenching	86 rock and soil samples	0	Doubling of rock samples and new soil sampling and trenching activity
Ownership	Exclusive option for up to 75% ownership	Exclusive option for up to 75% ownership	Exclusive option for up to 75% ownership	0	None

Early-stage exploration projects:

BONANZA PROJECT

On May 19, 2006, Klondike Star acquired a controlling interest in 269 mineral claims in the Klondike region of the Yukon, Canada. Known as the Bonanza Project, the property has been expanded through the re-assignment of additional Company properties in adjacent areas bringing it to 400 mineral claims and 65.6 km²/25.3 mi². It is located in the heart of the Klondike gold fields and proven gold producing ground, 10 km from Dawson City.

Since 1999, building on previous exploration efforts, the majority of the property has been explored by KSL Exploration (Yukon) Ltd, a wholly-owned subsidiary of Klondike Source Limited, and PacRim Resources Limited (formerly Barramundi Gold Ltd.) using advanced-exploration techniques, geological mapping and geochemical soil surveys.

KSL Exploration (Yukon) Limited considers the property to have a number of prospects on the basis of reasonably well-defined geochemical gold anomalies. In an independent geologist's report, KSL (Yukon) Limited reported that, "These surveys have identified several prospective targets with potential for hosting large tonnage, primary gold mineralization." (Roy Cox & Associates, November 10, 2003).

Although recently acquired, Klondike Star has initiated a preliminary exploration program including consolidation of mapping, sampling results, and all accessible assessment work on the property. Mineral claim staking was undertaken in the third quarter ended November 30, 2006 to supplement the property.

	1^st quarter-end May 31, 2007	Year-end February 28, 2007	Year-end February 28, 2006	Year-end February 28, 2005	Change from year-end 2007 to Q1-end May 31, 2007
Total claims	400	308	0	0	Claims re-assigned from Lone Star Project
Total area	65.6 km² or 25.3 mi²	47.0 km² or 18.1 mi²	0	⁰	Area of re-assigned claims
Ownership	100% of 308 claims and 55% and exclusive option to acquire up to 75% of 92 claims	100% registered	0	0	Ownership in claims re-assigned from Lone Star Project

INDIAN RIVER CONGLOMERATE PROJECT

The Indian River Quartz Project is an early-stage gold exploration property for the Company. The property is located 40 km (24.9 mi) from Dawson City in the heart of the Klondike gold-producing region of the Yukon and the Tintina Gold Belt spanning Alaska and the Yukon. Access to the region is by good gravel road.

Additional geological mapping, rock and soil sampling and geochemistry analysis, trenching and a magnetometer survey were completed from May to September 2005. Auger drilling provided bedrock samples between January and April 2005. This work built on extensive reconnaissance and geological mapping, bulk sampling, diamond drilling and core analysis, and geochemical surveys completed by previous exploration companies.

During 2006, additional baseline work was undertaken to consolidate and ground-truth previous exploration results, with the focus on two claim blocks. The first involved an eastern extension of 2005 soil and rock sampling done to determine the presence of gold anomalies on the property (Reka claim block). The second (RMB claim block) pursued 2005 rock chip assays with elevated PGM values, targeting platinum group minerals to identify any PGM, as well as Ni, Cu and Au targets.

Mineral claims with low probability of having exploration value were released in the final quarters of the year-ended February 28, 2007.

	1^st quarter-end May 31, 2007	Year-end February 28, 2007	Year-end February 28, 2006	Year-end February 28, 2005	Change from year-end 2007 to Q1-end May 31, 2007
Total claims	248	248 claims	205 claims	0	None
Total area	62.1 km² or 24.0 mi²	62.1 km² or 24.0 mi²	67.3 km² or 26 mi²	0	None
Drilling - no. of auger drill holes	No change	No change	49 holes (winter season January - April)	0	None
Surface trenching and sampling	No change	16 rock samples, 20 soil samples	8 trenches totaling 1128 m³(1,475 yd³), 12 test pits, 52 rock samples, 333 soil samples	0	None
Assay and other analysis	No change	Not available	36 rock samples, 333 soil samples	0	None
Ownership	Exclusive option for up to 75%	Exclusive option for up to 75%	Exclusive option for up to 75%	0	None

ELDORADO PLACER PROJECT

Located 20 km from Dawson City, Yukon, Canada, the Eldorado Placer Project is a placer gold project situated within the boundaries of the Lone Star Project. The placer mineral claims (surface) overlap some of Lone Star's quartz mineral claims (subsurface).

The property is in the heart of a longstanding gold-producing area. There are many placer mines operating in the general vicinity. The claims were originally assembled by Canadian mine-finder Richard Hughes and optioned to the Company in December 2003. The property has known placer gold potential. However, the Company has not itself conducted substantive exploration work to date. Over the last two years the right to conduct placer mining on the property has been optioned to an experienced Klondike placer miner and this arrangement was expected to continue.

Following an assessment in the second quarter ended August 31, 2006, the Company has terminated this arrangement and taken direct responsibility for the project. Currently, consideration is being given to entering into a joint venture with an experienced Yukon placer miner to develop the property in 2007.

	1^st quarter-end May 31, 2007	Year-end February 28, 2007	Year-end February 28, 2006	Year-end February 28, 2005	Change from year-end 2007 to Q1-end May 31, 2007
Total claims	115 claims	115 claims	115 claims	114 claims	None
Total area	6.9 km² or 2.7 mi²	6.9 km² or 2.7 mi²	6.9 km² or 2.7 mi²	6.5 km² estimated or 2.5 mi²	None
Ownership	55% and exclusive option to acquire up to 75%	55% and exclusive option to acquire up to 75%	55% and exclusive option to acquire up to 75%	55% and exclusive option to acquire up to 75%	None

Future financial condition

Since 2003, the Company has raised capital successfully by way of private placements. Through recent placements and warrants, the Company expects to have the resources necessary to expand its exploration program, acquire new properties and move ahead with mining feasibility planning and development. The Company has forged strong relationships with financial professionals in order to provide adequate capital investment for its projects with the goal of bringing new mining production on-stream in the future.

Capital resources

The Company has no material commitments for capital expenditures as of May 31, 2007. Pursuant to its 2008 business plan, resources are targeted to corporate development priorities. Private placement initiatives currently in progress are expected to raise additional funds in a timely manner.

The business plan for developing the Indian River Placer Mine currently being prepared by the Company includes material capital requirements for 2008. Commencing placer mining on the advanced-stage Indian River Placer Project would create a positive cash flow and change the status of the company to that of a producer.

Company policy is to expense mineral rights acquisitions and exploration activities to prove up resources and reserves as mineral exploration expenditures. Typically, the mineral exploration industry is cyclical, based upon the price of commodities and the demand for certain metals. The Company considers that it has entered this business at a time that is favorable within a long term commodity inflation cycle, and that it can sustain an enterprise in the field of mineral exploration and mining production.

Resource sector and gold market outlook

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

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

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

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

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

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

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

Current gold price forecasts by GFMS Ltd. and TD Economics suggest that prices will range between $US 643 and $US 675 to the end of calendar 2007. (Sources: GFMS Limited Gold Survey 2006 Update 2, January 18, 2007 cites $US 643 over period of January 1, 2007 to June 30, 2007; and, TD Economics Quarterly Commodity Price Report, February 5, 2007 cites $US 650 - 675 over period of April 1, 2007 to December 31, 2007). The market is pricing gold at US$681.20 in one year. (Source: Esignal as reported in the Globe & Mail)

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

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

Corporate governance matters

In the first quarter ended May 31, 2007, a Company whistleblower policy was adopted and action plans for the year-ended February 29, 2008, were developed and approved for implementation of the Health and Safety Policy and the Environment and Sustainable Development Policy.

Effective March 16, 2007, Klondike Star Mineral Corporation (the "Company") incorporated a wholly owned Canadian subsidiary company, Klondike Star Canada Inc., under the Canada Business Corporations Act. The new company has been established to support planned growth and development including new mineral exploration and development opportunities in Canada and globally.

ITEM 3. Quantitative and Qualitative Disclosures about Market Risk

The Company's functional currency is U.S. dollars. Monetary assets and liabilities of the Company's foreign operations are translated into U.S. dollars at the exchange rates as of the balance sheet date. Results of operations from monetary revenues and expenses are translated at the average exchange rates during the period, with non-monetary revenues and expenses translated at the exchange rate in effect at the time of acquisition of the underlying non-monetary asset or liability. Realized gains and losses from foreign currency transactions are reflected in the results of operations.

ITEM 4. Controls and Procedures

As of May 31, 2007 ("evaluation date"), Company management has reviewed the effectiveness of disclosure controls and procedures (as defined in Rule 13a-15(e) or 15d-15(e) promulgated under the Securities and Exchange Act of 1934, as amended). The Company has developed and implemented a number of policies and procedures to assist in the consistent application of internal controls. This includes the Board of Directors Charter, the Audit Committee charter, the Code of Business Ethics and Conduct, and the Authorization Policy. The Company has financial reporting procedures in place to assist in ensuring reliable and accurate information is provided to shareholders and potential investors and to ensure compliance with financial reporting regulatory oversight bodies. Based upon that review, Management has concluded that company disclosure controls and procedures are effective for timely gathering, analyzing and disclosing the information disclosed in reports filed under the Securities Exchange Act of 1934. There have been no significant changes made in our internal controls or in other factors that could significantly affect our internal controls, in a negative manner, subsequent to the evaluation date.

As of May 31, 2007, the Company also maintains a system of internal accounting controls that is designed to provide assurance that assets are safeguarded and that transactions are executed in accordance with management's authorization and properly recorded. This system is continually reviewed and is augmented by written policies and procedures, the careful selection and training of qualified personnel and an internal audit program to monitor its effectiveness. During the three-month period ended May 31, 2007, there were no significant changes to this system of internal controls or in other factors that could significantly affect those controls.

In anticipation of the requirement to complete and disclose Management's assessment regarding internal controls over financial reporting in the annual report for the year-ended February 28, 2008, the Audit Committee has approved a project charter including terms of reference, deliverables, timetable and establishment of a steering committee to review compliance with sections 302 and 404 of Sarbanes-Oxley Act of 2002 (SOX) and expedite necessary remediation, if any. The Company's objective is not merely to comply with these requirements, but to use them as a catalyst to examine financial, management and operational processes and programs through the organization. Management believes that executing a SOX compliance initiative that seeks to improve processes and programs throughout the Company will achieve a net benefit in terms of improved risk management, operational efficiency and effectiveness, and enhanced shareholder confidence.

PART II

OTHER INFORMATION

ITEM 1. Legal Proceedings

There are no material or pending legal proceedings to which the Registrant is a party or of which any of its property is subject.

ITEM 1A. Risk Factors

There are no material changes from the risk factors previously disclosed in the Form 10-K report for the year-ended February 28, 2007.

ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds

Sales of unregistered securities by period	Exemption from registration	Total common shares sold	Total warrants issued and outstanding convertible into common shares¹	Total cash value of shares sold ($USD)
Year ended February 29, 2004	Rule 506, Regulation D	1,040,000	0	2,600,000
Year ended February 28, 2005	Rule 506, Regulation D	1,090,000	0	2,725,000
Year ended February 28, 2006	Rule 506, Regulation D	3,423,000	1,300,000	8,029,068
Year ended February 28, 2007	Rule 506, Regulation D	3,752,982	3,032,982	9,090,299
1^st quarter ended May 31, 2007	Rule 506, Regulation D and Regulation S	0		0

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

ITEM 3. Defaults upon Senior Securities

None

ITEM 4. Submission of Matters to a Vote of Securities Holders

None

ITEM 5. Other Information

The following announcements, made by press release and distributed over various wire services, the Company website and shareholder and potential investor distribution, may have qualified for disclosure on a Form 8-K during the quarter ended May 31, 2007:

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

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

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

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

ITEM 6. Exhibits

Exhibits

31 Rule 13a-41(a)/15d-14(a) Certificates

32 Section 1350 Certifications

SIGNATURES

Pursuant to the requirements of the Securities and Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

KLONDIKE STAR MINERAL CORPORATION

By , President (Signature and Title)

Date July 13, 2007

, Vice President, Operations

By (Signature and Title)

Date July 13, 2007