10-Q

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 ACT OF 1934

For the quarterly period ended May 31, 2008

Commission File Number 000-30965

KLONDIKE STAR MINERAL CORPORATION

(Exact name of registrant as specified in its charter)

Delaware	91-198708
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

Box 20116, 1031 – Ten Mile Road

Whitehorse, Yukon, Canada Y1A 7A2

(Address of principal executive offices) (Zip Code)

Registrant’s telephone number including area code:

(800) 579-7580

Securities registered pursuant to Section 12(b) of the Act:

None

Securities registered under Section 12(g) of the Exchange Act:

Common Stock, Par Value $0.0001 Per Share

(Title of Class)

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.  [X] Yes  [  ] No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer or a smaller reporting company in Rule 12b-2 of the Exchange Act.   

Large accelerated filer [  ]

Accelerated filer [  ]

Non-accelerated filer [  ]

Smaller reporting company [X]

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

As of May 31, 2008, there were 44,083,486 shares outstanding of the registrant’s common stock.

TABLE OF CONTENTS

Page No.

PART I – FINANCIAL INFORMATION

Item 1.

Financial Statements

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

Item 4T.

Controls and Procedures

PART II – OTHER INFORMATION

Item 1.

Legal Proceedings

Item 1A.

Risk Factors

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

Item 3.

Defaults Upon Senior Securities.

Item 4.

Submission of Matters to a Vote of Security Holders

Item 5.

Other Information

Item 6.

Exhibits.

SIGNATURES

PART I – FINANCIAL INFORMATION

Item 1.

Financial Statements

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

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

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

KLONDIKE STAR MINERAL CORPORATION

(An Exploration Stage Company)

Condensed Notes to the Consolidated Financial Statements

May 31, 2008

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 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. As of May 31, 2008, Klondike Star Canada had limited exploration operation in the Arab Republic of Egypt.

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 29, 2008. 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, 2008 are not necessarily indicative of the re sults that may be expected for the year ending February 28, 2009.

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.

Cash and Cash Equivalents

The Company considers all highly liquid investments with an original maturity of three months or less to be cash equivalents.

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 ($100,820 US dollars at May 31, 2008). At February 29, 2008, the Company did not exceed the FDIC insured. At May 31, 2008, the Company exceeds the CIDC insured amount.

Foreign Operations

The accompanying balance sheet contains certain recorded Company assets (principally cash and property and equipment) in a foreign country (Canada). The Company also holds mineral properties situated in the Yukon Territory of Canada which were expensed as an exploration cost when acquired. Although Canada is considered economically stable, it is always possible that unanticipated events in foreign countries could disrupt the Company’s operations.

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, 2008, the exploration costs and mineral rights expensed during the Company’s exploration stage have been approximately $45,979,000. 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.

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 $963,000 for the three months ended May 31, 2008 and has an accumulated deficit of approximately $59,272,000 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 $3,000,000 for fiscal year ending in 2009. The Company has approximately $267,000 in cash at May 31, 2008.

NOTE 3 – PROPERTY AND EQUIPMENT

Property and equipment 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, 2008			Net Book Value February 29, 2008
	Cost	Accumulated Depreciation	Net  Book Value	Net  Book Value February 29 ,  2008
Depreciable Property and Equipment:
Leasehold improvements, furniture & fixtures	$        1,068,891	$ 445,356	$ 623,536	$ 675,898
Computer hardware & software	68,706	63,404	5,302	10,912
Vehicles	470,195	405,900	64,294	104,324
Equipment	606,403	285,280	321,123	351,588
Movable Structures	1,070,444	553,788	516,656	570,183
Pack horse	-	-	-	-
Total Depreciable Assets	3,284,639	1,753,728	1,530,911	1,712,905
Non Depreciable Property and
Equipment:
Gold samples	105,573	-	105,573	105,573
Total Property and Equipment	$ 3,390,212	$1,753,728	$ 1,636,484	$ 1,818,478

Total depreciation expense for the three months ending May 31, 2008 and 2007 was $173,494, $177,416 respectively.

NOTE 3 – 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 $62,202 and $65,505 at May 31, 2008 and February 29, 2008 respectively. During the three months ending May 31, 2008, the Company included in mineral exploration expense $0 and $308,000 for the year ended February 29, 2008 in transactions with a company controlled by an officer and director of the Company. The transactions were recorded at fair market value.

NOTE 6 – 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.

SERIES A PREFERRED STOCK

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 STOCKS

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.

SERIES C PREFERRED STOCK

Effective February 25, 2008, the Company created a new series of Series C Preferred Stock initially consisting of 2,000,000 shares. The holders of Series C Preferred Stock are not entitled to dividends nor any assets in distribution upon the liquidation, dissolution or winding up of the Corporation, and are non-convertible. The holder of each share of Series C Preferred is entitled to cast such number of votes as is equal to seventy-five shares of common stock of the Corporation on the following matters:

(a)

The merger, consolidation or other combination of the Corporation with any other corporation or other business entity which shall not result in the Corporation being the surviving corporation;

(b)

The sale, or other transfer, of all, or substantially all, of the assets of the corporation;

(c)

A shareholder rights plan;

(d)

  A tender offer or any other bid to acquire a controlling interest in the issued and outstanding common stock of the Corporation; or

(e)

 Any other transaction or series of transactions which will, or are intended to, directly or indirectly, to result in the effective change of control of the Corporation.

(f)

The holders of Series C Preferred Stock are required to cast the votes represented either “for” or “against” the matter submitted to a vote, in the same manner as the Board of the Corporation.

At May 31 2008 and February 29, 2008  the Company had 2,000,000 shares of Series A preferred convertible stock issued and outstanding.

NOTE 7 – 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, 2008, February 29, 2008 and February 28, 2007, the Company had 44,083,486, 42,833,486 and 29,035,782 shares of common stock issued and outstanding, respectively.

During the three months ended May 31, 2008, the Company sold through private placements 1,250,000 common shares at $.20 per share for total net cash proceeds of $225,000.

During the year ended February 29, 2008, the Company issued a private placement memorandum dated December 9, 2007 to issue 5,000,000 common shares at $0.10 per share for estimated net cash proceeds of $500,000. During the year ended February 29, 2008, the Company issued a private placement memorandum dated December 17, 2007 to issue 2,500,000 common shares at $0.10 per share for estimated net cash proceeds of $250,000. The Company sold 7,500,000 common shares for cash proceeds of $750,000.

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 total estimated cash proceeds of $1,500,000 with the offering expiring on or before July 16, 2007. As of May 31, 2008, the Company sold 3,600,000 common shares under this private placement memorandum for total net cash proceeds of $1,770,000.

During the year ended February 29, 2008, 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 total estimated cash proceeds of $1,000,000 with the offering expiring on or before September 30, 2007. As of May 31, 2008, the Company sold 2,000,000 common shares against this private placement memorandum for total net cash proceeds of $1,000,000.

During the year ended February 29, 2008, the Company approved a private placement memorandum for the issuance of up to 3,000,000 units of one common stock of the Company and one warrant to purchase one common stock of the Company at $1.50 per share; with the unit price being equal to the 5 day volume average price preceding the date of purchase less $0.10. As of May 31, 2008, the Company sold 210,989 units under this private placement memorandum.

During the year ended February 29, 2008, 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. The Company did not issue shares under this private placement memorandum.

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.

During the year ended February 29, 2008, the Company executed a private placement memorandum to issue up to 3,000,000 units each consisting of one share of common stock and one warrant of up to $1.50 per share; with the unit price being equal to the 5 day volume average price preceding the date of purchase less $0.10 with one warrant attached to each share to purchase an additional share at a minimum conversion price of $1.50. 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 29, 2008; risk-free interest rate of 4.75%; volatility of 54.33%; life of one year; no dividends.

	Number of Warrants	Weighted Average Remaining Life	Average Exercise Price
Outstanding and exercisable, February 28, 2007	3,032,982	0.00 years	$ 3.50
Issued	210,989	0.70 years	1.50
Exercised	-		-
Rescinded or expired	(3,032,982)		3.50
Outstanding and exercisable, February 29, 2008	210,989	0.70 years	$ 1.50

Issued	-
Exercised	-		-
Rescinded or expired	-		-
Outstanding and exercisable, May 31, 2008	210,989	0.45 years	$ 1.50

NOTE 8 – 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

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

Klondike Star Mineral Corporation (“Klondike Star” or the “Company”) (OTCBB – “KDSM”) is a mineral exploration and development company with a portfolio of gold and base metal projects in Canada and Egypt.  The Company currently has five active gold projects totaling about 278 km2 or 107.4 mi2 in the Yukon, located in the northwest corner of Canada underlying the site of the world-renowned Klondike gold producing region; and, in which the Company has a 100% or majority ownership or an exclusive option to explore, earn or purchase up to a 75% or 100% ownership interest.  In the Arab Republic of Egypt, Klondike Star through its wholly owned subsidiary, Klondike Star Canada Inc. was awarded rights to explore and exploit the 1,245 km² or 481 mi² Oweinat Concession in the Western Desert region. Two projects, the Lone Star and Indian River are in the advanced exploration stage and are the prima ry focus of Klondike Star’s exploration programs.  

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.  

Mineral rights:

Mineral Rights Indicators	Quarter-end    May 31, 2008	Year-end February 29, 2008	Year-end February 28, 2007	Year-end February 28, 2006	Year-end February 28, 2005
Exploration projects	No change	6	8	6	2
Quartz mining claims	1,418	1,448	2,396	1921	1753
Total area of quartz claims and crown grants	250 km2/96.5 mi2	262 km2/101.5 mi2	418.3 km2/161.5 mi2	352 km2/135.9 mi2	239 km2 (estimate)/92.3 mi2
Placer mining claims	338 plus 2 leases	338 plus 3 leases	329 plus 43 miles of leases	300 plus 43 miles of leases	114 plus 60 miles of leases
Total area of placer claims and leases	No change	28 km2/10.9 mi2	43.9 km2/17 mi2	42 km2/16.2 mi2	21 km2 (estimate)/8.1 km2
Total area of exploration and exploitation concessions	No change	1,245 km2/481 mi2	0	0	0

Results of Operations

Operational highlights include:

- Substantial completion of the Lone Star Gold Project scoping study with the report expected to be issued early in the second quarter;

- Determination of a probable mineral reserve and substantial completion of the Indian River Gold Project business plan;

- Obtaining the Yukon placer mining land use permit and water use license for developing and operating the proposed Indian River Gold Project;

- Undertaking the first field exploration expedition to the Oweinat property in the Arab Republic Egypt through the wholly owned subsidiary, Klondike Star Canada Inc.;

- Completing the first management assessment of internal controls required for implementation of the Sarbanes-Oxley Act of 2002 for smaller public companies and the first audit of the Company by a new independent Auditor.

Operational Indicators	Quarter-end          May 31, 2008	Year-end February 29, 2008	Year-end February 28, 2007	Year-end February 28, 2006
Health and safety incidents	0	5 with 2 involving lost work time.	6 with 1 involving lost work time, 2 with no injury or lost time, 3 vehicle incidents with no injuries or lost time.	2 vehicle accidents, no injuries or lost time
Environmental incidents	0	0	0	0

Financial condition

Financial highlights include:

- The loss from continuing operations for the quarter ending May 31, 2008, was $962,733 (net loss of $0.03 per common share) compared to the quarter ending May 31, 2007 with $1,701,472 loss from continuing operations and $0.06 net loss per common share).

- Cash used in operating activities for the three months ended May 31, 2008 was approximately $900,660 compared with approximately $1,705,031 for the three months ended May 31, 2007;

- During the quarter ended May 31, 2008, the Company issued restricted common stock for cash, with cash proceeds of $225,000 net of commissions and related expenses, which was used to finance current operations;

- The position in cash and cash equivalents for the quarter ending May 31, 2008 was $267,060 compared to $552,554 for the quarter ending May 31, 2007.

Selected financial data:

	Quarter-end to May 31, 2008	Year-end to February 29, 2008	Year-end to February 28, 2007
Total expenses	$ 978,312	$8,242,617	$ 9,967,672
Operating revenue	0	0	0
Net loss from continuing operations	(962,733)	($6,789,591 )	($10,043,789)
Cash raised by financing activities	$225,000	$4,411,525	$ 9,090,299
Cash used in operating activities	$922,969	$5,563,717	$ 8,621,116
Cash and cash equivalents on hand	$267,060	$937,434	$ 2,390,876

Net loss per common share: Basic and Diluted	$ (0.03)	$ (0.20)	$ (0.38)
Weighted average number of common shares outstanding: Basic and diluted	35,350,933	33,432,505	26,512,538
Cash dividends declared per common share	0	0	0
Property, plant and equipment, net	$1,636,484	$1,818,478	$ 2,227,683
Long-term debt	0	0	0
Shareholders’ equity	$1,080,343	$1,818,075	$ 4,271,141

Investor relations data:

Investor Relations Indicators	Quarter-end       May 31, 2008	Year-end February 29, 2008	Year-end February 28, 2007
Common shares issued and outstanding	44,083,486	42,833,486	29,035,782
Restricted shares	21,534,516	22,084,516	9,943,734
Free trading shares	22,548,970	20,748,970	19,092,048
Warrants outstanding and exercisable	210,989	210,989	3,032,982
Preferred shares issued and outstanding	Series A Convertible: 2,000,000	Series A Convertible: 2,000,000	Series A Convertible: 2,000,000
Common share price range by high/low	$0.75/ $0.37	$1.75/ $0.35	$3.98/ $1.50
Common share volume monthly high/low	638,751/ 285,938	1,152,165/ 356,598	4,223,025/ 897,158
Shareholders	Approximately 3,870	Approximately 3,280	Approximately 4,675
Material event press releases,  8-K reports, special information products	10	31	39
Total share options issued and unexercised	1,580,000	1,580,000	1,580,000

Share price/volume profile to quarter-end May 31, 2008:

Share trading volumes by quarter to quarter-end May 31, 2008:

Quarter	High Monthly Volume	Low Monthly Volume
Q1, 2005 March - May	701,231	103,697
Q2, June - August	381,452	92,502
Q3, September - November	1,528,916	333,422
Q4, December – 2006 February	2,359,551	1,885,902
Q1, 2006 March - May	4,223,025	594,549
Q2, June - August	3,059,070	1,103,816
Q3, September - November	1,835,969	1,292,985
Q4, December – 2007 February	1,839,652	897,158
Q1, 2007 March - May	1,152,165	460,069
Q2, June - August	1,009,940	324,640
Q3, September - November	775,133	268,176
Q4, December – 2008 February	1,116,905	306,936
Q1, 2008 March - May	638,751	285,938

Share price by quarter to year-end May 31, 2008:

Quarter	High Quarterly Price	Low Quarterly Price
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
Q2, June - August	1.44	0.90
Q3, September - November	1.20	1.00
Q4, December – 2008 February	1.05	0.35
Q1, 2008 March - May	0.75	0.37

During the quarter-ended May 31, 2008, there have been no material changes in liquidity, capital resources, results of operations or off-balance sheet arrangements from the year-end 10-K filing to February 29, 2008.

Gold Price Outlook

Global mineral exploration spending reached a new high-water mark in 2007 for the fifth straight year in a row. In a special report prepared for the Prospectors and Developers International Convention (PDAC) in March 2008, the Metals Economics Group advised that worldwide mineral exploration spending (excluding ferrous metal and uranium) reached $10.5 billion in 2008. The Metals Economics Group expects that exploration spending will continue to be driven upward in 2008, the combined result of a well-funded junior sector and the current reserves-replacement requirements of major and intermediate companies. (Source: Metals Economics Group, World Exploration Trends: A Special Report from the Metals Economics Group for the PDAC International Convention 2008, March 2008.)

So far in 2008 (to April 25, 2008), daily gold prices have remained $150 above the 2007 annual average price of $695. Gold prices broke through the $1,000 barrier on March 17, 2008, reaching $1,011 on that day. The lowest daily gold price recorded so far in 2008 ($847), was recorded on the first day of 2008 trading (January 2, 2008). (Source: World Gold Council, London PM Fix).

Gold Price, June, 2003 to May, 2008:

In terms of future prices for gold, the London Bullion Market Association, on the basis of a consensus survey of 24 precious metals analysts, expects the price of gold to average $862 in 2008. (Source: London Bullion Market Association, Forecast 2008, 2008). TD Economics expects that gold prices will average $988.75 in 2008. (Source: TD Economics Quarterly Commodity Price Report, March 18, 2008).

In terms of historical gold prices, the three-year moving average price of gold at February 28, 2008 was $609. (Source: World Gold Council, London PM Fix over period of March 1, 2005 to February 29, 2008). The three-year moving average for the price of gold to the end of March 2008 was $624. (Source: World Gold Council, London PM Fix over period of April 1, 2005 to March 31, 2008).

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 4T.

Controls and Procedures

The financial statements, financial analyses and all other information included in this quarterly report on Form 10-Q were prepared by the Company's management, which is responsible for establishing and maintaining adequate internal control over financial reporting.

The Company's internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.  The Company's internal control over financial reporting includes those policies and procedures that:

·

pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company;

·

provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company; and

·

provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition and use or disposition of the Company's assets that could have a material effect on the Company's financial statements.

There are inherent limitations in the effectiveness of any internal control, including the possibility of human error and the circumvention or overriding of controls.  Accordingly, even effective internal controls can provide only reasonable assurances with respect to financial statement preparation.  Furthermore, due to changes in conditions, the effectiveness of internal controls may vary over time.

During the quarter ended May 31, 2008, the Company terminated an arrangement for third party accounting services performed on a contractual basis effective on the commencement of the new fiscal year, March 1, 2008 – February 28, 2009. The Company’s management is now fully in charge of the general ledger (including the preparation of routine and non-routine journal entries and journal entries involving accounting estimates), the preparation of accounting reconciliations, and the preparation of interim and annual financial statements including note disclosures in accordance with generally accepted accounting principles. The Company also undertook a series of measures to improve internal controls, accounting and financial reporting, including for example, revisions to the chart of accounts, bank signing authority and retaining additional in-house professional and accounting resources.  

PART II – OTHER INFORMATION

Item 1.

Legal Proceedings

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

Item 1A.

Risk Factors

There are no material changes in risk factors from those identified in the 10-K to February 29, 2008.

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

There are approximately 3,870holders of the common stock of the Company.

During the quarter ending May 31, 2008 covered by this report, the Company has sold or issued 1,250,000 shares of common stock for a total cash of $250,000. The sales of stock were made pursuant to Rule 506 of Regulation D and/or Regulation S of the Securities Act of 1933 (“Securities Act”). 

Sales of unregistered securities by period	Exemption from registration	Total common shares sold	Total warrants issued and outstanding convertible into common shares	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
Year ended February 29, 2008	Rule 506, Regulation D	486,715	210,989	488,650
	Regulation S	13,310,989	0	3,762,000
Quarter ended May 31, 2008	Regulation D	1,250,000	0	250,000

The Company has never paid any dividends, cash or otherwise, on the common shares of the Company. As long as it is an exploration-stage company, there is no plan to pay dividends for the foreseeable future.

Item 3.

Defaults Upon Senior Securities

None.

Item 4.

Submission of Matters to a Vote of Security Holders

During the quarter ended May 31, 2008, no matters were submitted to a vote of security holders.

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, 2008:

- Klondike Star Clears Final Regulatory Step on Indian River Gold Project, April 29, 2008

- Klondike Star Completes First Exploration Mission, April 17, 2008

- Egypt is a Strategic Investment for Klondike Star, April 15, 2008

- Unprecedented Gold Prospects on Klondike Star’s Oweinat Property, April 10, 2008

- Klondike Star Begins Exploration in Egypt, April 8, 2008

- Klondike Star Pursuing TSX-V Listing, March 26, 2008.

On May 16, 2008, 1,250,000 common shares were sold to Mr. Rene Hussey for $0.20 per share pursuant to a Rule 506, Regulation D private placement memorandum.

Item 6.

Exhibits

The following documents are filed as part of this report:

Exhibit

Number	Description of Exhibit	Location
3.1	Articles of Incorporation	Previously filed on Form 10-SB 7/7/00
3.2	Amendment to Articles of Incorporation	Previously filed on Form 8-K 2/2/06
3.2	Bylaws	Previously filed on Form 10-SB 7/7/00
3.3	Amendment to Bylaws No. 1	Previously filed on Form 8-K 2/2/06
3.4	Amendment to Bylaws No. 2	Previously filed on Form 8-K 2/2/06
4.1	Certificate of Designation – Series A Convertible Preferred Stock	Previously Filed on Form 8-K 2/28/07
4.2	Acceptance of Designation	Previously Filed on Form 8-K 2/28/07
4.3	Certificate of Designation – Series C Convertible Preferred Stock	Previously Filed on Form 8-K 3/18/08
10.1	Employment Agreement with Hans Boge, P.Eng.	Previously Filed on Form 8-K 11/7/06
10.2	Employment Agreement with Donald W. Flinn, P.Eng.	Previously Filed on Form 8-K 11/7/06
14.1	Code of Business Conduct and Ethics	Previously filed on Form 8-K 12/5/05
16.1	Change in Certifying Accountant	Previously Filed on Form 8-K 10/10/07
21.1	Subsidiary of the Company	Previously Filed on Form 8-K 3/30/07
22.1	Report on Matters Submitted to Vote of Security Holders	Previously Filed on Form 8-K 12/20/07
31.1	Certification of Chief Executive Officer Pursuant to Securities and Exchange Act Rules 13a-14(a) and 15d-14(a)	Included
32.1	Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002	Included
32.1	Certifications for Section 1350	Included

SIGNATURES

Pursuant to the requirements of the Securities 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

Hans Boge, P.Eng., President

Date:  July 21, 2008

By

Donald W. Flinn, P.Eng., Chief Operating Officer

Date:  July 21, 2008

By

Donald F. Willems, CGA, Chief Financial Officer

Date:  July 21, 2008

EX-31

CERTIFICATIONS

I, Hans Boge, certify that:

1.

As of May 31, 2008, I have reviewed this quarterly report of Klondike Star Mineral Corporation;

2.

Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.

Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.

The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f) for the registrant and have:

a.

Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which the report is being prepared;

b.

Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c.

Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d.

Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.

The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a.

All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b.

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. 

Date:   July 21, 2008	Signed:
	Name:	Hans Boge
	Title:	Chief Executive Officer

CERTIFICATIONS

I, Donald F. Willems, certify that:

1.

As of May 31. 2008, I have reviewed this quarterly report of Klondike Star Mineral Corporation;

2.

Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.

Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.

The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f) for the registrant and have:

a.

Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which the report is being prepared;

b.

Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

a.

Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

b.

Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

1.

The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a.

All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b.

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. 

Date:   July 21, 2008	Signed:
	Name:	Donald F. Willems
	Title:	Chief Financial Office

EX-32

CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

I, Hans Boge the Chief Financial Officer of Klondike Star Mineral Corporation, Inc. (the "Company") in compliance with 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, hereby certify that, the Company's Quarterly Report on Form 10-Q for the period ended May 31, 2008, fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: July 21, 2008_	Signed:
	Name:	Hans Boge
	Title:	Chief Executive Officer and principal
		financial officer

CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

I, Donald F. Willems, the Chief Financial Officer of Klondike Star Mineral Corporation, Inc. (the "Company") in compliance with 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, hereby certify that, the Company's Quarterly Report on Form 10-Q for the period ended May 31, 2008, fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: July 21, 2008_	Signed:
	Name:	Donald F. Willems
	Title:	Chief Financial Officer