Klondike Star Mineral Corporation - Investor Relations

Frequently Asked Questions

Our answers are intentionally short, with a few exceptions. If you are seeking something more, do not hesitate to contact Klondike Star through information@klondikestar.com.

FORWARDING LOOKING STATEMENTS

The statements in Frequently Asked Questions that relate to the company's expectations with regard to the future impact on the company's results from new products or actions in exploration or development are forward-looking statements, within the meaning of the Private Securities Litigation Reform Act of 1995. The statements in this document may also contain "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Since this information may contain statements that involve risk and uncertainties and are subject to change at any time, the company's actual results may differ materially from expected results.

KLONDIKE STAR’S MISSION

What is the Company’s goal?

While the Company’s goals are at a strategic level, the practical mission is to find mineral deposits of a world class nature, and thereafter to develop those deposits into full scale mining operations. In so doing, Klondike Star is committed to a sustainable development approach through which everyone benefits.

Is Klondike Star just a gold company, or is there something more to it?

Klondike Star is a mineral exploration and development company. Meaning we search for any viable mineral deposits that are of world class size. Currently, in the portfolio of exploration properties, mineral prospects range from gold to silver to zinc to copper and to precious meals (such as palladium, platinum), although quartz and placer gold is one primary focus to date.

MINING IN THE YUKON, CANADA AND GLOBAL OPPORTUNITIES

Is the Yukon, Canada a good place for mineral exploration and development?

Yes. The Yukon has a positive climate for investment and development. The current government was recently re-elected for the next 5 years. Canadian and international mining executives rank the Yukon in the top third of Canadian jurisdictions in which to do business according to third-party assessments (The Fraser Institute). With a long history in mining, the Yukon’s private sector and labor force are geared to serving the mining exploration industry.

Land claim agreements recognize the aboriginal rights, titles and interests of Yukon First Nations to their traditional lands and resources. The settlement of Yukon First Nation land claims is the most advanced in Canada. The First Nations land claim in the region around the Lone Star property have been settled and completed.

The Department of Energy, Mines and Resources provides support for the mining industry, including a constructive regulatory framework, transportation and energy infrastructure, various mining incentive programs and modern geo-science research and mapping.

Has Klondike Star considered projects outside of Canada?

As a mineral exploration and development company, Klondike Star is continuously looking to add value for shareholders. That includes looking at properties outside of Canada.

KLONDIKE STAR’S BUSINESS FUNDAMENTALS AND SHARE PRICE

How do I know that Klondike Star is performing well and getting results?

Please refer to the Q3 Report for the period ending November 30, 2006 for nine-month and three year progress indicators, the current annual report, quarterly reporting (particularly Management’s Discussion and Analysis) found on the Klondike Star website or Klondike Star’s filings with the SEC on EDGAR, particularly the recent 8-K filing which is a disclosure statement by the company regarding progress-to-date on the exploration of the Lone Star zone

Mineral exploration companies are capital intensive. The fundamental strength of mineral companies is measured by the quality of the properties and projects, the operational capability of the company, and achievements in mineral exploration results. The share price of Klondike Star will reflect investor interest and momentum in the market. Volatility and range of share price is normal among junior exploration companies engaged in the process of determining economic viability of projects.

Why did Klondike Star’s common share price decline in November/December 2006?

Like other publicly traded companies, Klondike Star is subject to changing market conditions. In the period commencing April 2006 the share price of junior exploration companies, in general, entered a period of volatility due to volatility in the gold market. It is vital to note that as a company Klondike Star has not faltered from our course. There were no business reasons to explain the period of share volatility in late 2006. The number of our shareholders has grown significantly year-over-year. As far as management can determine shareholders are, by and large, remaining invested in the company. Of course, changes in share price represent opportunities for buyers and sellers.

If I buy shares will I be able to sell them?

The record shows that there is a stable and sustained market for Klondike Star’s shares. The technical term is ‘liquidity’. The company has reasons to believe market liquidity will continue given the on-going exploration programs that the company has underway.

Why does Klondike Star Mineral Corporation have no revenue?

As an exploration-stage company currently, Klondike Star’s job is to invest money in the exploration and ‘proving-up’ of mineral properties with the future prospect of putting a mine into production. The objective is to search for world-class deposits; therefore, until we have a producing mine we will have exploration expenditures. In many jurisdictions around the world, including Canada, those expenditures can be applied against future revenues to offset taxes, thereby creating the possibility of company profits and potential shareholder dividends.

How many people work for Klondike Star?

Klondike Star has seasonal operations in the summer/fall and fall/winter. Our workforce including contractors at times ranges between 80 and 120 people. Year-round corporate leadership, geology and administration employees number about 15 people.

Where can I get more information about Klondike Star?

There are numerous ways to receive information about Klondike Star. The simplest way is to contact our in- house Investor Relations Advisor at 1-800-579-7580. To review published material, you can go to the website for complete information including annual reports, SEC filings, press releases, quarterly reports, videos, and general information on the properties. You can review all regulatory filings made with the SEC on EDGAR. Go to www.klondikestar.com and under Investor Relations to Reports and SEC filings, or, go to www.sec.gov under “filings and Forms (EDGAR),” click on “Search for Company Filings,” then on “Company & Other Filers.” Enter “KDSM” in the CIK box and locate 10-QSB or 10-KSB filings.

Finally, your broker can arrange for a complete package to be sent to you. Publicly accessible websites such as Yahoo, MSN, SEC or OTCBB, can also be viewed for information.

KLONDIKE GOLD, GEOLOGY AND INTERNATIONAL GOLD MARKETS

Why, after 110 years, has the source of the surface gold not been discovered?

The majority of the prime Klondike quartz properties has been privately owned and closely held in small blocks of claims since 1897, limiting the regional search. Starting in 1986, Richard Hughes, with his proven track record as a Canadian mine finder, was able to consolidate a large group of about 500 claims and explored several shear zones for gold prospects. Other companies have made tentative forays into the Klondike, most for short periods of time and with prescriptive exploration models. Klondike Star is the first company to conduct a modern, systematic and comprehensive exploration effort. This work has been supported by research from the University of British Columbia’s Mineral Deposit Research Unit.

Is there still a lot of gold in the Klondike to be mined?

The Klondike region has annually produced thousands of ounces of placer gold. As the price of gold continues to strengthen, so does the interest in the region, and placer gold mining operations are increasing. The objective of Klondike Star has been to find the source, or sources, of this extensive goldfield, which, in total, has produced millions of ounces of gold.

REASONS AND WAYS TO INVEST

Why should I consider investing in Klondike Star?

Consider the common parameters: management, properties, track record, and strategic approach. In our view, Klondike Star excels in all these elements. Through its results, Klondike Star is setting itself apart from others. The recorded historical production of the Klondike from surface deposits is in excess of 13,000,000 million ounces of gold. Klondike Star is seeking the source of these surface deposits, which have the potential for world-class mineral deposits. Results to date indicate strong potential for oregenic lode deposits that have potential for open pit mining methods. The approach of Klondike Star is to locate low-grade, large tonnage deposits and evaluate the economic potential of such mineralized zones.

Why should I invest now instead of waiting for production?

The best opportunity for maximum return is to have your money invested prior to any production of a mine. For most mines once that production starts the shares will reflect revenue and will have increased in value significantly.

Where are the shares of Klondike Star traded?

Klondike Star is a Delaware corporation founded in 1999. The company trades on the NASD:OTC-BB market and has remained there to date. As the company grows, Management is considering the shareholder and corporate benefit of listing or co-listing on other markets or exchanges. Regardless of the marketplace rules, Klondike Star adheres to a high standard of corporate governance that in our view meets or exceeds regulatory requirements and best practices. Please refer to the company website for information of governance practices and policies.

How do I buy shares?

You can purchase shares through an established network of appropriately qualified and registered brokers that include, but are not limited to, banks, brokerage houses, e-trading, and other investment firms.

QUARTZ VERSUS PLACER MINING

What is the difference between a quartz mine and a placer mine?

The basic difference is that a placer mine extracts gold from surface gravels usually using gravity separation while a quartz mine processes the ‘bed-rock’ by crushing the ore and applying special processing methods. There are also material differences relating to capital and operating costs as well as the timelines for permitting and development. Placer mines are common and well understood in the Yukon. They can be permitted and brought into production within short timeframes in the order of 6 to 12 months. They do not require larger amounts of capital to bring into production. Quartz mines, on the other hand, require a more complex and lengthy process, and a substantially larger investment in mine development and operation.

What is the difference between quartz exploration and placer exploration?

The most distinctive difference is what type of drill is used. A placer operation uses an auger mounted on a Nodwell to dig into the sand and gravel and a short distance into bedrock. The depth is typically under 20 meters (66 feet). Analysis of auger drilling materials can be supplemented by bulk sampling to test for resource consistency.

For quartz exploration a broad suite of methodologies is employed including soil geo-chemistry, trenching, chip and rock sampling, ground and/or airborne geo-physical surveys, and diamond or other drilling technologies depending on the site, regional and structural analysis. For diamond drilling, a core is removed and what is recovered is a solid sample of the rock. It requires the sample to be sent out for analysis by an independent certified laboratory. This drilling typically penetrates hundreds of meters into the bedrock.

What is placer gold?

Placer gold is eroded from hard rock gold sources. It is then carried downstream by streams and rivers. These pieces of gold are found in the form of nuggets, flakes or grains. When the currents in the streams or rivers slow down, they eventually are no longer strong enough to suspend the gold - which is heavy - in their waters. When this happens, the gold is deposited at the bottoms of stream and river valleys.

Over thousands of years, these streams and rivers change course, and the valleys fill with sediments, including placer gold deposits. The heavy placer gold migrates downward through the sediments. They are typically concentrated near the bottom of the gravel layers, just above solid bedrock. Often, the gold is covered by 50 feet or more of sediment. Yukon placer gold deposits are typically found in creek and river valley bottoms, but they have also been found on some hillsides along the edges of valleys. These hillside deposits are known as "benches."

How does placer mining work?

Placer mining means extracting valuable minerals from surface gravel deposits. It differs from hard-rock or quartz mining (which refers to underground mining below the level of solid bedrock). Yukon placer mining does not use or release chemicals. It creates no toxic by-products. Instead, it uses water, motion and gravity to extract the minerals. No drilling, blasting or crushing are required. A very common method is, of course, ‘panning for gold’.

How do placer miners recover placer gold?

Placer gold is recovered when the gravels are sluiced or washed in flowing water in a sluice box or wash plant. The heaviest particles, including gold, settle to the bottom. Many placer deposits are covered by frozen layers of sediments. Water is used to thaw these frozen materials, and at the same time, to wash the gold loose. The water carries the gold, sand and gravel in a slurry to the sluice box.

Early prospectors and turn-of-the-19th-century gold miners used picks, shovels and hand tools to dig down through frozen soil and gravel layers, often working as deep as a hundred feet underground in narrow shafts and tunnels. Modern miners use heavy equipment like bulldozers and excavators to move the layers of soil and gravel out of the way, in order to uncover the gold-bearing gravels. Sometimes water courses may need to be diverted while mining takes place, to allow the miner to get at the ‘pay dirt’ underneath.

The sluicing process washes away many other fine materials from the gold particles, resulting in high concentrations of sediment left suspended in the sluicing water. This water runs into settling ponds, where the sediments slowly sink or settle to the bottom. After enough sediment has settled to meet regulatory standards, the water can be discharged back into the stream. Some mines recycle the water, using it over and over again for sluicing.

What happens inside the sluice box?

A typical sluice box has one or more metal troughs, or runs, with cross bars on the bottom, called riffles. As the water passes over these riffles, little whirlpools are created behind each riffle, and the heavier gold particles fall to the bottom. Lighter particles are washed over the top of the riffles and out the end of the sluice box. A layer of mats under the riffles provides spaces where the gold particles become trapped.

EXPLORATION PLANS, ACTIVITY AND RESULTS

What mineralized material (U.S. terminology) or mineral resources and reserves (Canadian terminology) has Klondike Star found on its properties?

The Lone Star quartz gold properties are an expansive mineral rights holding of 1056 quartz claims and crown grants totaling 152 km2/58.7 mi2. The primary focus on Klondike Star’s exploration efforts have been centered on the Lone Star Zone, the site of a former producing mine (circa 1912-14). It is one of five major zones that are exploration targets, including the recently discovered JF Zone, which was announced February 8, 2007.

According to preliminary technical analysis and engineering and planning assumptions that are being refined through a scoping study, the Lone Star mine appears to have the potential to be developed as a low-medium grade, bulk tonnage open pit hard-rock gold mine with no underground operations.

Due to SEC requirements concerning the reporting of assessments of mineralized material, the Company has reporting constraints. These legal constraints are different than those associated with the corresponding standards relating to mineral resources in Canada. For a detailed understanding of the SEC framework for reporting that governs what a publicly traded, U.S. mineral exploration and development company can disclose, please refer to “Recommendations Concerning Estimation and Reporting of Mineral Resources and Mineral Reserves,” April 2005 as submitted to the SEC by the SEC Reserves Working/SME Resources and Reserves Committee of The Society for Mining, Metallurgy, and Exploration, Inc.

Based on the information available, including the results from Company exploration activities since December 2003, the Company is of the opinion that approximately 20% of the required volume of mineralized material has been delineated with reasonable confidence in the exploration results. This conceptual projection is subject to updating based on final evaluation of the 2006 diamond drilling and other exploration results described on the report filed with Yukon mining authorities in March 2007. Exploration results have been derived from a combination of soil geochemistry, airborne and ground geophysical surveys, trenching, bulk sampling, and diamond, reverse-circulation, and percussion drilling focusing largely on one exploration target – the Lone Star Zone. Due to the expansion of the Lone Star properties, several additional known exploration targets remain to be fully explored and assessed.

The recoverable gold potential of the properties is expected to be expanded considerably by an even larger diamond drilling, RC drilling, trenching and bulk sampling program in 2007.

The Company’s views are supported by the fundamental geology of the Klondike region that includes the Lone Star Project, and the 5 major exploration targets that extend over large areas with opportunity for the existence of multiple mineralized zones, along both strike and dip. They belong to a class of structures which have potential for large, medium-grade, bulk-tonnage ore bodies.

The information, including estimates and ranges are exploration information about targets or potential. They are provided as conceptual projections. The Company can not represent and is not representing the information contained in this filing as an estimate of Mineral Reserves or mineralized material. Under U.S. securities regulations, Klondike Star is not able to use the term mineral resources and is not able to disclose inferred resources that may be reported in other international jurisdictions.

The Company believes that its progressive exploration programs will continue to increase the known, assessed and reportable gold potential of the Lone Star properties. This forward-looking statement is based on a number of factors including:

the new exploration targets for investigation identified by the 2006 IP survey results received recently, the structural geology and gold composition research by the U.B.C. Mineral Deposit Research Unit and the Company, trenching and bulk sampling (including, by way of example, the newly discovered JF Zone) and other determinations flowing from the 2006 exploration program;

the findings, improved understanding of the structural geology of the entire Klondike region, and the refined Company exploration model based on the results of the Klondike geological research project being undertaken in cooperation with the Company by the U.B.C. Mineral Deposit Research Unit;

the expansive size of the Lone Star Project with many areas not yet investigated with modern exploration methods;

the confidential March 2007 Lone Star Project report on the exploration work performed during the 2006 exploration program filed with Yukon mining authorities.

The Company’s estimates and preliminary conclusions take account of consolidated analysis of 2006 drilling, trenching and bulk sampling results, as well as discoveries of new exploration targets and recently reported geo-science on the Klondike gold-producing region.

The findings and gold recovery potential of other Company projects within the Klondike Region, such as the advanced stage Indian River Placer Project and the Dominion Project, add to the Company’s regional gold recovery potential.

Gold recovery rates from the mining and milling process are important. To address the specific composition of ore and gold from the Lone Star properties, the Company constructed (2004) and has since upgraded (2005 and 2006) the Eldorado Bulk Sampling Test Plant. Sophisticated technical procedures and analysis have been undertaken by a Canadian engineering firm with analysis performed by certified laboratories. After three years of experience, the Company is in a position to test additional processes that could further improve gold recovery methods and results or define full-scale engineering and design specifications. This work will facilitate detailed mine process planning, technology and design decisions.

The mineral exploration information provided in this answer does not constitute an assessment of mineralized material pursuant to “Guide 7, Description of Property by Issuers Engaged or to be Engaged in Significant Mining Operations.” As a Delaware corporation regulated by U.S. securities laws and regulations, the Company is expressly prohibited from releasing mineral resource assessments required by the Canadian National Instrument 43-101, or other similar international standards and reporting guidelines.

Why is the Klondike Research Project with the University of British Columbia’s Mineral Deposit Research Unit considered important?

The Mineral Deposit Research Unit (“MDRU”) is a collaborative venture between the mining industry and the University of British Columbia. Acting as the hub for integrated geological and geophysical research at UBC, MDRU is an internationally recognized research group dedicated to solving mineral exploration-related problems.

Klondike Star Mineral Corporation is one of 43 corporate members of MDRU, which include major mining and exploration companies from Canada, United States, Peru, South Africa and Australia. These include companies like Placer Dome Canada Ltd., Teck Cominco Ltd., Barrick Gold Corp., Kennecottt Exploration Ltd., Newmount Gold Co., and NovaGold Resources Inc. among others. MDRU has collaborative research projects in five continents including North America, South America, Asia, Australia and Africa. All projects are designed in conjunction with corporate members, and address fundamental questions relevant to the mining and exploration industry.

The Klondike Research Project is significant for a number of reasons:

an extraordinarily experienced group of geologists is working cooperatively with Klondike Star’s geology team to assess the underlying structural geology, including the possible sources and distribution of gold in the Klondike region;

the project leader, Dr. Jim Mortensen, P.Eng. has worked in the Yukon and studied the geology of the Klondike for over 20 years;

the research findings and analysis provide Klondike Star with sophisticated technical insights and exploration models that benefit from being unbiased, independent opinions

the results of the Klondike Research Project will be published nationally and internationally by the authors who, as professors, are subject to high scientific and publishing standards.

The Klondike District in western Yukon has yielded in excess of 13 million ounces of placer gold over the past century, however, a detailed and systematic investigation of the lode potential for the area is only now being undertaken. Structurally controlled, gold-bearing quartz veins of broadly “orogenic” character occur in several parts of the Klondike and studies of the shapes and compositions of placer gold grains demonstrate that the placer gold was derived from these or closely related veins. A detailed study of the nature, geochronology and structural control on these veins is currently underway. This study builds on more than 20 years of research in the Klondike by Mortensen and will result in a new geological map of the Klondike which will be published by the Yukon Geological Survey in 2007.

What are the different stages in mineral exploration?

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 and site geology, soil, trenching and chip sampling, staking of claims

Intermediate stage exploration – exploration continues, including bulk sampling, soil chemistry, geophysical surveys and analysis with diamond or RC drilling as appropriate

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

Early development – bulk sampling/test mining, on-site testing of processing technology for throughput and mineral recovery; decision made to proceed with pre- or 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 gold sales and revenue

MINE DEVELOPMENT PLANS AND PROSPECTS

Is it difficult to get permits to put a new mine into production?

The requirements for a quartz mine are different from a placer mine. Klondike Star is working towards both types of mining. According to regulatory authorities, permitting for a placer mine can take 6 to 12 months. The environmental assessment and permitting for a quartz mine is more variable, depending on the size and nature of proposed mine and generally spans 2 to 3 years. A pro-active company can shorten the time involved by gathering necessary environmental information through monitoring programs, working with the local First Nation, and by assessing options for addressing critical factors such as energy supply, water supply, road and utility access early on. Furthermore, where Klondike Star would be looking to put a mine into production, the First Nation land claims in the area are settled and essential infrastructure (such as electrical power, all-weather roads, and health, education and community services) are well developed.

The Yukon has a stable regulatory regime. A recent, independent national survey of mining executives ranks the Yukon as among the most improved jurisdictions in the country, 11th among global jurisdictions that are attractive for their mining policies and 14th among all jurisdictions world-wide for current mining potential (The Fraser Institute Annual Survey of Mining Companies 2006/07, March 5, 2007).

With the advice of experienced technical and environmental consultants, the Company has scoped out requirements and timelines for permitting and regulatory approvals in detail, and anticipated and implemented processes requiring attention in advance so as to facilitate timely submissions for review and approval. This includes, for example, amassing three years of environmental monitoring data, and establishing credibility with environmental authorities through Company policy, permitting compliance and action.

Furthermore, since the entire Klondike region has been subject to extensive mining activity since the late 1890s, the environmental and socio-economic impacts of mining projects are generally understood and, although subject to comprehensive regulatory scrutiny, new projects do not generally face significant issues or local opposition.

Based on industry experience and present data, the Company does not believe the regulatory process for mine development will compromise the Lone Star Project.

The Company says a scoping study is being undertaken on the Lone Star Project. What does that entail?

In 2006, Klondike Star initiated a scoping study as a management planning tool to guide and accelerate future feasibility, environmental permitting and mine development decision-making. This study is proceeding concurrently with efforts to delineate potential economically viable gold deposit(s). The Company is proceeding with an integrated technical planning process that allows feasibility planning, permitting and detailed mine design and development considerations to be addressed simultaneously. This coordinated effort will have the benefit of saving time, money and managerial focus.

A practical example to illustrate the benefit of this approach relates to environmental monitoring requirements and the permitting process. The Company has already completed three successive years of monitoring that enables fast-tracking environmental assessment and permitting as decisions are made to proceed with the mining process. The more linear and conventional approach, after a mine development decision is made, would involve attempting to gather the necessary information at greater cost in a shorter period of time (with seasonal conditions, such a process being more problematic). With less available information, a company might be required to file a less comprehensive permit application, which, in turn risks incurring significant delays while missing research is conducted, or having applications rejected with material consequences and costs in terms of time, money, effort and opportunity.

It is a comprehensive undertaking that will report on such matters as the evaluation of other mineralized material, including grade and tonnage in a SEC Guide 7 compliant manner, mine development scenarios, ore handling and processing methods, tailings recovery, disposal and reclamation, water supply and storage, energy supply requirements and options. It will detail mining facilities, infrastructure, excavation, processing and fleet vehicle equipment, roads and access, water supply, socio-economic considerations, housing and services, temporary construction arrangements, as well as detailed capital and operating cost analysis.

The scoping study, on a preliminary basis and based on planning assumptions, is providing a target for an economically viable development based on tonnage and grams of gold per tonne of mineralized material, gold price scenarios, and capital and operating cost projections for a gold mine having an operating life of at least 10 years.

It is being undertaken by a professional team of experienced Company staff and technical consultants with a combination of northern, Canadian and international experience and expertise in geology, mine planning and development, environmental assessment and permitting, economics, financing, energy supply, engineering and design, and First Nation and community relations.

The scoping study is scheduled for release in the fall, 2007. As new information becomes available, particularly following completion of the 2007 exploration program, the study will be updated to support informed and timely decision-making. A master project timetable is guiding the Company through the phases of mine planning, development and production, including significant milestones such as completion of feasibility studies, environmental assessment and permitting, financing, and a production decision. Sections on the material technical matters have been developed, such as delineation of the regulatory process, engineering analysis of appropriate mining, processing technology and design base case, capital and operating cost analysis, energy supply options, facility and housing requirements, and labor force projections. Work is in progress with respect to tailings management, site reclamation, siting of facilities, administrative and service buildings, road improvements, acid rock drainage and water supply.

Klondike Star says a business plan is being developed for the Indian River Placer Project. What does that entail?

A business plan is similar to a scoping study except there are fewer complexities in analyzing the economic viability of the property. The business plan will outline estimates of volumes of mineralized material with recoverable gold potential based on auger drilling and bulk sampling results, the mining process (including, but not limited, to mobilization, stripping and clearing, ongoing drilling, ore handling and processing, road access upgrading and construction, camp acquisition and installation, reclamation), costing of capital infrastructure and equipment, and projected operating costs. The business plan is scheduled for completion in the fall 2007.

Investor Relations