Claude Resources (CRJ) 6-K Current report (foreign)

Exhibit 99.1

NOTICE OF AUDITOR REVIEW OF INTERIM FINANCIAL STATEMENTS

Under National Instrument 51-102, Part 4, subsection 4.3(3)(a), if an auditor has not performed a review of the interim financial statements, they must be accompanied by a notice indicating that the financial statements have not been reviewed by an auditor.

The Management of Claude Resources Inc. is responsible for the preparation of the accompanying unaudited interim consolidated financial statements.  The unaudited interim consolidated financial statements are considered by Management to present fairly the financial position, operating results and cash flows of the Company.

The Company's independent auditor has not performed a review of these financial statements, in accordance with standards established by the Canadian Institute of Chartered Accountants.  These unaudited interim consolidated financial statements include all adjustments, consisting of normal and recurring items that Management considers necessary for a fair presentation of the consolidated financial position, results of operations and cash flows.

                                                                 

	Mike Sylvestre, P.Eng., ICD.D	Rick Johnson, CA
	Interim Chief Executive Officer	Chief Financial Officer
Date:  October 30, 2014

 

Condensed Consolidated Interim Statements of Financial Position
(In Thousands of Canadian Dollars - Unaudited)
			SEPTEMBER 30		DECEMBER 31
			2014		2013
	Note
Assets
Cash and cash equivalents		$	10,586	$	-
Short-term investments	5		1,483		1,643
Accounts receivable			1,111		2,873
Inventories	6		27,030		20,565
Prepaid expenses and deposits			121		390
Assets held for sale	7		-		13,423
Current assets			40,331		38,894
Mineral properties			126,804		140,544
Deposits for reclamation costs	9		1,829		2,237
Non-current assets			128,633		142,781
Total assets		$	168,964	$	181,675
Liabilities
Bank indebtedness		$	-	$	8,623
Accounts payable and accrued liabilities			7,872		6,997
Loans and borrowings	11		3,600		31,869
Net royalty obligation	10		1,105		1,001
Liabilities related to assets held for sale	7		-		2,316
Current liabilities			12,577		50,806
Loans and borrowings	11		18,799		-
Net royalty obligation	10		889		1,826
Decommissioning and reclamation	9		6,681		6,447
Non-current liabilities			26,369		8,273
Shareholders' equity
Share capital			198,489		195,245
Contributed surplus			6,918		8,223
Accumulated deficit			(75,857)		(80,925)
Accumulated other comprehensive income			468		53
Total shareholders' equity			130,018		122,596
Total liabilities and shareholders' equity		$	168,964	$	181,675
See accompanying notes to condensed consolidated interim financial statements.
On behalf of the Board:

                                                                     

	Mike Sylvestre, P.Eng., ICD.D	Ronald J. Hicks, CA
	Chairman	Chairman, Audit Committee
Date:  October 30, 2014

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Condensed Consolidated Interim Statements of Income
(In Thousands of Canadian Dollars, except per share amounts - Unaudited)
					Three Months Ended				Nine Months Ended
						SEPTEMBER 30				SEPTEMBER 30
					2014		2013		2014		2013
			Note
Revenue				$	24,323	$	14,976	$	64,665	$	46,324
Mine Operating:
	Production costs				12,021		9,909		35,243		31,581
	Production royalty		8		902		-		1,694		-
	Depreciation and depletion				4,604		5,360		16,841		15,703
					17,527		15,269		53,778		47,284
Gross profit (loss)					6,796		(293)		10,887		(960)
	General and administrative				1,258		1,249		5,201		5,076
	Finance expense				800		924		4,022		2,259
	Finance and other income				(1,067)		(1,251)		(2,729)		(1,495)
	Impairment charge				-		45,187		-		56,034
	Loss on sale of assets				-		-		642		-
	(Gain) loss on investments				(1,047)		-		(1,317)		262
					(56)		46,109		5,819		62,136
Profit (loss) before income tax					6,852		(46,402)		5,068		(63,096)
Deferred income tax recovery					-		(12,531)		-		(16,773)
Net profit (loss)				$	6,852	$	(33,871)	$	5,068	$	(46,323)
Net earnings (loss) per share
	Basic and diluted		13
		Net earnings (loss)		$	0.04	$	(0.19)	$	0.03	$	(0.26)
		Basic			188,156		175,811		186,136		175,478
		Diluted			188,459		175,811		186,313		175,478
See accompanying notes to condensed consolidated interim financial statements.
Condensed Consolidated Interim Statements of Comprehensive Income
(In Thousands of Canadian Dollars - Unaudited)
					Three Months Ended				Nine Months Ended
						SEPTEMBER 30				SEPTEMBER 30
					2014		2013		2014		2013
Net profit (loss)				$	6,852	$	(33,871)	$	5,068	$	(46,323)
Other comprehensive loss
	(Gain) loss on available-for-sale securities transferred to profit				(1,047)		-		(1,317)		262
	Unrealized gain (loss) on available-for-sale securities				191		22		1,732		(260)
Other comprehensive gain (loss)					(856)		22		415		2
Total comprehensive income (loss)				$	5,996	$	(33,849)	$	5,483	$	(46,321)
See accompanying notes to condensed consolidated interim financial statements.

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Condensed Consolidated Interim Statements of Shareholders'  Equity
(In Thousands of Canadian Dollars - Unaudited)
			Three Months Ended				Nine Months Ended
				SEPTEMBER 30				SEPTEMBER 30
			2014		2013		2014		2013
Share Capital
	Balance, beginning of period	$	198,489	$	194,868	$	195,245	$	193,189
	Common shares and warrants issued		-		-		1,501		1,679
	Transfers from contributed surplus		-		-		1,743		-
	Balance, end of period	$	198,489	$	194,868	$	198,489	$	194,868
Contributed Surplus
	Balance, beginning of period	$	6,765	$	7,213	$	8,223	$	6,652
	Stock-based compensation		153		307		438		937
	Transfers to share capital		-		-		(1,743)		-
	Other		-		-		-		(69)
	Balance, end of period	$	6,918	$	7,520	$	6,918	$	7,520
Accumulated Deficit
	Balance, beginning of period	$	(82,709)	$	(19,954)	$	(80,925)	$	(7,502)
	Net profit (loss)		6,852		(33,871)		5,068		(46,323)
	Balance, end of period	$	(75,857)	$	(53,825)	$	(75,857)	$	(53,825)
Accumulated Other Comprehensive Income (Loss)
	Balance, beginning of period	$	1,324	$	5	$	53	$	25
	Other comprehensive income (loss)		(856)		22		415		2
	Balance, end of period	$	468	$	27	$	468	$	27
Shareholders' equity, end of period		$	130,018	$	148,590	$	130,018	$	148,590
See accompanying notes to condensed consolidated interim financial statements.

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Condensed Consolidated Interim Statements of Cash Flows
(In Thousands of Canadian Dollars - Unaudited)
				Three Months Ended				Nine Months Ended
					SEPTEMBER 30				SEPTEMBER 30
				2014		2013		2014		2013
Cash flows from (used in) operating activities
	Net profit (loss)		$	6,852	$	(33,871)	$	5,068	$	(46,323)
	Adjustments for non-cash items:
		Depreciation and depletion		4,604		5,360		16,841		15,703
		Finance expense		126		136		1,176		381
		Finance and other income		(320)		(316)		(833)		(913)
		Impairment charge		-		45,187		-		56,034
		Loss on sale of assets		-		-		642		-
		(Gain) loss on investments		(1,047)		-		(1,317)		262
		Stock-based compensation		153		307		438		937
		Deferred income tax recovery		-		(12,531)		-		(16,773)
				10,368		4,272		22,015		9,308
	Net changes in non-cash operating working capital:
		Accounts receivable		6,255		2,063		1,762		3,088
		Inventories		2,576		1,867		(6,276)		(6,311)
		Prepaid expenses and deposits		427		(10)		269		134
		Accounts payable and accrued liabilities		1,152		(2,846)		875		82
Cash provided by operating activities				20,778		5,346		18,645		6,301
Cash flows from investing activities:
	Additions to mineral properties			(4,418)		(5,756)		(16,142)		(25,201)
	Proceeds from NSR agreement			-		-		12,822		-
	Proceeds from sale of assets			-		-		8,259		-
	Decrease in reclamation deposits			-		-		408		-
	Decrease (increase) in investments			2,479		3,500		4,335		(1,500)
Cash provided by (used in) investing activities				(1,939)		(2,256)		9,682		(26,701)
Cash flows from financing activities:
	Proceeds from issue of common shares, net of issue costs			-		-		711		725
	Debenture redemption			-		-		-		(9,751)
	Term loan
		Proceeds, net of issues costs		-		(48)		-		24,328
		Repayments		(900)		-		(1,500)		-
	Demand loans:
		Proceeds		-		-		-		5,000
		Repayments		(1,715)		(599)		(7,950)		(1,780)
	Obligations under finance lease:
		Repayments		-		(352)		(291)		(1,138)
Cash from (used in) financing activities				(2,615)		(999)		(9,030)		17,384
Increase (decrease) in cash and cash equivalents				16,224		2,091		19,297		(3,016)
Decrease in cash and cash equivalents related to assets held for sale				-		(263)		(88)		(1,405)
Cash and cash equivalents (bank indebtedness), beginning of period				(5,638)		(9,780)		(8,623)		(3,531)
Cash and cash equivalents (bank indebtedness), end of period			$	10,586	$	(7,952)	$	10,586	$	(7,952)
See accompanying notes to condensed consolidated interim financial statements.

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Claude Resources Inc.
Notes to the Condensed Consolidated Interim Financial Statements
For the nine months ended September 30, 2014 and 2013
Expressed in Thousands of Canadian Dollars, except share data or as otherwise noted

1. Corporate Information:

Claude Resources Inc. (“Claude” or the “Company”) is a company domiciled in Canada. The address of the Company’s registered office is at 1500, 410 – 22^nd Street East, Saskatoon, Saskatchewan, S7K 5T6. Its principal office is located at 200, 219 Robin Crescent, Saskatoon, Saskatchewan, S7L 6M8.

Claude Resources Inc. is a gold producer whose shares are listed on both the Toronto Stock Exchange (TSX-CRJ) and the OTCQB (OTCQB: CLGRF). The Company is also engaged in the exploration and development of gold mineral reserves and mineral resources. The Company’s entire asset base is located in Canada. Its revenue generating asset is the 100 percent owned Seabee Gold Operation, located in northern Saskatchewan. Claude also owns 100 percent of the Amisk Gold Project in northeastern Saskatchewan.

2. Basis of Preparation:

STATEMENT OF COMPLIANCE

These unaudited condensed consolidated interim financial statements for the period ended September 30, 2014 have been prepared in accordance with International Accounting Standard 34 (“IAS 34”),Interim Financial Reporting.These unaudited condensed consolidated interim financial statements do not include all of the information required for full annual financial statements and should be read in conjunction with the Company’s 2013 annual financial statements prepared in accordance with International Financial Reporting Standards (“IFRS”), as issued by the International Accounting Standards Board (“IASB”).

These unaudited condensed consolidated interim financial statements have been prepared following the same accounting policies and methods as those used in preparing the most recent audited consolidated financial statements for the year ended December 31, 2013.

These unaudited condensed consolidated interim financial statements were authorized for issue by the Company’s Board of Directors on October 30, 2014.

Details of the Company’s accounting policies, including changes during the year, are included in Notes 3 and 4.

BASIS OF MEASUREMENT

These unaudited condensed consolidated interim financial statements have been prepared on the historical cost basis except for available-for-sale financial assets and liabilities for cash-settled share-based payment arrangements, which are measured at fair value.

FUNCTIONAL CURRENCY

These unaudited condensed consolidated interim financial statements are presented in Canadian dollars, which is the Company’s functional currency. All financial information presented in Canadian dollars has been rounded to the nearest thousand, except share data or as otherwise noted.

USE OF JUDGMENTS AND ESTIMATES

The preparation of the Company’s consolidated financial statements in conformity with IFRS requires Management to make judgments, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, revenue and expenses and disclosure of contingent assets and liabilities at the date of the consolidated financial statements. Significant judgments, estimates and assumptions are related to the useful lives and recoverability of mineral properties and deferred income tax assets or liabilities, valuation of inventory, provisions for decommissioning and reclamation and financial instruments. 

Although these estimates are based on Management’s best knowledge of the amount, events or actions, actual results ultimately may differ from those estimates.

Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimates are revised and in any future periods affected.

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Claude Resources Inc.
Notes to the Condensed Consolidated Interim Financial Statements
For the nine months ended September 30, 2014 and 2013
Expressed in Thousands of Canadian Dollars, except share data or as otherwise noted

Critical Judgments in Applying Accounting Policies

Critical judgments that the Company’s management has made in the process of applying the Company’s accounting policies, apart from those involving estimates, that have the most significant effect on the amounts recognized in the Company’s consolidated financial statements are as follows:

Production Start Date

The Company assesses the stage of each mine under construction to determine when a mine moves into commercial production. The criteria used to assess the start date of commercial production are based on the unique nature of each mine construction project, such as the complexity of the geology and its location. The Company considers various relevant criteria to assess when the mine construction phase is substantially complete and the mine is ready for its intended use. At this point, deferred costs are reclassified from “Mines under construction” to “Producing mines” and “Property, plant and equipment”. Some of the criteria will include, but are not limited, to the following:

· Completion of a reasonable period of testing of the mine plant and equipment;

· Ability to produce precious metal in saleable form;

· Ability to sustain certain levels of ongoing production of precious metals; and

· Production attaining a reasonable percentage of Mine Plan for a specified period of time.

When a mine enters the production stage, the capitalization of certain construction costs ceases and costs are either regarded as inventory or operating expense, except for new capital costs which are capitalized. Depreciation and depletion commences at this time.

Exploration and Evaluation Expenditures

The application of the Company’s accounting policy for exploration and evaluation expenditures requires judgment in determining whether future economic benefits are likely either from future extraction or sale or where activities have not reached a stage which permits a reasonable assessment of the existence of mineral reserves. The determination of a mineral resource is itself an estimation process that involves varying degrees of uncertainty depending on sub-classification and these estimates directly impact the decision to continue the deferral of exploration and evaluation expenditures. The accounting policy requires management to make certain estimates and assumptions about future events or circumstances, in particular whether an economically viable extraction operation can be established. Estimates and assumptions made may change if new information becomes available. If, after an expenditure is capitalized, information becomes available suggesting that the recovery of this expenditure is unlikely, the amount capitalized is written off in the statement of comprehensive income in the period when the new information becomes available.

Business Combinations

Determination of whether a set of assets acquired and liabilities assumed constitute a business may require the Company to make certain judgments, taking into account all facts and circumstances. Upon acquisition of a set of assets and liabilities, the Company examines the criteria set forth in IFRS 3,Business Combinations(“IFRS 3”). If a transaction does not meet the definition of a business, as defined in IFRS 3, it is accounted for as an asset acquisition.

Critical Estimates and Assumptions in Applying Accounting Policies

Significant assumptions about the future and other major sources of estimation uncertainty as at the end of the reporting period that have a significant risk of resulting in a material adjustment to the carrying amounts of the Company’s assets and liabilities are as follows:

Impairment

At the end of each reporting period, the Company assesses whether any indication of impairment exist. Where an indicator of impairment exists, an estimate of the recoverable amount is made. Determining the recoverable amount requires the use of estimates and assumptions such as long-term commodity prices, discount rates, future capital requirements, exploration potential and operating performance. Changes in circumstances may affect these estimates and the recoverable amount.

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Claude Resources Inc.
Notes to the Condensed Consolidated Interim Financial Statements
For the nine months ended September 30, 2014 and 2013
Expressed in Thousands of Canadian Dollars, except share data or as otherwise noted

Fair value for mineral properties is generally determined as the present value of estimated future cash flows arising from the continued use of the assets, which includes estimates such as the cost of future expansion plans and eventual disposal, using assumptions that an independent market participant would take into account. Cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset.

Inventories

Net realizable value tests are performed at each reporting date and represent the estimated future sales price of the product the Company expects to realize when the product is processed and sold, less estimated costs to complete production and bring the product to sale.

Stockpiles are measured by estimating the number of tonnes added and removed from the stockpile, the number of contained gold ounces is based on assay data, and the estimated recovery percentage is based on the expected processing method.

Stockpile tonnages are verified by periodic surveys.

Mine Operating Costs

When determining mine operating costs recognized in the Consolidated Statements of Income, the Company makes estimates of quantities of ore within stockpiles and of quantities in-circuit and the recoverable gold in this material to determine the average costs of finished goods sold during the period. Changes in these estimates can result in a change in mine operating costs of future periods and carrying amounts of inventories.

Ore Reserve and Resource Estimates

Ore reserves are estimates of the amount of ore that can be economically extracted from the Company’s mining properties. Estimating the quantities and grades of the reserves and resources requires the size, shape and depth of the ore bodies to be determined by analyzing geological data such as the logging and assaying of drill samples. This process may require complex and difficult geological judgments and calculations to interpret the data. The estimation of recoverable reserves is based upon factors such as estimates of foreign exchange rates, commodity prices, future capital requirements and production costs along with geological assumptions and judgments made in estimating the size and grade of the ore body.

Because the economic assumptions used to estimate the gold mineral reserves and resources change from year to year, and because additional geological data is generated during the course of operations, estimates of the mineral reserves and resources may change from year to year. Changes in the reserve or resource estimates may impact upon the carrying value of exploration and evaluation assets, mine properties, property, plant and equipment, decommissioning and reclamation, recognition of deferred tax balances and depreciation and amortization charges.

At the end of each financial year, the Company updates its estimate of proven and probable gold mineral reserves and resources. Depreciation of the Company’s mining assets, included within the Mineral properties line item on the Statement of Financial Position, is prospectively adjusted, based on these changes. The Company also monitors the accuracy of the estimate during the periods between annual updates for significant changes to economic assumptions and geological data that could require an interim update to the estimate.

Fair value measurement

The Company measures financial instruments, such as derivatives, at fair value each balance sheet date. The fair values of financial instruments measured at amortized cost are disclosed in Note 14. Also, from time to time, the fair values of non-financial assets and liabilities are required to be determined, e.g., when the entity acquires a business, or where an entity measures the recoverable amount of an asset or cash-generating unit (CGU) at fair value less costs of disposal.

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.

The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing the asset or liability, assuming that market participants act in their economic best interest. A fair value measurement of a non-financial asset takes into account a market participant's ability to generate economic benefits by using the asset in its highest and best use or by selling it to another market participant that would use the asset in its highest and best use.

Page 8

Claude Resources Inc.
Notes to the Condensed Consolidated Interim Financial Statements
For the nine months ended September 30, 2014 and 2013
Expressed in Thousands of Canadian Dollars, except share data or as otherwise noted

The Company uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, maximizing the use of relevant observable inputs and minimizing the use of unobservable inputs. Changes in estimates and assumptions about these inputs could affect the reported fair value.

Taxation

Estimation of deferred taxes includes judgments based on expected performance of the Company. Various factors are considered to assess taxes, including past operating results, operational plans, expiration of tax losses and tax pools carried forward and tax planning strategies.

Decommissioning and Reclamation

The Company’s mining and exploration activities are subject to various environmental laws and regulations. The Company estimates environmental obligations based on the current legal and constructive requirements. The Company provides for the closure, reclamation and decommissioning of its operating and development sites based on the estimated future costs using information available at the reporting date. Provision is made, based on net present values, for decommissioning and land restoration costs as soon as the obligation arises.

Additional Accounting Judgments, Estimates and Assumptions

In addition to the above disclosure on estimates and judgments, the Company has disclosed additional information relating to significant estimates and judgments recognized in the consolidated financial statements throughout the following notes:

Note 5	Short-term Investments
Note 9	Decommissioning and Reclamation
Note 10	Net Royalty Obligation
Note 12	Share-based Compensation
Note 14	Financial Instruments

3. Significant Accounting Policies:

These unaudited condensed consolidated interim financial statements are prepared using accounting policies consistent with the Company’s annual consolidated financial statements and notes thereto for the year ended December 31, 2013. The accounting policies utilized by Management for the Company and its wholly-owned subsidiaries have been applied consistently to all periods presented in these unaudited condensed consolidated interim financial statements, unless otherwise indicated.

4. Accounting Standards:

Future Changes in Accounting Policies

These are the changes that the Company reasonably expects will have an impact on its disclosures, financial position or performance when applied at a future date. The Company intends to adopt this standard, if applicable, when it becomes effective.

Financial Instruments

IFRS 9,Financial Instruments (“IFRS 9”), was issued by the IASB on November 12, 2009 and will replace IAS 39,Financial Instruments: Recognition and Measurement (“IAS 39”). IFRS 9 uses a single approach to determine whether a financial asset is measured at amortized cost or fair value, replacing the multiple rules in IAS 39. The approach in IFRS 9 is based on how an entity manages its financial instruments in the context of its business model and the contractual cash flow characteristics of the financial assets. The new standard also requires a single impairment method to be used, replacing the multiple impairment methods in IAS 39. IFRS 9 is effective for annual periods beginning on or after January 1, 2018 (tentative). The Company is currently evaluating the impact of IFRS 9 on its financial statements, if any.

Page 9

Claude Resources Inc.
Notes to the Condensed Consolidated Interim Financial Statements
For the nine months ended September 30, 2014 and 2013
Expressed in Thousands of Canadian Dollars, except share data or as otherwise noted

5. Short-term Investments:

			SEPT 30		DEC 31
			2014		2013
Short-term Investments	(a)	$	-	$	1,500
Available-for-sale securities	(b)		1,483		143
		$	1,483	$	1,643

(a) Short-term Investments

Short-term investments are denominated in Canadian dollars, are comprised of instruments with terms to maturity between three and 12 months. During the first half of 2014, the Company’s short-term investments were redeemed and utilized for reduction of debt. Short-term investments are classified as loans and receivables for financial instrument purposes (Note 14).

(b) Available-for-sale Investments

		SEPT 30		DEC 31
		2014		2013
Available-for-sale securities, beginning of period	$	143	$	378
Acquisition of available-for-sale securities		2,444
Disposition of available-for-sale securities		(1,567)		-
Write-down of available-for-sale securities		-		(284)
Unrealized gain on available-for-sale securities		463		49
Available-for-sale securities, end of period	$	1,483	$	143

During the third quarter of 2014, the Company disposed of 5.7 million of its 9.8 million shares in Pure Gold Mining Inc. (“Pure Gold”, formerly Laurentian Goldfields) received pursuant to the sale of the Madsen Gold Project.

At September 30, 2014, the Company reviewed its portfolio of available-for-sale securities in order to assess whether there was objective evidence of impairment. Factors considered in the Company’s assessment included the length of time and extent to which fair value was below cost and current conditions specific to the investment. Utilizing these factors, the Company determined that the Company’s available-for-sale securities were not impaired in value.

By holding these available-for-sale securities, the Company is exposed to various risk factors including market price risk and liquidity risk (Note 14).

6. Inventories:

Details of the Company’s inventories are as follows:

		SEPT 30		DEC 31
		2014		2013
Gold bullion and in-circuit(1) (2)	$	5,465	$	2,522
Stockpiled ore(1) (2)		1,762		1,838
Materials and supplies(3)		19,803		16,205
Inventories	$	27,030	$	20,565

⁽¹⁾ For the period ended September 30, 2014, depreciation and depletion of $1.9 million is included in the above noted balances (December 31, 2013 - $1.7 million).

⁽²⁾ For the period ended September 30, 2014, there was no write-down of gold inventory to net realizable value (December 31, 2013 – $1.8 million).

⁽³⁾ There was no material write-down or reversal of write-down of materials and supplies inventory for the period ended September 30, 2014 or for the year ended December 31, 2013.

Page 10

Claude Resources Inc.
Notes to the Condensed Consolidated Interim Financial Statements
For the nine months ended September 30, 2014 and 2013
Expressed in Thousands of Canadian Dollars, except share data or as otherwise noted

Write-downs and reversals, if any, are included in production costs.

7. Assets Held for Sale:

On March 4, 2014, the Company completed the sale of its 100 percent interest in the Madsen Gold Project in Red Lake, Ontario, Canada to Pure Gold Mining Inc. (“Pure Gold”), formerly Laurentian Goldfields Ltd., for CDN $6.25 million cash and 9,776,885 shares of Pure Gold. In accordance with the terms of the sale agreement, an additional and final payment of CDN $2.5 million of cash was received during the third quarter of 2014.

8. Net Smelter Return Royalty:

During the first quarter of 2014, the Company completed a Net Smelter Return (“NSR”) royalty agreement on the Seabee Gold Operation. Pursuant to this transaction, proceeds of U.S. $12.0 million were received by the Company in exchange for a three (3) percent NSR. On the Company’s Statement of Financial Position, proceeds received from the completion of the NSR royalty agreement were booked to Cash with a corresponding credit to Mineral Properties. Under the terms of the NSR, the Company has the right to purchase half or 1.5 percent of the three percent NSR for U.S. $12.0 million, expiring on December 31, 2016. The NSR payments will be paid quarterly in cash or in physical gold at the average price of gold in each calendar month. Year to date, NSR costs were $1.7 million (YTD 2013 – nil).

9. Decommissioning and Reclamation:

The Company’s decommissioning and reclamation costs consists of reclamation and closure costs. Mineral property obligations were determined using discount rates ranging from 1.76 to 2.77 percent. Expected undiscounted payments of future obligations are $7.4 million over the next 5 to 11 years. During 2014, an accretion expense of $0.1 million has been charged (September 30, 2013 - $0.1 million), augmented by revisions made to the decommissioning and reclamation costs, resulting in an increase in the overall carrying amount of the provision. Changes to the provision during the period ended September 30, 2014 are as follows:

		SEPT 30		DEC 31
		2014		2013
Decommissioning and reclamation provision, beginning of year	$	6,447	$	9,163
Accretion		114		182
Revisions due to change in estimates and discount rate		120		(673)
		6,681		8,672
Amount re-classified to Liabilities related to assets held for sale		-		(2,225)
Decommissioning and reclamation provision, end of period	$	6,681	$	6,447

As required by regulatory authorities, the Company has provided letters of credit as security for reclamation related to its properties in the amount of $1.8 million (December 31, 2013 - $2.2 million). As security for these letters of credit, the Company has provided investment certificates in the amount of $1.8 million (December 31, 2013 - $2.2 million).

As filed with the Government of Saskatchewan’s Ministry of Environment, the Company estimated in its 2013 Mine Closure Plan the closure costs at the cessation of mining at its Seabee Mine at $6.1 million. Actual costs of completing the reclamation of the mine site may be higher than those estimated. The Company has issued letters of credit in favor of the Ministry of Environment in the amount of $1.8 million in support of its obligations. The letters of credit are secured by investment certificates. The Company has received approval to incrementally fund its remaining closure cost obligations over the next five years as follows: 2014 - $0.5 million; 2015 - $0.5 million; 2016 - $1.0 million; 2017 - $1.0 million; and 2018 - $1.5 million. At September 30, 2014, $0.25 million of the scheduled 2014 payment requirement has been made; a $0.25 million payment is scheduled to be made during the fourth quarter of 2014.

Page 11

Claude Resources Inc.
Notes to the Condensed Consolidated Interim Financial Statements
For the nine months ended September 30, 2014 and 2013
Expressed in Thousands of Canadian Dollars, except share data or as otherwise noted

10. Net Royalty Obligation:

(a) Royalty Agreements

During each of 2004, 2005, 2006 and 2007, the Company entered into separate Royalty Agreements (“Agreements”) whereby it sold a basic royalty on a portion of the gold production at its Seabee Gold Operation. The Company received cash consideration consisting of royalty income, indemnity fee income and interest income.

Under the terms of the Agreements, the Company is required to make royalty payments at fixed amounts per ounce of gold produced; these amounts vary over the term of the respective Agreements. A portion of the cash received at the inception of the respective agreements was placed with a financial institution; in return, the Company received a restricted promissory note. The Company utilizes interest earned from the restricted promissory notes and, if necessary, a portion of the principal to fund the basic royalty payments pursuant to each agreement. Over the life of the royalty agreements, it is expected that interest earned and principal from the restricted promissory notes will be sufficient to fund the expected basic royalty payments.

The Company has the legal right of offset and the intention to settle on a net basis. As such, the Company has presented these transactions on a net basis on the Statements of Financial Position.

		Note	2004 Agreement	2005 Agreement	2006 Agreement	2007 Agreement	Total
Restricted Promissory Notes
	Principal Balance(1)	(b)	6,763	14,082	36,099	26,305	83,249
	Interest receivable(1)		203	525	1,572	1,145	3,445
	Interest Rate		6 percent	6 percent	7 percent	7 percent
	Maturity		DEC 10, 2014	FEB 15, 2015	FEB 15, 2016	FEB 15, 2017
Royalty Payments
	Royalty Rate per ounce of gold produced(2)		$13.29 to $24.53	$26.72 to $112.45	$69.69 to $198.95	$40.56 to $147.05
	Royalty payable (current)(1)	(b)	227	463	1,562	1,129	3,381
	Royalty obligation payable (long-term)(1)	(b)	6,858	14,179	36,129	26,398	83,564

Net Profit Interest		(c)	-	-	-	-	-
	Applicable years		2010-2014	2011-2015	2012-2016	2013-2017
	Percent		2.50, 3.00 or 4.00	1.00, 2.00 or 3.00	3.75, 4.00 or 4.25	3.50, 3.70 or 3.90
	Price of gold thresholds		$800, $900 or $1,200	$875, $1,075 or $1,275	$975, $1,175 or $1,375	$1,250, $1,500 or $1,675

⁽¹⁾ At September 30, 2014.

⁽²⁾ Over the remaining life of the respective agreements.

(b) Net Royalty Obligation

The following schedule outlines the different components of the transaction that are presented net on the Company’s consolidated Statements of Financial Position:

Page 12

Claude Resources Inc.
Notes to the Condensed Consolidated Interim Financial Statements
For the nine months ended September 30, 2014 and 2013
Expressed in Thousands of Canadian Dollars, except share data or as otherwise noted

		SEPT 30		DEC 31
		2014		2013
Current portion
Assets
Interest receivable on Restricted promissory notes	$	3,445	$	4,991
Restricted promissory note (2004 agreement)		6,763		6,776
Restricted promissory note (2005 agreement)		14,082		-
		24,290		11,767
Liabilities
Current portion of deferred revenue		977		1,075
Interest payable on royalty obligations		3,381		4,782
Royalty obligation (2004 agreement)		6,858		6,911
Royalty obligation (2005 agreement)		14,179		-
		25,395		12,768
Net royalty obligation (current)	$	(1,105)	$	(1,001)

		SEPT 30		DEC 31
		2014		2013
Long-term portion
Assets
Restricted promissory notes	$	62,404	$	76,978
Liabilities
Deferred revenue		766		1,473
Royalty obligation		62,527		77,331
		63,293		78,804
Net royalty obligation (long-term)	$	(889)	$	(1,826)
Total net royalty obligation	$	(1,994)	$	(2,827)

The interest income and the indemnity fees received by the Company are being amortized into income over the prepayment period and the life of the respective agreements. The interest income and the indemnity fees are netted against interest expense and are reflected in “Financing expense” on the consolidated statement of income.

(c) NPI Payment

In addition to the royalty, the Company granted a net profit interest (“NPI”) of varying percentages, payable only if gold prices exceed a pre-determined threshold. Prior to any NPI payment, the Company is entitled to first recover the NPI expenditures (including capital expenditures), working capital, operating losses, interest charges and asset retirement obligations relating to the production of ore at the Seabee Operation. These expenditures are calculated on a cumulative basis from the commencement of the individual agreements. At September 30, 2014, the cumulative carry forward amounts remained in a deficiency position under each of the agreements and no payments are expected during 2014 or 2015.

(d) Call and Put

Under certain circumstances, a 100 percent owned subsidiary of Claude will have the right to purchase (“Call”) the equity of the holder of the royalties or right to receive the royalties at an amount no greater than the fair market value thereof at the time of the Call. The Call price will be paid from the balance owing to the Company under the promissory notes. Under certain circumstances, the purchaser of the royalties will have the right to sell (“Put”) their interest in the royalty to the Company at an amount no greater than the fair market value thereof at the time of the Put. However, such right is subject to the subsidiary of Claude’s pre-emptive right to exercise the Call in advance of any Put being exercised and completed.

Page 13

Claude Resources Inc.
Notes to the Condensed Consolidated Interim Financial Statements
For the nine months ended September 30, 2014 and 2013
Expressed in Thousands of Canadian Dollars, except share data or as otherwise noted

11. Loans and Borrowings:

This note provides information about the contractual terms of the Company’s interest-bearing loans and borrowings, which are measured at amortized cost. For more information about the Company’s exposure to interest rate and liquidity risk, see Note 14.

			SEPT 30		DEC 31
			2014		2013
Current liabilities
Demand loans	(a)	$	-	$	2,950
Current portion of finance lease liabilities	(b)		-		291
Current portion of term loan	(c)		3,600		23,628
Revolving loan	(e)		-		5,000
		$	3,600	$	31,869

			SEPT 30		DEC 31
			2014		2013
Non-current liabilities
Term loan	(c)	$	22,399	$	23,628
Less current portion	(c)		(3,600)		(23,628)
		$	18,799	$	-

At December 31, 2013, the Company was not in compliance with a certain financial covenant requirement of the Term Loan. As such, the amortized cost of this facility was reclassified to a current liability. During the first quarter of 2014, the Company obtained a waiver from the lender and entered into a Waiver and Credit Amendment Agreement (“Amending Agreement”) to make certain amendments to the original Credit Agreement. As such, the long-term portion of this Term Loan was reclassified back to non-current liabilities in the first quarter of 2014.

(a) Demand Loans

The Company’s obligations under demand loans were retired during the third quarter of 2014.

	SEPT 30		DEC 31
	2014		2013
$	-	$	2,950
$	-	$	2,950

(b) Finance Lease Liabilities

The Company’s obligations under finance leases were retired during the first quarter of 2014.

		Present Value of		Interest		Future Value of
		Minimum Lease				Minimum Lease
		Payments				Payments
		SEPT 30		DEC 31		DEC 31
		2014		2014		2014
Less than one year	$	-	$	-	$	-

Page 14

Claude Resources Inc.
Notes to the Condensed Consolidated Interim Financial Statements
For the nine months ended September 30, 2014 and 2013
Expressed in Thousands of Canadian Dollars, except share data or as otherwise noted

		Present Value of		Interest		Future Value of
		Minimum Lease				Minimum Lease
		Payments				Payments
		DEC 31		DEC 31		DEC 31
		2013		2013		2013
Less than one year	$	291	$	2	$	293

(c) Term Loan

Terms

Interest on the Company’s term loan (the “Term Loan”) with Crown Capital Partnership Inc. (“CCP”) is fixed at 10 percent, compounds monthly and is payable monthly. Monthly principal payments of $0.3 million began in May 2014. The maturity date of the Term Loan is 60 months from closing (April 2018), at which time a $10.9 million principal payment will be due.

Closing Costs

The Company incurred $1.6 million of closing costs associated with the completion of this Term Loan. These costs reduce the carrying value of the Term Loan on the Statement of Financial Position and will be amortized using the effective interest rate method at an effect rate of approximately 12 percent over the five year period of the Term Loan.

		SEPT 30		DEC 31
		2014		2013
Term loan	$	25,000	$	25,000
Adjustments:
Closing costs		(1,627)		(1,627)
Amortization of closing costs		526		255
Principal repayments		(1,500)		-
Current portion		(3,600)		(23,628)
	$	18,799	$	-

Repayment Schedule

The tables below outline remaining scheduled repayments of the Term Loan until maturity.

		Term Loan				Future Value of
		Principal				Term Loan
		Payments		Interest		Payments
		SEPT 30		SEPT 30		SEPT 30
		2014		2014		2014
Less than one year	$	3,600	$	2,185	$	5,785
Between one and five years		19,900		3,987		23,887
	$	23,500	$	6,172	$	29,672

The Term Loan is subordinate to all of the Company’s other short-term and long-term Loans and borrowings and contains early retraction and redemption provisions. The Company has the right to prepay the Term Loan subject to a prepayment fee (calculated on the amount being prepaid) of:

Months Following Closing *	Prepayment Fee
Months 13 – 24	2%
Months 25 – 36	1%
Months 37 – 60	0%

* The Term Loan with CCP closed in April 2013.

Page 15

Claude Resources Inc.
Notes to the Condensed Consolidated Interim Financial Statements
For the nine months ended September 30, 2014 and 2013
Expressed in Thousands of Canadian Dollars, except share data or as otherwise noted

(e) Revolving Loan

The Company’s $5.0 million revolving loan was repaid during the first quarter of 2014.

(f) Line of Credit

The Company has access up to an $8.5 million operating line of credit which bears interest at prime plus 1.625 percent; the prime rate at September 30, 2014 was 3 percent. At September 30, 2014, this operating line of credit was undrawn. These funds are available for general corporate purposes. At September 30, 2014, the Company was bound by and met all covenants on this credit facility.

12. Share Capital:

Equity Issue:

(a) Credit Agreement Waiver

During the first quarter of 2014, the Company completed a private placement of 4,545,454 common shares to CCP as payment for a waiver being granted by CCP in connection with the Credit Agreement dated April 5, 2013. At September 30, 2014, there were 188,155,978 common shares of Claude outstanding.

The Company has the following equity-settled plans:

(b) Employee Share Purchase Plan (“ESPP”)

The ESPP was established to encourage employees to purchase the Company’s common shares. Under the plan, eligible employees may contribute up to five percent of their basic annual salary and the Company shall contribute common shares in an amount equal to 50 percent of the employee’s contribution. Shares of the Company are issued to employees based on a weighted average market price over a specific period.

During the first quarter of 2014, the Company issued 7,799,148 common shares (2013 – 2,065,812) pursuant to 2013 participation in this plan.The maximum number of common shares of the Company available for issue under this ESPP is five percent of the Company’s common shares outstanding.Distribution of common shares pursuant to the Company’s ESPP occurs annually, subsequent to the year of participation.

During the period ended September 30, 2014,compensation expense recognized in respectof the ESPP was $0.1 million (September 30, 2013 - $0.1 million). Year to date, thecompensation expense recognized in respect of the ESPP was $0.3 million (YTD 2013 - $0.4 million).This compensation expense has been included in General and administrative expense in the Consolidated Statements of Income.

(c) Stock Option Plan

The Company has established a stock option plan under which common share purchase options may be granted to directors, officers and key employees. The maximum number of common shares available for option under the stock option plan is nine percent of the Company’s common shares outstanding. Options granted have an exercise price of the Company’s prior day’s closing price quoted on the TSX for the common shares of Claude. All options are settled by physical delivery of shares. Vesting periods of options granted under the Company’s stock option plan vary on a grant by grant basis, at the discretion of the Company’s Board of Directors. Grants to Employees have a term to expiry of 7 to 10 years and typically have a vesting term of 3 to 5 years. Grants to Directors have a term to expiry of 7 to 10 years and vest immediately.

Options outstanding under this plan at September 30, 2014 and December 31, 2013 and their weighted average exercise prices are as follows:

Page 16

Claude Resources Inc.
Notes to the Condensed Consolidated Interim Financial Statements
For the nine months ended September 30, 2014 and 2013
Expressed in Thousands of Canadian Dollars, except share data or as otherwise noted

			Weighted			Weighted
	SEPT 30		Average	DEC 31		Average
	2014		Exercise	2013		Exercise
	Options		Price	Options		Price
Beginning of year	7,936,361	$	1.19	6,948,527	$	1.43
Options granted	811,576		0.17	1,937,268		0.43
Options exercised	-		-	-		-
Options forfeited	(675,778)		1.00	(934,434)		1.35
Options expired	(60,000)		1.57	(15,000)		1.79
End of year	8,012,159	$	1.10	7,936,361	$	1.19

There were no stock options exercised during the third quarter of 2014 or 2013.

For director and employee options outstanding at September 30, 2014, the range of exercise prices, the weighted average exercise price and the weighted average remaining contractual life are as follows:

	Options Outstanding			Options Exercisable (Vested)
Option Price Per Share	Quantity	Weighted Average Remaining Life	Weighted Average Exercise Price	Quantity	Weighted Average Remaining Life	Weighted Average Exercise Price
$0.17 - $0.50	2,447,563	5.90	$0.35	556,255	5.44	$0.47
$0.51 - $1.00	973,178	4.42	0.75	923,178	4.38	0.75
$1.01 - $1.50	2,339,673	4.08	1.20	2,339,673	4.08	1.20
$1.51 - $2.00	1,775,000	5.32	1.87	1,538,000	5.11	1.86
$2.01 - $2.38	476,745	6.44	2.32	405,396	6.43	2.31
	8,012,159	5.09	$1.10	5,762,502	4.70	$1.31

The foregoing options have expiry dates ranging from January 5, 2015 to November 9, 2021.

The weighted average fair value of stock options granted during the nine months ended September 30, 2014 was $0.12 and was estimated using the Black-Scholes option pricing model with assumptions of a 5.9 year weighted average expected option life, a 6.5 percent expected forfeiture rate, 76.6 percent volatility and an interest rate of 1.8 percent. The weighted average fair value of stock options granted during the nine months ended September 30, 2013 was $0.30 and was estimated using the Black-Scholes option pricing model with assumptions of a 6.0 year weighted average expected option life, a 4.8 percent expected forfeiture rate, 73.6 percent volatility and an interest rate of 1.4 percent.

For the quarter ended September 30, 2014, the compensation expense recognized in respect of stock options was $0.1 million (Q3 2013 - $0.2 million). Year to date, compensation expense recognized in respect of stock options was $0.2 million (YTD 2013 - $0.5 million). This compensation expense has been included in General and administrative expenses in the Consolidated Statements of Income (loss).

The expected volatility used in the Black-Scholes option pricing model is based on the historical volatility of the Company’s shares over the weighted average expected option life.

The Company has the following cash-settled plans:

(d) Deferred Share Unit Plan

The Company offers a Deferred Share Unit (“DSU”) plan to non-employee Directors. A DSU is a notional unit that reflects the market value of a single common share of Claude. A portion of each Director’s annual retainer is paid in DSUs. Each DSU fully vests upon award and are redeemable for cash upon a director leaving the Company’s Board of Directors. The redemption amount will be based upon the weighted average of the closing prices of the common shares of Claude on the TSX for the last 20 trading days prior to the redemption date multiplied by the number of DSUs held by the Director.

Page 17

Claude Resources Inc.
Notes to the Condensed Consolidated Interim Financial Statements
For the nine months ended September 30, 2014 and 2013
Expressed in Thousands of Canadian Dollars, except share data or as otherwise noted

During 2014, the Company granted 3,043,481 DSUs to participating Directors. At September 30, 2014, total DSUs held by participating Directors was 3,302,985 (December 31, 2013 – 1,580,086). During the third quarter of 2014, the Company settled 1,320,582 DSUs in conjunction with the retirement of two Directors.

Year to date, compensation expense recognized in respect of DSUs during 2014 was $0.8 million (YTD 2013 - $0.3 million). This compensation expense has been included in General and administrative expenses in the Consolidated Statements of Income.

(e) Restricted Share Unit Plan

In 2014, the Company established a Restricted Share Unit (“RSU”) plan whereby it may provide each plan participant an annual grant of RSUs in an amount determined by the Company’s Board of Directors. An RSU is a notional unit that reflects the market value of a single common share of Claude that entitles the participant to a cash payment for all fully vested units. RSUs vest annually over a three-year period. The final value of the RSUs will be based upon the weighted average of the closing prices of the common shares of Claude on the TSX for the last 20 trading days prior to the redemption date multiplied by the number of RSUs held by participants.

For RSUs, the Company records compensation expense with an offsetting credit to accounts payable to reflect the estimated fair value of RSUs granted to participants. During the second quarter of 2014, a total of 1,058,696 RSUs were granted to participants in the Company’s RSU plan. At September 30, 2014, total RSUs held by plan participants was 778,261.

Year to date, compensation expense recognized in respect of RSUs during 2014 was $0.1 million (YTD 2013 - nil). This compensation expense has been included in General and administrative expenses in the Consolidated Statements of Income.

Other:

(f) Schedule of Warrants Outstanding

Each common share purchase warrant entitles the holder to acquire one common share of the Company at prices determined at the time of issue.

			Number			Number
	Exercise		Outstanding at			Outstanding at
	Price	Expiry Date *	DEC 31, 2013	Granted	Cancelled	SEPT 30, 2014
$	0.70	April 5, 2018	5,750,000	-	5,750,000	-

* At September 30, 2014, there were no common share purchase warrants outstanding. This compares to 5.8 million common share purchase warrants outstanding at December 31, 2013. During the first quarter of 2014, the 5,750,000 warrants held by CCP were cancelled in conjunction with an Amending Agreement pursuant to a long term debt arrangement between Claude and CCP.

The range of exercise prices and dates of expiration of the common share purchase warrants outstanding at December 31, 2013 were as follows:

			Number			Number
	Exercise		Outstanding at			Outstanding at
	Price	Expiry Date	DEC 31, 2012	Granted	Expired	DEC 31, 2013
$	1.60	May 22, 2013	1,693,200	-	1,693,200	-
$	0.70	April 5, 2018	-	5,750,000	-	5,750,000
			1,693,200	5,750,000	1,693,200	5,750,000

Page 18

Claude Resources Inc.
Notes to the Condensed Consolidated Interim Financial Statements
For the nine months ended September 30, 2014 and 2013
Expressed in Thousands of Canadian Dollars, except share data or as otherwise noted

13. Earnings (Loss) Per Share:

Basic:

The calculation of basic earnings per share has been based on the following profit (loss) attributable to ordinary shareholders and weighted-average number of ordinary shares outstanding.

		Three Months Ended				Nine Months Ended
		SEPT 30		SEPT 30		SEPT 30		SEPT 30
		2014		2013		2014		2013
Net profit (loss) attributable to common Shareholders	$	6,852	$	(33,871)	$	5,068	$	(46,323)
Weighted average number of common shares outstanding (basic)		188,156		175,811		186,136		175,478
Basic net profit (loss) per share	$	0.04	$	(0.19)	$	0.03	$	(0.26)

Diluted:

		Three Months Ended				Nine Months Ended
		SEPT 30		SEPT 30		SEPT 30		SEPT 30
		2014		2013		2014		2013
Net profit (loss) attributable to common Shareholders	$	6,852	$	(33,871)	$	5,068	$	(46,323)
Weighted average number of common shares outstanding		188,156		175,811		186,136		175,478
Dilutive effect of stock options		303		-		176		-
Dilutive effect of warrants		-		-		-		-
Weighted average number of common Shares outstanding (diluted)		188,459		175,811		186,312		175,478
Diluted net earnings per share	$	0.04	$	(0.19)	$	0.03	$	(0.26)

Excluded from the computation of diluted earnings per share for the three months ended September 30, 2014 were options outstanding on 7,025,583 common shares with an average exercise price greater than the average market price of the Company’s common shares. Excluded from the computation of diluted earnings per share for the nine months ended September 30, 2014 were options outstanding on 7,200,583 common shares with an average exercise price greater than the average market price of the Company’s common shares.

For the three months ended September 30, 2013 and year to date September 30, 2013, there was no effect of applying the treasury-stock method to the weighted average number of shares outstanding as all of the options and warrants were anti-dilutive.

14. Financial Instruments:

The Company is exposed in varying degrees to a variety of financial instrument related risks by virtue of its activities. The overall financial risk management program focuses on preservation of capital and protecting current and future Company assets and cash flows by reducing exposure to risks posed by the uncertainties and volatilities of financial markets.

The Company’s Board of Directors has responsibility to ensure that an adequate financial risk management policy is established and to approve the policy.

The Company’s Audit Committee oversees Management’s compliance with the Company’s financial risk management policy, approves financial risk management programs, and receives and reviews reports on management compliance with the policy.

Page 19

Claude Resources Inc.
Notes to the Condensed Consolidated Interim Financial Statements
For the nine months ended September 30, 2014 and 2013
Expressed in Thousands of Canadian Dollars, except share data or as otherwise noted

The types of risk exposures and the way in which such exposures are managed are as follows:

Credit Risk – The Company’s credit risk is primarily attributable to its liquid financial assets including cash and cash equivalents, receivables, and commodity and currency instruments. The Company limits exposure to credit risk on liquid financial assets through maintaining its cash and cash equivalents and reclamation deposits with high-credit quality financial institutions. Sales of precious metals are to entities considered to be credit worthy, as evaluated through the Company’s risk management program, which includes an evaluation of new and existing customers and quarterly monitoring.

Liquidity Risk – The Company ensures that there is sufficient capital in order to meet short term business requirements, after taking into account cash flows from operations and the Company’s holdings of cash and cash equivalents. The Company believes operating cash flows will be sufficient to fund the ongoing capital improvements at the Seabee properties for the next twelve months. The Company’s cash is invested in business accounts with quality financial institutions and is available on demand.

Market Risk – Market risk is the potential for loss from adverse changes in the market value of financial instruments. The level of market risk that the Company is exposed to varies depending on the composition of its derivative instrument portfolio, as well as current and expected market conditions. The significant market risk exposures to which the Company is exposed are Foreign exchange risk, Commodity price and Interest rate risk. These are discussed further below:

Foreign exchange risk – The results of the Company’s operations are subject to currency risks. The Company’s revenues from the production and sale of gold are denominated in U.S. dollars. However, the Company’s operating expenses are primarily incurred in Canadian dollars and its liabilities are primarily denominated in Canadian dollars. The Company is not exposed to material foreign exchange risk on its financial instruments.

For a $0.01 movement in the US$/CDN$ exchange rate, based on assumptions comparable to third quarter 2014 actuals, earnings and cash flow will have a corresponding movement of $0.9 million, or $0.00 per share.

Interest rate risk – In respect to the Company’s financial assets, the interest rate risk mainly arises from the interest rate impact on our cash and cash equivalents, reclamation deposits and debt. In respect to financial liabilities, one of the Company’s demand loans carries a floating interest rate with the balance of Company debt at fixed interest rates. When possible, the Company will fix its interest costs to avoid variations in cash flows. Due to the greater proportion of fixed rate debt, a one percent change in interest rates would not materially impact earnings or cash flows.

Commodity price risk – The value of the Company’s mineral resources is related to the price of gold and the outlook for this mineral. Gold and precious metal prices historically have fluctuated widely and are affected by numerous factors outside of the Company’s control, including, but not limited to, industrial and retail demand, central bank lending, forward sales by producers and speculators, levels of worldwide production, short-term changes in supply and demand because of speculative hedging activities and certain other factors related specifically to gold. The profitability of the Company’s operations is highly correlated to the market price of gold. If the gold price declines below the cost of production at the Company’s operations, for a prolonged period of time, it may not be economically feasible to continue production. The Company is not exposed to material commodity price risk on its financial instruments.

For a U.S. $10 movement in gold price per ounce, based on assumptions comparable to third quarter 2014 actuals, earnings and cash flow will have a corresponding movement of CDN $0.7 million, or $0.00 per share.

At September 30, 2014, the Company had derivative instruments outstanding in the form of forward sales contracts relating to 2014 production totaling 12,500 ounces. The market value gain inherent in these contracts at September 30, 2014 was $0.9 million. The Company did not have any derivative instruments outstanding at September 30, 2013.

Fair Value - The Company has various financial instruments comprised of cash and cash equivalents, receivables, short and long-term investments, restricted promissory notes, reclamation deposits, demand loans, accounts payable and accrued liabilities, long-term debt, and royalty obligations.

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. For disclosure purposes, all financial instruments measured at fair value are categorized into one of three hierarchy levels, described below. The fair value hierarchy establishes three levels to classify the inputs to valuation techniques used to measure fair value. Each level is based on the transparency of the inputs used to measure the fair values of assets and liabilities:

Page 20

Claude Resources Inc.
Notes to the Condensed Consolidated Interim Financial Statements
For the nine months ended September 30, 2014 and 2013
Expressed in Thousands of Canadian Dollars, except share data or as otherwise noted

Level 1 – Values based on unadjusted quoted prices in active markets that are accessible at the measurement date for identical assets or liabilities.

Level 2 – Values based on quoted prices in markets that are not active or model inputs that are observable either directly (for example, interest rate and yield curves observable at commonly quoted intervals, forward pricing curves used to value currency and commodity contracts and volatility measurement used to value option contracts) or indirectly for substantially the full term of the asset or liability.

Level 3 – Values based on prices or valuation techniques that require inputs that are both unobservable and significant to the overall fair value measurement.

The fair values of financial assets and liabilities, together with the carrying amounts shown in the Statement of Financial Position, are as follows:

	SEPT 30		DEC 31
	2014		2013
	Carrying Value	Estimated Fair Value	Carrying Value	Estimated Fair Value
Loans and receivables
Cash and cash equivalents(1)	$10,586	$10,586	-	-
Short-term investments(1)	-	-	$1,500	$1,500
Accounts receivable(2)	252	252	2,873	2,873
Available-for-sale financial assets
Investments(1)	1,483	1,483	143	143
Held-to-maturity
Deposits for reclamation costs	1,829	1,829	2,237	2,237
Derivative instruments(3)	859	859	-	-
Other financial assets
Assets held for sale	-	-	13,423	13,423
Other financial liabilities
Bank indebtedness	-	-	8,623	8,623
Demand and revolving loans	-	-	7,950	7,950
Accounts payable	7,872	7,872	6,997	6,997
Liabilities related to assets held for sale	-	-	2,316	2,316
Net royalty obligations	1,994	1,994	2,827	2,827
Term loan	22,399	23,500	23,628	25,000

⁽¹⁾ Based on quoted market prices – Level 1.

⁽²⁾ At September 30, 2014, there were no receivables that were past due or considered impaired.

⁽³⁾ Based on models with observable inputs – Level 2.

Valuation Techniques:

Investments

The fair value of Investments is determined based on the closing bid price of each security at the balance sheet date. The closing bid price is a quoted market price obtained from the exchange that is the principal active market for the particular security, and therefore Investments are classified within Level 1 of the fair value hierarchy.

Term Loan

The Company’s Term Loan is recorded at amortized cost. The fair value is the principal outstanding on the Term Loan, as the fixed interest rate approximates rates for similar instruments.

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Claude Resources Inc.
Notes to the Condensed Consolidated Interim Financial Statements
For the nine months ended September 30, 2014 and 2013
Expressed in Thousands of Canadian Dollars, except share data or as otherwise noted

15. Capital Management:

The Company’s objective when managing its capital is to safeguard its ability to continue as a going concern so that it can provide adequate returns to shareholders and benefits to other stakeholders. The Company defines capital that it manages as the aggregate of its equity attributable to owners of the Company, which is comprised of issued capital, contributed surplus, accumulated deficit and accumulated other comprehensive income (loss).

The Company manages the capital structure and makes adjustments to it in light of changes in economic conditions and the risk characteristics of the underlying assets and the Company’s working capital requirements. In order to maintain or adjust the capital structure, the Company (upon approval from its Board of Directors, as required) may issue new shares through private placements, sell assets or incur debt. The Board of Directors reviews and approves any material transaction out of the ordinary course of business, including proposals on acquisitions, major investments, as well as annual capital and operating budgets. The Company believes that this approach, given the relative size of the Company, is reasonable. There were no changes in the Company’s approach to capital management during the period ended September 30, 2014. The Company is not subject to externally imposed capital requirements.

The Company utilizes a combination of short-term and long-term debt and equity to finance its operations and exploration.

				SEPT 30		DEC 31
	Interest	Maturity		2014		2013
Demand loans			$	-	$	2,950
Revolving loan				-		5,000
Finance lease liabilities				-		291
Term loan *	10.00%	Apr/2018		22,399		23,628
Total debt			$	22,399	$	31,869
Shareholders’ equity				130,018		122,596
Debt to equity				17.2%		26.0 %

* Closing costs associated with the Company’s long-term debt are netted against the principal balance owing, thereby reducing the carrying value of the Company’s debt on the Statement of Financial Position. Amounts presented in the above table are the amortized cost of the balances owing (Note 11).

At September 30, 2014, the Company is bound by and has met all covenants on its credit facilities.

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