Knight Resources 6-K March Quaterly Report

FORM 6-K

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Report of Foreign Issuer

Pursuant to Rule 13a-16 or 15d-16

of the Securities Exchange Act of 1934

Knight Resources Ltd.

(Translation of registrant’s name into English)

3^rd Floor, 157 Alexander Street, Vancouver, BC V6A 1B8

(Address of principal executive officer)

Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F.

Form 20-FüForm 40-F ________

Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.

Yes________No::ü

If “Yes” is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b): 82-_________.

SIGNATURES

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

Knight Resources Ltd.

 Registrant

Dated: May 27, 2005By: /s/David Patterson/s/, CEO

Knight Resources Ltd.

Quarterly Financial Statements

For The Six Months Ended March 31, 2005

(Unaudited)

Notice to Reader

The accompanying unaudited financial statements of Knight Resources Ltd. (“the Company”) have been prepared by and are the responsibility of the Company’s management. The Company’s independent auditor has not performed a review of the Company’s unaudited interim financial statements as at and for the six months ended March 31, 2005.

KNIGHT RESOURCES LTD.
(An exploration stage company)
Balance Sheets
(Unaudited)
(Canadian Dollars)
	March 31,	September 30,
	2005	2004
ASSETS
Current assets
Cash and cash equivalents	$ 56,028	$ 764,000
Short-term investments	545,764	294,711
Accounts receivable	19,868	16,371
Advances for exploration	31,052	-
Tax credits recoverable	3,230,264	2,843,026
Prepaid expenses	24,602	37,946
	3,907,578	3,956,054
Property, plant and equipment	21,636	22,070
	$ 3,929,214	$ 3,978,124
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable and accrued liabilities	$ 69,643	$ 1,388,398
Shareholders' equity
Share capital(note 4)	17,898,718	15,532,563
Contributed surplus(note 5)	2,174,899	2,042,698
Deficit	(16,214,046)	(14,985,535)
	3,859,571	2,589,726
	$ 3,929,214	$ 3,978,124
Nature of operations and basis of presentation (note 1)
Commitment (note 3)
Contingency (note 3)
Subsequent events (note 7)
Approved by the Directors:
"Harvey Keats"
"Kerry Sparkes"

KNIGHT RESOURCES LTD.
(An exploration stage company)
Statements of Operations
(Unaudited)
(Canadian Dollars)
		Three months ended March 31,		Six months ended March 31,
	2005	2004	2005	2004
Revenue
Oil and gas sales	$ -	$ -	$ 9,770	$ 12,945
Production expenses
Royalties	3,840	9	5,862	3,229
Operating costs	1,956	1,441	4,771	5,427
	5,796	1,450	10,633	8,656
Net production revenue (loss)	(5,796)	(1,450)	(863)	4,289
Expenses
Exploration expenditures
(see schedule 1) (note 3)	523,315	323,219	796,398	1,056,984
General and administrative(see schedule 2)	245,672	253,579	481,939	1,526,853
Promotion	73,359	79,446	149,834	160,493
Travel	14,733	15,224	48,872	45,300
	857,079	671,468	1,477,043	2,789,630
Loss before income taxes	(862,875)	(672,918)	(1,477,906)	(2,785,341)
Future income tax recovery	249,395	-	249,395	-
Loss for the period	$ (613,480)	$ (672,918)	$ (1,228,511)	$ (2,785,341)
Basic and diluted loss per share	$ (0.01)	$ (0.01)	$ (0.02)	$ (0.06)
Weighted average number of
common shares outstanding	58,820,317	46,833,343	54,807,393	43,409,328

KNIGHT RESOURCES LTD.
(An exploration stage company)
Statements of Deficit
(Unaudited)
(Canadian Dollars)
		Six months ended March 31,
	2005	2004
Deficit, beginning of period	$ (14,985,535)	$ (7,593,670)
Loss for the period	(1,228,511)	(2,785,341)
Deficit, end of period	$ (16,214,046)	$ (10,379,011)

KNIGHT RESOURCES LTD.
(An exploration stage company)
Statements of Cash Flows
(Unaudited)
(Canadian Dollars)
		Three months ended March 31,		Six months ended March 31,
	2005	2004	2005	2004
Cash Provided by (Used for):
Operating Activities
Loss for the period	$ (613,480)	$ (672,918)	$ (1,228,511)	$ (2,785,341)
Items not involving cash:
Amortization	1,846	1,032	3,492	1,793
Compensation expense	81,865	94,000	132,201	1,187,750
Future income tax recovery	(249,395)	-	(249,395)	-
Accrued interest income	775	(30,094)	(1,053)	(30,094)
Changes in non-cash operating working capital:
Accounts receivable	4,288	21,009	(3,497)	5,737
Advances for exploration	(31,052)	-	(31,052)	883,835
Tax credits recoverable	(188,875)	(146,000)	(387,238)	(486,000)
Prepaid expenses	(1,057)	(81,047)	13,344	(83,800)
Accounts payable and accrued liabilities	15,051	100,344	(1,318,755)	233,959
	(980,034)	(713,674)	(3,070,464)	(1,072,161)
Financing Activities
Issuance of common shares	1,040,050	303,125	2,615,550	4,826,850
Subscription proceeds	(500,000)	-	-	-
	540,050	303,125	2,615,550	4,826,850
Investing Activities
Purchase of short-term investments	(500,000)	(4,083,900)	(500,000)	(4,083,900)
Redemption of short-term investments	250,000	-	250,000	-
Purchase of property, plant and equipment	(1,602)	(4,052)	(3,058)	(5,417)
Expenditures on oil and gas property	-	(35,000)	-	(70,000)
Expenditures on mineral property	-	(138,599)	-	(138,599)
	(251,602)	(4,261,551)	(253,058)	(4,297,916)
Decrease in cash and cash equivalents	(691,586)	(4,672,100)	(707,972)	(543,227)
Cash and cash equivalents,
beginning of period	747,614	4,843,903	764,000	715,030
Cash and cash equivalents, end of period	$ 56,028	$ 171,803	$ 56,028	$ 171,803

KNIGHT RESOURCES LTD.

(An exploration stage company)

Notes to the Financial Statements

March 31, 2005

(Unaudited)

(Canadian Dollars)

1.   Nature of Operations and Basis of Presentation

The Company is a public company incorporated under the Company Act, British Columbia. Its shares are listed on the TSX Venture Exchange and the Frankfurt Stock Exchange. The principal business of the Company is exploration of mineral and oil and gas properties. As of the date of this report, the Company has not determined whether its properties contain reserves that are economically recoverable.

These interim financial statements have been prepared in accordance with Canadian generally accepted accounting principles for interim financial information. Accordingly, they do not include all of the information and notes to the financial statements required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for fair presentation have been included. Operating results for the six month period ended March 31, 2005 are not necessarily indicative of the results that may be expected for the year ended September 30, 2005. The balance sheet at September 30, 2004 has been derived from the audited financial statements at that date but does not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements.

2.Significant Accounting Policies

These interim financial statements have been prepared by management in accordance with the accounting policies described in the Company’s annual financial statements for the year ended September 30, 2004. For further information, refer to the financial statements and notes thereto included in the Company’s Annual Report to Shareholders for the year ended September 30, 2004.

3.Mineral Property

West Raglan Property

	March 31,	September 30,
Cumulative expenditures	2005	2004
Exploration expenditures	$ 9,810,762	$ 8,627,126
Refundable tax credits and mining duties	(3,921,250)	(3,534,012)
	$ 5,889,512	$ 5,093,114

On March 26, 2003, the Company entered into a formal option and joint venture agreement with Anglo American Exploration (Canada) Limited (‘Anglo American’), whereby the Company can earn a 49% participating joint venture interest in the 720 km²West Raglan Project (‘the Project’) located in northern Quebec, Canada.

To exercise the option, the Company must incur a total of $11.8 million of expenditures on exploration and related work on or before December 31, 2006. The Company has agreed to spend $5 million in calendar 2005, which will result in the option being exercised during the 2005 program.

On April 21, 2004 Novawest Resources Inc. (‘Novawest’) of Vancouver, BC, commenced litigation in the Supreme Court of British Columbia against Anglo American. The lawsuit, Action No. SO42230, relates primarily to the question of ownership of the claims that form the West Raglan Property. On June 24, 2004 Anglo American filed a Statement of Defence in the Supreme Court of British Columbia. In the Statement of Defense, Anglo American provides a detailed account of the events that led to Anglo American’s staking of the West Raglan Property, and more specifically challenges the basis for all claims made by Novawest Resources Inc.

On November 12, 2004 the Company commenced litigation in the Supreme Court of British Columbia against Novawest and all the directors and officers of Novawest (the ‘Personal Defendants’). The lawsuit, Action No. SO46306 alleges that the Novawest Action was filed, at the behest of the Personal Defendants, with the purpose, among other things, of causing injury to the Company.

3.Mineral Property (cont’d)

The Company is relying on representations in its Option and Joint Venture Agreement with Anglo American that Anglo American is the valid owner of all of the claims that form the West Raglan Project.

4.Share Capital

	Number	Value
Balance at September 30, 2004	48,411,706	$ 15,532,563
Exercise of agent's options	1,300,000	260,000
Exercise of warrants	8,195,000	1,248,750
Private placements	3,800,000	1,106,800
Future income tax for renunciation of Canadian
Exploration Expenses pursuant to flow-through shares		(249,395)
Balance at March 31, 2005	61,706,706	$ 17,898,718

On December 29, 2004, the Company issued 1,000,000 common shares to Anglo American through a non-brokered private placement at a price of $0.45 per share for proceeds of $450,000. Along with the shares, the Company issued Anglo American 1,000,000 non-transferable share purchase warrants entitling Anglo American to purchase one additional common share of the Company at a price of $0.45 expiring December 29, 2005.

On December 29, 2004, the Company issued 800,000 flow-through common shares through a non-brokered private placement at a price of $0.25 per share for proceeds of $200,000 less share issuance costs of $7,000. For income tax purposes, the subscription funds of $200,000 will be applied towards carrying out exploration activities and the expenditures will be renounced in favour of the subscriber. Accordingly, the Company will not have available deductions from taxable income in respect of such expenditures.

On January 12, 2005, the Company issued 2,000,000 flow-through common shares through a non-brokered private placement at a price of $0.25 per share for proceeds of $500,000 less fees and costs of $36,200. For income tax purposes, the subscription funds of $500,000 will be applied towards carrying out exploration activities and the expenditures will be renounced in favour of the subscriber. Accordingly, the Company will not have available deductions from taxable income in respect of such expenditures.

5.Stock-based Compensation

The Company uses the fair value based method of accounting for all stock-based awards. During the six months ended March 31, 2005, the Company re-priced 930,000 stock options and granted 1,240,000 stock options with a compensation cost of $132,201. The Company calculated the compensation cost by using the Black-Scholes option pricing model assuming a weighted average risk-free interest rate of 3%, a dividend yield of nil, an expected volatility of 87% and expected life of the stock options of 1.6 years.

6.Related Party Transactions

Related parties are directors, officers and other companies with common directors and/or officers of the Company. Amounts due to related parties are non-interest bearing and without specific terms of repayment.

Related party transactions are in the normal course of operations and are measured at the exchange amount, which is the amount of consideration established and agreed to by the related parties.

The following is a summary of the related party transactions that occurred throughout the period:

6.Related Party Transactions (cont’d)

	2005	2004
Directors fees	$ 12,000	$ -
Management fees	$ 81,795	$ 127,600
Rent	$ 15,000	$ -
Exploration expenditures - management fees	$ 78,630	$ -

7.Subsequent Events

a) Subsequent to March 31, 2005, the Company issued 1,840,000 units to Anglo American through a non-brokered private placement at a price of $0.30 per unit for proceeds of $552,000. Each unit is comprised of one common share and one transferable share purchase warrant entitling the holder to purchase one additional common share of the Company at a price of $0.35 expiring April 22, 2007. The private placement fulfills Anglo American’s obligation to fund 20% of exploration on the West Raglan Project during the option earn-in phase through private placements in the Company.

b) Subsequent to March 31, 2005, the Company issued 1,833,334 units through a non-brokered private placement at a price of $0.30 per unit for proceeds of $550,000. Each unit is comprised of one common share and one transferable share purchase warrant entitling the holder to purchase one additional common share of the Company at a price of $0.35 expiring April 22, 2007.

c) Subsequent to March 31, 2005, the Company received roughly $2,400,000 from the Quebec Government for refundable tax credits relating to fiscal 2004 West Raglan exploration expenditures.

KNIGHT RESOURCES LTD.
(An exploration stage company)
Exploration Expenditures				Schedule 1
(Canadian Dollars)
		Three months ended March 31,		Six months ended March 31,
	2005	2004	2005	2004
Lagarde
Recovery of abandonment costs	$ -	$ -	$ -	$ (4,168)
Net proceeds on sale of wellhead and tubing	-	-	-	(8,250)
	-	-	-	(12,418)
West Raglan Property
Drilling	4,109	105,648	147,759	500,431
Geochemistry	2,002	3,602	14,496	41,508
Geology	142,517	271,453	260,454	546,409
Geophysics	51,282	13,834	111,493	273,856
Land	8,843	-	8,843	-
Mobilization	363,886	-	363,886	-
Other	124,262	74,682	261,415	193,198
Safety and environment	15,290	-	15,290	-
	712,191	469,219	1,183,636	1,555,402
Refundable tax credits	(158,762)	(119,000)	(325,498)	(394,000)
Mining duties refund	(30,114)	(27,000)	(61,740)	(92,000)
	523,315	323,219	796,398	1,069,402
	$ 523,315	$ 323,219	$ 796,398	$ 1,056,984
General and Administrative Expenses				Schedule 2
(Canadian Dollars)
		Three months ended March 31,		Six months ended March 31,
	2005	2004	2005	2004
Accounting and audit	$ 32,462	$ 30,329	$ 32,462	$ 30,329
Administrative fees	27,000	25,500	54,000	52,500
Amortization	1,846	1,032	3,492	1,793
Consulting fees	-	-	-	48,000
Directors fees	6,000	-	12,000	-
Filing fees	6,360	10,604	16,255	30,794
Legal fees	32,287	18,430	52,909	18,430
Management fees	37,105	68,100	81,795	127,600
Office and miscellaneous	12,752	10,176	65,424	27,250
Rent	7,500	12,000	15,000	18,000
Stock-based compensation expense(note 5)	81,865	94,000	132,201	1,187,750
Telephone and communications	2,875	4,167	19,197	10,617
Transfer agent	2,410	3,055	4,618	9,644
Less: interest income	(4,790)	(23,814)	(7,414)	(35,854)
	$ 245,672	$ 253,579	$ 481,939	$ 1,526,853

KNIGHT RESOURCES LTD.

Management’s Discussion and Analysis

Six Months Ended March 31, 2005

The following discussion and analysis of the results of operations and financial condition (“MD&A”) for Knight Resources Ltd. (“the Company”) should be read in conjunction with the unaudited interim consolidated financial statements for the six months ended March 31, 2005 and related notes thereto. The financial information in this MD&A is derived from the Company’s financial statements prepared in accordance with Canadian generally accepted accounting principles. The effective date of this MD&A is May 25, 2005.

This MD&A may contain forward looking statements based on assumptions and judgments of management regarding events or results that may prove to be inaccurate as a result of exploration or other risk factors beyond its control. Actual results may differ materially from the expected results.

Description of Business

The Company is an exploration company engaged in the acquisition and exploration of natural resource properties with potential for nickel, copper, cobalt, platinum and palladium deposits. The Company’s primary property is the West Raglan Project, located in the Province of Quebec, Canada. The Company also has an interest in a gas well near Fort St. John, British Columbia (the Fort St. John Project) and an interest in an oil and gas prospect in the Foothills Region of Alberta (the Maycroft Project). The Company is a reporting issuer in British Columbia and Alberta and its shares are listed on the TSX Venture Exchange and the Frankfurt Stock Exchange under the symbols KNP and KRL respectively.

Risks and Uncertainties

The Company’s principal activity of mineral exploration is considered to be very high risk. Companies in this industry are subject to many and varied kinds of risks, including but not limited to, environmental, commodity prices, political and economic, with some of the most significant risks being:

1.   Substantial expenditures are required to explore for mineral reserves and the chances of identifying economical reserves are extremely small;

2.   The junior resource market, where the Company raises funds, is extremely volatile and there is no guarantee that the Company will be able to raise funds as it requires them;

3.   Although the Company has taken steps to verify title to the mineral properties it has an interest in or is earning into, there is no guarantee that the property will not be subject to title disputes or undetected defects; and

4.   The Company is subject to the laws and regulations relating to environmental matters, including provisions relating to reclamation, discharge of hazardous material and other matters. The Company conducts its exploration activities in compliance with applicable environmental protection legislation and is not aware of any existing environmental problems related to its properties that may cause material liability to the Company.

Exploration Projects

West Raglan, Quebec

On March 26, 2003, the Company entered into a formal Option and Joint Venture Agreement with Anglo American Exploration (Canada) Ltd. ('Anglo American') whereby the Company can earn a 49% participating joint venture interest in the 720 square kilometre West Raglan Project located in the Cape Smith Belt in northern Quebec. To exercise the option, the Company must incur a total of $11.8 million of expenditures on exploration and related work on the property on or before December 31, 2006.

Anglo American has the right to increase its interest in the Project from 51% to 70% by completing, at its own cost, a bankable feasibility study. At the Company’s election, Anglo American can further increase its interest in the West Raglan Project to 75% by arranging production financing for both parties.

Anglo American Exploration (Canada) Ltd. is a wholly owned subsidiary of Anglo American plc, of London, England. The Company has funded exploration programs on the West Raglan Project in 2003 and 2004.

2005 Work Program - West Raglan

The Company and Anglo American have finalized a $5 million budget for the 2005 exploration program.

Mobilization of fuel and field supplies from Salluit, Quebec to the West Raglan Project camp was substantially completed in April 2005. Ground geophysical surveys were carried out on the project in April 2005 and surveys are expected to resume in mid June, after break-up, in preparation for a 5,000 metre diamond drill program.

The majority of the 2005 program will consist of diamond drilling. The diamond drill program, which is scheduled to begin in the first week of July, will have two primary components:

1) to follow up on high grade drill intercepts from the 2003 and 2004 programs and un-sourced boulder trains in the Greater Frontier Area; and

2) to follow up on new targets generated by the ground geophysics program in the Raglan Formation and the Povungnituk Group.

The 2005 program is being carried out by West Raglan Project operator Anglo American.

Fort St. John, B.C.

The Company has a 15% working interest in a gas well in Fort St. John, B.C. The well produced approximately 9 million cubic feet of gas during the six months ended March 31, 2005, for net production loss to the Company of $863.

Results of Operations

The Company reported a loss of $1,228,511 (2004 - $2,785,341) and a loss per share of $0.02 (2004 - $0.06) for the six months ended March 31, 2005. The Company’s 2005 loss has decreased significantly compared to 2004 primarily due to lower exploration expenditures on the West Raglan Project, lower stock-based compensation expense and a future income tax recovery of renunciation of flow-through shares.

The Company expended $371,766 less on the West Raglan Project during the six months ended March 31, 2005 compared to 2004 because the bulk of the 2004 exploration program was completed prior to October 1, 2004. The majority of exploration costs are incurred during the summer months.

The Company incurred $1,055,549 less in stock-based compensation during the six months ended March 31, 2005 compared to 2004 because the Company granted 1,240,000 stock options in 2005 compared to 2,825,000 stock options in 2004. Although the Company re-priced 930,000 stock options during the first quarter of fiscal 2005, the incremental stock-based compensation cost amounted to only $50,336.

A portion of the Company’s exploration activities are financed through proceeds received from the issue of flow-through shares. Under the terms of the flow-through share issues, the tax attributes of the related expenditures are renounced to the share subscribers. To recognize the foregone tax benefits to the Company, the carrying value of the shares issued is reduced by the tax effect of the tax benefits renounced to the subscribers. The tax effect of the renouncement is recorded upon renunciation and the corresponding exploration expenditures are incurred or are reasonably likely to be incurred within the permitted time frame. As a result of renouncing $804,500 of Canadian Exploration Expenses during the three months ended March 31, 2005, the Company recorded a reduction in share capital of $249,395 with a corresponding recovery of future income taxes.

Management billed the Company a total of $160,425 (2004 - $127,600) for management services for the six months ended March 31, 2005. Of these amounts, $78,630 (2004 - $nil) was charged to exploration for technical geological services incurred on the West Raglan Project. Management devotes a portion of their time to the Company and a portion of their time to other companies where they are directors and/or officers. Accordingly, management invoices the Company based on the percentage of time each of the individuals devote to the Company. The total fees increased slightly as the Company’s business and projects required slightly more management time.

The Company utilized the services of Institutional Market Communications Inc. to provide European public relations on a month to month basis at a cost of $5,000 per month plus expenses. The Company has also engaged the services of Vanguard Shareholder Solutions Inc. to provide North American public relations on a month to month basis at a cost of $8,000 per month plus expenses. The Company attended investment conferences in Toronto, New Orleans, San Francisco, Quebec City and Vancouver during the six months ended March 31, 2005.

Office and miscellaneous costs increased primarily due to $23,750 of directors and officers liability insurance purchased in the first quarter of fiscal 2005.

Legal fees have increased primarily due to the litigation initiated by Novawest Resources Inc. against Anglo American and the litigation initiated by the Company against Novawest Resources Inc. Additional details regarding the litigation are provided in note 3 of the financial statements.

The Company paid an arms-length private company $54,000 (2004 - $52,500) for accounting, secretarial and general administrative services and paid the same company $nil (2004 - $18,000) for rent of office space.

Financial Condition, Liquidity and Capital Resources

The Company’s working capital position improved by $1,270,279 over the six months ended March 31, 2005. Working capital improved due to $2,615,550 of equity financing during the six months ended March 31, 2005. Most of the funds raised were used to pay down accounts payable and accrued liabilities relating primarily to the 2004 exploration program. The balance of funds will be used for 2005 exploration and operating costs.

The Company’s funds from equity financing were derived as follows: 1) a non-brokered private placement for net proceeds of $450,000 by issuing 1,000,000 units at a price of $0.45 per unit; 2) a non-brokered private placement for net proceeds of $193,000 by issuing 800,000 flow-through common shares at a price of $0.25 per share; 3) a non-brokered private placement for net proceeds of $463,800 by issuing 2,000,000 flow-through common shares at a price of $0.25 per share; 4) issued 1,300,000 common shares pursuant to the exercise of agent’s options for proceeds of $260,000; and 4) issued 8,195,000 common shares pursuant to the exercise of warrants for proceeds of $1,248,750.

Subsequent to March 31, 2005, the Company issued 3,673,334 common shares and warrants for net proceeds of $1,087,000 pursuant to two non-brokered private placements.

Also, subsequent to March 31, 2005, the Company received approximately $2,400,000 from the Quebec Government for refundable tax credits relating to fiscal 2004 West Raglan exploration expenditures. 

The Company currently does not have any revenue producing assets and therefore will be dependent on additional equity financing in order to continue operations and to finance exploration on the West Raglan Project.

To exercise the West Raglan Project option, the Company must incur a total of $11.8 million of expenditures on exploration and related work on or before December 31, 2006. The Company has agreed to fund its share of a $5 million exploration program in calendar 2005. As at March 31, 2005, the Company has incurred approximately $9,800,000 in expenditures and accordingly, after the Company spends a further $2,000,000, the Company will have earned its 49% interest in the West Raglan Project at which time the company will only be responsible for 49% of on-going exploration costs. Therefore, the Company’s net cost of the $5 million program will be approximately $3,800,000. The Company intends to fund these costs primarily through funds on hand and tax credits recoverable from the Quebec Government.

As a part of the Company’s option earn-in agreement with Anglo American, Anglo American is required to fund 20% of the initial $11.8 million in exploration through equity financings in the Company. Based on exploration work carried out to date and funding previously provided by Anglo American, Anglo American was required to provide additional equity financing to the Company in the amount of approximately $552,000 as at March 31, 2005. Anglo American met this commitment subsequent to March 31, 2005 by subscribing for 1,840,000 common shares at $0.30 per share.

Selected Quarterly Information

The following selected consolidated financial data has been prepared in accordance with Canadian generally accepted accounting principles and should be read in conjunction with the Company’s audited consolidated financial statements. All dollar amounts are in Canadian dollars.

Fiscal Quarter Ended	31-Mar-05	31-Dec-04	30-Sep-04	30-Jun-04	31-Mar-04	31-Dec-03	30-Sep-03	30-Jun-03
Interest income	$ 4,790	$ 2,624	$ 5,877	$ 23,721	$ 23,814	$ 12,040	$ 4,976	$ 5,956
Net loss	$ 613,480	$ 615,031	$ 3,998,441	$ 608,083	$ 672,918	$ 2,112,423	$ 1,184,814	$ 412,610
Basic and diluted
loss per share	$ (0.01)	$ (0.01)	$ (0.09)	$ (0.01)	$ (0.01)	$ (0.05)	$ (0.05)	$ (0.02)

The quarterly loss for September 2004 and 2003 was significantly more than prior periods due to large exploration expenditures incurred during the summer months of July, August and September. The quarterly loss for December 2003 was much higher than in previous quarters as a result of new accounting rules for measuring stock option compensation coming into effect in fiscal 2004 and resulted in the fair value of stock options charged to operations. The Company granted 2,825,000 stock options during the three months ended December 31, 2003. Interest income fluctuates depending on the amount of cash on hand the Company has to invest in short term interest bearing investments. Since June 30, 2004, the Company has had smaller amounts of cash on hand to invest which in turn has resulted in smaller amounts of interest income.

Related Party Transactions

All of the Company’s transactions with related parties are disclosed in note 6 of the financial statements. The Company paid the CEO $60,475 (2004 - $72,000), the President $47,150 (2004 - $40,600) and the exploration manager $52,800 (2004 - $15,000).

Outstanding Share Data

As at May 25, 2005, the Company had the following securities issued and outstanding:

	Number	Exercise Price	Expiry Date
Common shares issued and outstanding	65,380,040	n/a	n/a
Warrants	11,260,103	$0.35	Dec 10/05 to Apr 22/07
Stock options	6,530,000	$0.19 to $0.35	Nov 13/05 to May 19/07
Fully Diluted	83,170,143

Subsequent Events

On May 20, 2005 the Company announced that, subject to formal ratification by warrant holders, the Company has negotiated the re-pricing and extension of 6,586,769 warrants currently exercisable at $0.65 per share until June 10, 2005 to $0.35 per share until December 10, 2005. The terms of the warrants will also be amended, as required under TSX Venture Exchange policy, such that if the trading price of the Company’s shares exceeds $0.44 for ten consecutive trading days, the exercise period will be shortened to a period of 30 days.

The Company has extended the exercise period of 1,077,500 stock options, which are currently exercisable at $0.30 per share until June 18, 2005, to June 18, 2007 and 340,000 stock options, which are currently exercisable at $0.25 per share until July 28, 2005, to July 28, 2007.

The Company has re-priced 60,000 stock options, which are currently exercisable at $0.83 per share until July 1, 2006, to $0.35 per share and 2,120,000 stock options, which are currently exercisable at $0.93 per share until December 22, 2005, to $0.35 per share.

Additionally, the Company has granted 500,000 incentive stock options to certain of its directors, officers and employees exercisable at a price of $0.35 per share for a period of two years.

The amendment to the warrant and option terms and the grant of new stock options are subject to the approval of the TSX Venture Exchange.

Directors and Officers

David PattersonDirector and CEOJohn MaherDirector

Harvey KeatsDirector and PresidentLaurie SadlerDirector

Kerry SparkesDirectorErin WalmesleySecretary

Additional Information

Additional information is provided in the Company’s audited financial statements for the periods ended September 30, 2004 and 2003 and the Company’s Information Circular dated December 14, 2004. These documents are available on SEDAR at www.sedar.com. Additional information relating to the Company’s operations and activities can also be found by visiting the Company’s website at www.knightresources.ca.