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Arctic Gold AB (ARCT): Interim report January - March 2011

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First quarter (January  –  March 2011)

  • Capitalized exploration costs for the first quarter amounted to 1.0 (1.0) mkr
  • P/L after tax for the first quarter totaled -1.5 (-0.4) mkr
  • P/L per share for the first quarter totaled -0.20 (-0.24) kr

Main Events During the Period

  • Published report for mineral resources in Bidjovagge showed 1.36 million tons indicated resource with 2.74 g/t gold and 1.21 % copper and 30,000 tons of inferred resource with 2.2 g/t gold and 1.1 % copper. 
  • Application submitted for "utvinningsrett" which is a preparatory step for a Norwegian "driftskoncession" (comparable to an exploitation concession in Sweden)
  • A preliminary initial study of the Bidjovagge project finds that the project already shows good profitability with the current mineral resource and with conservative assumptions regarding mineral prices
  • Studies of archived information regarding Bidjovagge to confirm a new estimation of the mineral resource
  • The work with the Norwegian "reguleringsplan" for Bidjovagge initiated (comparable to Swedish detailed plan)
  • Planning of and order placement for a 8000 m drilling program in Bidjovagge has been started
  • Negotiation and coordination with the Norwegian Sami Parliament and the local reindeer farmers has continued, as well as information and discussions regarding the Bidjovagge project with the municipality of Kautokeino
  • Geophysical ground measurements have been carried out on the gold target at Björklidberget in Sweden

Important events after the end of the reporting period

  • The mineral resource at Bidjovagge has increased by 10%
  • Leading competence in the mining industry is added to the Board of Directors through the recruitment of the new Director of the Board Stefan Månsson
  • The consulting company Ramböll has been contracted for the planning program (the first part of "reguleringsplan")
  • Geophysical data has been confirmed for Bidjovagge from Outokumpu who previously operated the mine
  • Sampling of bottom moraine and drill cutting has been initiated at Björklidberget in Sweden

A message from the CEO

The development of our mining project in Bidjovagge is progressing according to plan, and we have published estimations of the mineral resource in Bidjovagge totaling1.83 million tons indicated resource with 2.45 g/t gold and 1.10 % copper which corresponds to around 4,500 kg of gold and 20,000 tons of copper.  This is positive, and we continue work in investigating the size of the resource in preparation for the planned start of mining.

Several parts are currently progressing in parallell. We have applied for an ”utvinningsrett” according to the Norwegian Mineral Law which can be compared to the first part of an exploitation concession in Sweden. The application is basically for the entire Bidjovagge mine field and will be reviewed by the Norwegian Mining Inspector.

We have also carried out a preliminary study, a so-called Scoping Study, for the Norwegian gold-copper project in Bidjovagge. The study shows the mineral resource already estimated for Bidjovagge is sufficient for a profitable mining operation for five years, and that the project at today's metal prices and certain assumptions has a present estimated value of SEK 500 million. This requires that the estimated mineral resource can be converted to an ore reserve of 1.77 million tons with 2.2 g/t Au and 0.94 % Cu.  Arctic Gold intends to submit an complete application for an exploitation concession, along with continued exploration to increase the mineral resource to at least 3.5 million ton for starting mining operations.

The conclusion is that the project continues to show good profitability already with the current mineral resource and with careful assumptions regarding metal prices for gold and copper over the duration of the project.

During the month of May we have initiated a drilling program at our gold target Björklidberget in Västerbotten where previous operations have shown interesting gold targets.

For further information, please contact the company's CEO and Qualified Person as per SweMin as well as Europe Geologist.

Lars-Åke Claesson
CEO
Arctic Gold AB
46 18 156423
46 70 6733294
claesson@arcticgold.se
www.arcticgold.se

Arctic Gold's business concept is to engage in exploration activities to discover and demonstrate commercially extractable gold and base metal deposits in Scandinavia; The strategy is primarily to carry out exploration work and either sell the project within a few years or to establish mining activities under the company's own control or through a partnership with other companies. Arctic Gold focuses mainly on the Bidjovagge project in northern Norway and current gold and base metal permits in Västerbotten and Norrbotten.

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