Aurizon Mines Ltd.
AMEX : AZK
TSX : ARZ

Aurizon Mines Ltd.

August 11, 2005 18:18 ET

Aurizon Reports Second Quarter 2005 Results

VANCOUVER, BRITISH COLUMBIA--(CCNMatthews - Aug. 11, 2005) - Aurizon (TSX:ARZ)(AMEZ:AZK) (reports financial results for the second quarter of 2005, which have been prepared on the basis of available information up to August 5, 2005. Management's Discussion and Analysis should be read in conjunction with the most recent annual financial statements of the Company.

The second quarter was highlighted by the following activities at the Casa Berardi Project:

- Installation of hoist and construction of hoist building completed.

- Headframe construction initiated.

- Re-commencement of underground ramp below 550 metre level.

- Continued exploration drilling of the West Mine area.

In addition, Aurizon strengthened its financial position due to the following:

- Sale of Sleeping Giant Mine for $5 million cash.

- $5.8 million balance of $25.3 million gross proceeds equity financing completed.

The $25.3 million equity financing was priced at a premium to the prevailing market price. At June 30, 2005, Aurizon had cash and working capital in excess of $25 million and was debt free.

FINANCIAL RESULTS

On May 11, 2005 Aurizon completed the sale of its 50% interest in Sleeping Giant, realizing a gain on sale from the disposition of this asset of $3.95 million. The Company received its share of gold production up to April 30, 2005, the effective date of the sale. All environmental liabilities and reclamation costs associated with the operation and ultimate closure of the mine have been assumed by the purchaser.

For accounting purposes, the disposition of Sleeping Giant is considered a discontinued operation. Consequently, all of the 2005 Sleeping Giant operating results, as well as prior year's results, are presented as a single line on the Statements of Operations and Cash Flow. In addition, the Balance Sheet has segregated the comparative 2004 Sleeping Giant assets and liabilities from Aurizon's other assets and liabilities.

SECOND QUARTER 2005

Continuing Operations

With the sale of Sleeping Giant, Aurizon does not have any operating mining assets, pending the commencement of commercial production of Casa Berardi anticipated in the fourth quarter of 2006. Consequently, the Statement of Operations and Cash Flow reflects the ongoing administrative expenditures of the Company, net of royalty and interest income. Aurizon incurred a net loss from continuing operations of $1.3 million, or ($0.01) cents per share, compared to a net loss of $0.6 million, or ($0.01) cents per share, in the second quarter of 2004. Corporate costs increased in the second quarter of 2005 over the same period of 2004 due to increased investor relations activity, as well as financial advisory and consulting fees associated with the Casa Berardi project financing and Sarbanes-Oxley related activities.

A reduction of non-cash working capital in the second quarter of 2005, together with net corporate and administrative costs, resulted in cash flow from operating activities of $83,000. In the same period of 2004, cash flow from operating activities declined by $402,000.

During the second quarter of 2005, capital expenditures of $9.7 million were incurred at Casa Berardi for surface infrastructure related to the new shaft, underground development and continued exploration of the West Mine area. During the same period of 2004, $6.8 million was invested at Casa Berardi. Proceeds from the sale of Sleeping Giant provided $5.2 million in the second quarter of 2005.

Financing activities during the second quarter of 2005 totaled $7 million, of which $5.6 million was provided by an equity financing and $1.4 million from provincial refundable mining duties.

Discontinued Operations

The sale of Sleeping Giant in the second quarter of 2005 resulted in a gain on sale of $3.95 million, which, together with one month's operating results, provided net earnings from discontinued operations of $4.0 million compared to earnings of $0.4 million in the same period of 2004.

Sleeping Giant's operating, investing and financing activities during the second quarter of 2005 provided cash of $1.0 million.

Combined Operations

On a combined basis, Aurizon earned $2.7 million or two cents per share in the second quarter of 2005, compared to a loss of $0.2 million or nil cents per share in 2004.



Three months Six months
ended June 30 ended June 30
--------------------------------------------------------------------
2005 2004 2005 2004
--------------------------------------------------------------------

Capital Expenditures by
project
(in thousands of $):

Casa Berardi $9,687 $6,833 $15,980 $10,933

Sleeping Giant
(discontinued
operation) $ 215 $ 934 $ 787 $ 2,027

Other - $ 5 $ 8 $ 25
--------------------------------------------------------------------
Total $9,902 $7,772 $16,775 $12,985
--------------------------------------------------------------------


FIRST HALF 2005

Continuing Operations

For the first half of 2005, Aurizon realized net earnings from continuing operations of $0.1 million, or nil cents per share, compared to a loss of $0.9 million, or one cent per share for the same period of 2004. Excluding the recognition of a $2.06 million flow through tax benefit gain in the first quarter of 2005, Aurizon incurred a net loss of $1.95 million in the first half of 2005.

Corporate and administrative costs and changes in non-cash working capital during the first half of 2005 resulted in a decrease of cash from continuing operating activities of $0.6 million compared to $0.5 million for the same period of 2004.

Year to date 2005, $16 million was invested at Casa Berardi, compared to $10.9 million for the same period of 2004.

Year to date 2005, financing activities total $26 million, of which $24 million was provided by equity financings, $0.6 million from the exercise of incentive stock options and $1.4 million from provincial refundable mining duties.

Discontinued Operations

Operating losses at Sleeping Giant in the first quarter of 2005 together with one month's operating earnings and the gain on sale of the mine in the second quarter, have resulted in net earnings from discontinued operations of $3.8 million in the first half of 2005, compared to earnings of $0.4 million in the same period of 2004.

For the first half of 2005, Sleeping Giant consumed $0.2 million cash compared to $0.6 million in 2004.

Combined Operations

On a combined basis, Aurizon earned $3.9 million or three cents per share in the first half of 2005, compared to a loss of $0.5 million or one cent per share in 2004.

CASA BERARDI

At the end of June 2005, Aurizon completed an internal updated feasibility study incorporating the high-grade lower portion of Zone 113, below the 700 metre level. The high-grade zone situated below the 700 metre level was subject to a scoping study, the results of which were released in January 2005. The objective of the updated feasibility study, which augments the original feasibility study also completed in January 2005, is to strengthen the project by means of a larger reserve base, optimized mine plan, lower unit costs and increased annual gold production. Roscoe Postle Associates Inc. have been engaged to validate the updated feasibility study and produce an independent technical report by the end of the third quarter, 2005.

Surface construction is presently on schedule for a September 2005 completion and remains on budget. Construction of the surface infrastructure required for the new West Mine shaft continued during the second quarter with the completion of the hoist building and significant advancement in erecting the headframe and related infrastructure. The mechanical installation of the hoist is now complete and the electrical installation is underway.

During the second quarter, the contract for all of the underground development was awarded. During the first half of 2005, a ventilation raise down to the 550 metre level and the extension of the ramp down to the 590 metre level was completed. Development is on schedule for commercial production to commence in the fourth quarter of 2006.

Infill drilling results to date continue to confirm the continuity of mineralized zones near the 113 Zone. More than 20,830 metres of infill definition drilling were completed in 87 holes during the first half of 2005 to determine the continuity of mineralized zones which were not incorporated into the January 2005 feasibility study. Approximately 22,000 metres of definition drilling and 3,000 metres of exploration drilling are planned for the second half of 2005. The exploration track drift at the 550 metre level has been extended 468 metres in 2005 to permit further exploration and in-fill drilling of the lower portion of Zone 113 and Zones 118-122 situated east of Zone 113.

Surface exploration activity during the second quarter has focussed on targets west of the West Mine where a new vein system was discovered earlier in the year.

OUTLOOK

With the construction of the surface infrastructure required for the West Mine shaft on schedule, the shaft slashing and sinking is expected to commence in early September 2005 and take twelve months to complete down to its 810 metre depth. Mill modifications and refurbishing are planned to start in August 2005.

Underground development is also progressing, with the objective of having three months of production ore in inventory for start-up by late 2006.

As at June 30, 2005, cash and working capital exceeded $25 million and the Company remains debt free.

Further funding, including a project debt facility, will be required in the second half of 2005 to complete the pre-production work necessary to bring Casa Berardi to commercial production. Discussions to procure a project debt facility are progressing well and the terms of the proposed facility will reflect the results of the new updated feasibility study.



Common Shares
(TSX - ARZ/AMEX - AZK)
-------------------------------------------
-------------------------------------------
June 30, Dec. 31,
2005 2004
-------------------------------------------

Issued 118,791,298 103,421,522
Fully-diluted 126,664,168 111,306,392
Weighted average 113,124,151 100,577,055
-------------------------------------------
-------------------------------------------


As at August 5, 2005, the issued and fully diluted shares of the Company were 118,791,298 and 126,664,168, respectively.

Aurizon is a Canadian-based gold exploration company, with activities in the Abitibi region of north-western Quebec, one of the world's most prolific gold and base metal regions. Aurizon has recently completed a positive Feasibility Study on its' one hundred percent (100%) owned Casa Berardi Project. Pre-production construction is currently underway and production at the Project is anticipated to commence in late 2006. Casa Berardi is accessible by road, has mining permits in place and is on the Hydro Quebec power grid. Aurizon shares trade on the Toronto Stock Exchange under the symbol "ARZ" and on the American Stock Exchange under the symbol "AZK".




----------------------------------------------------------------
Summary of Quarterly Results:
----------------------------------------------------------------
2nd 1st 4th 3rd
Quarter Quarter Quarter Quarter
2005 2005 2004 2004
----------------------------------------------------------------
Revenue $ 233,323 $ 134,574 $ 227,520 $ 179,587
----------------------------------------------------------------
Net Earnings
(Loss) from
continuing
operations ($1,265,074) $1,373,098 ($4,880,193) ($ 402,697)

Net Earnings
(Loss) $2,740,190 $1,153,359 ($4,898,827) ($ 272,678)

Earnings
(Loss) per
share from
continuing
operations -
basic and
diluted ($ 0.01) $ 0.01 ($ 0.05) $ 0.00

Earnings
(Loss) per
share -
basic and
diluted $ 0.02 $ 0.01 ($ 0.05) $ 0.00
----------------------------------------------------------------

----------------------------------------------------------------
2nd 1st 4th 3rd
Quarter Quarter Quarter Quarter
2004 2004 2003 2003
----------------------------------------------------------------
Revenue $ 205,593 $ 224,460 $ 253,783 $ 152,087
----------------------------------------------------------------
Net Earnings
(Loss) from
continuing
operations ($ 582,591) ($ 353,435) ($1,021,369) ($ 417,174)

Net Earnings
(Loss) ($ 228,190) ($ 296,191) ($ 90,662) ($ 38,779)

Earnings
(Loss) per
share from
continuing
operations -
basic and
diluted ($ 0.01) $ 0.00 ($ 0.01) $ 0.00

Earnings (Loss)
per share -
basic and
diluted $ 0.00 $ 0.00 $ 0.00 $ 0.00
----------------------------------------------------------------


This report contains "forward-looking statements", including, but not limited to, statements regarding the Company's expectations as to the market price of gold, strategic plans, future commercial production, production targets and timetables, mine operating costs, capital expenditures, work programs, exploration budgets and mineral reserve and resource estimates. Forward-looking statements express, as at the date of this report, the Company's plans, estimates, forecasts, projections, expectations, or beliefs as to future events or results. Forward-looking statements involve a number of risks and uncertainties, and there can be no assurance that such statements will prove to be accurate. Therefore, actual results and future events could differ materially from those anticipated in such statements. Factors that could cause results or events to differ materially from current expectations expressed or implied by the forward-looking statements, include, but are not limited to, factors associated with fluctuations in the market price of precious metals, mining industry risks and hazards, environmental risks and hazards, uncertainty as to calculation of mineral reserves and resources, requirement of additional financing, risks of delays in construction and other risks more fully described in Aurizon's Annual Report on Form 20-F filed as an alternative form of AIF with the Securities Commissions of the provinces of British Columbia, Ontario and Quebec, with the United States Securities and Exchange Commission, and with the Toronto Stock Exchange. This 20-F document is available on Sedar at www.sedar.com.



Aurizon Mines Ltd.
Consolidated Balance Sheets (unaudited) - as at

June 30 December 31
2005 2004
--------------------------------------------------------------------
$ $
ASSETS As Restated
CURRENT (Note 3)

Cash and cash equivalents 26,589,973 12,065,681
Accounts receivable 1,002,730 2,850,841
Refundable tax credits 1,105,684 1,105,684
Prepaids 1,280,167 586,644
Inventory 740,085 786,048
Current assets of discontinued
operation (Note 3) - 743,994
--------------------------------------------------------------------
30,718,639 18,138,892

REFUNDABLE TAX CREDITS 780,000 -
RECLAMATION DEPOSITS 106,771 106,771
PROPERTY, PLANT & EQUIPMENT 14,522,168 9,480,250
MINERAL PROPERTIES 63,686,891 53,773,864
NON-CURRENT ASSETS OF
DISCONTINUED OPERATION (Note 3) - 4,651,464
--------------------------------------------------------------------
TOTAL ASSETS 109,814,469 86,151,241
--------------------------------------------------------------------
--------------------------------------------------------------------

LIABILITIES
CURRENT

Accounts payable and accrued
liabilities 5,006,192 3,570,693
Current liabilities of
discontinued operation (Note 3) - 2,325,597
--------------------------------------------------------------------
5,006,192 5,896,290

ASSET RETIREMENT OBLIGATIONS 1,418,141 1,363,597
FUTURE INCOME TAX LIABILITIES 2,587,974 2,587,974
NON-CURRENT LIABILITIES OF
DISCONTINUED OPERATION (Note 3) - 2,298,421
--------------------------------------------------------------------
TOTAL LIABILITIES 9,012,307 12,146,282
--------------------------------------------------------------------

SHAREHOLDERS' EQUITY
SHARE CAPITAL (Note 4)
Common shares issued -
118,791,298 (2004 - 103,421,522) 154,343,340 131,762,523
CONTRIBUTED SURPLUS 742,943 742,943
STOCK BASED COMPENSATION 773,594 450,757
DEFICIT (55,057,715) (58,951,264)
--------------------------------------------------------------------
TOTAL SHAREHOLDERS' EQUITY 100,802,162 74,004,959
--------------------------------------------------------------------
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY 109,814,469 86,151,241
--------------------------------------------------------------------
--------------------------------------------------------------------
The attached notes form an integral part of these consolidated
financial statements

Approved on behalf of the Board,

Robert Normand, Brian Moorhouse,
Director, Chairman of the Audit Committee Director


Aurizon Mines Ltd.
Consolidated Statements of Operations and Deficit (unaudited)

Three months Six months
ended June 30 ended June 30
--------------------------------------------------------------------
2005 2004 2005 2004
--------------------------------------------------------------------
$ $ $ $
As restated As restated
(Note 3) (Note 3)

Revenue
Royalty and other
income 233,323 205,593 367,897 416,426
--------------------------------------------------------------------

Expenses
Administrative and
general costs 989,353 741,411 1,790,793 1,293,871

Stock based
compensation
(Note 4(c)) 322,837 - 322,837 -

Gain on sale of
property, plant
and equipment - (29,850) (115,112) (67,350)

Foreign exchange
(gain) loss 49,179 (15,143) 60,933 (71,299)

Capital taxes 110,130 89,856 207,473 168,997
--------------------------------------------------------------------
1,471,499 786,274 2,266,924 1,324,219
--------------------------------------------------------------------
LOSS FOR THE
PERIOD BEFORE
THE FOLLOWING (1,238,176) (580,681) (1,899,027) (907,793)

INCOME TAX
EXPENSE (26,898) (1,910) (47,949) (28,233)

TAX BENEFITS NOT
PREVIOUSLY
RECOGNIZED
(Note 2) - - 2,055,000 -
--------------------------------------------------------------------
NET EARNINGS (LOSS)
FROM CONTINUING
OPERATIONS (1,265,074) (582,591) 108,024 (936,026)

NET EARNINGS FROM
DISCONTINUED
OPERATION
(Note 3) 4,005,264 354,401 3,785,525 411,645
--------------------------------------------------------------------
NET EARNINGS
(LOSS) FOR
THE PERIOD 2,740,190 (228,190) 3,893,549 (524,381)

DEFICIT -
BEGINNING
OF PERIOD (57,797,905) (53,551,570) (58,951,264) (53,255,379)
--------------------------------------------------------------------
DEFICIT - END
OF PERIOD (55,057,715) (53,779,760) (55,057,715) (53,779,760)
--------------------------------------------------------------------
EARNINGS (LOSS)
PER SHARE -
Basic and
diluted 0.02 0.00 0.03 (0.01)
--------------------------------------------------------------------
EARNINGS (LOSS)
PER SHARE FROM
CONTINUING
OPERATIONS -
Basic and
diluted (0.01) (0.01) 0.00 (0.01)
--------------------------------------------------------------------
--------------------------------------------------------------------
Weighted average
number of
common shares
outstanding 118,791,298 97,841,120 113,124,151 97,778,870
--------------------------------------------------------------------
--------------------------------------------------------------------


Aurizon Mines Ltd.
Consolidated Statements of Cash Flow (unaudited)

Three months Six months
ended June 30 ended June 30
--------------------------------------------------------------------
2005 2004 2005 2004
--------------------------------------------------------------------
$ $ $ $
As restated As restated
(Note 3) (Note 3)

OPERATING ACTIVITIES
Net (loss)
earnings for the
period from
continuing
operations (1,265,074) (582,591) 108,024 (936,026)
Add (deduct)
items not
requiring an
outlay of cash:
Depreciation 17,486 21,671 34,958 43,029
Unrealized
foreign
exchange
(gain) loss 51,000 12,829 - (29,700)
(Gain) loss on
sale of
property,
plant &
equipment - (29,850) (115,112) (67,350)
Stock based
compensation 322,837 - 322,837 -
Tax benefits not
previously
recognized - - (2,055,000) -
--------------------------------------------------------------------
Cash flow from
operations (873,751) (577,941) (1,704,293) (990,047)
Decrease
(increase)
in non-cash
working
capital items 956,623 175,701 1,118,537 489,426
--------------------------------------------------------------------
82,872 (402,240) (585,756) (500,621)
--------------------------------------------------------------------
INVESTING ACTIVITIES
Property, plant
& equipment (3,906,894) (159,980) (5,141,757) (310,056)
Reclamation
deposits - (59,517) - (59,517)
Mineral
properties (5,780,731) (6,677,515) (10,845,957) (10,647,342)
Proceeds from
sale of
Sleeping Giant
(Note 3) 5,201,649 - 5,201,649 -
Proceeds on
disposal of
property, plant
& equipment - 78,000 180,000 183,000
--------------------------------------------------------------------
(4,485,976) (6,819,012) (10,606,065) (10,833,915)
--------------------------------------------------------------------
FINANCING ACTIVITIES
Mining duties 1,390,091 243,587 1,390,091 243,587
Issuance of
shares 5,583,820 8,759,048 24,635,817 8,922,548
--------------------------------------------------------------------
6,973,911 9,002,635 26,025,908 9,166,135
--------------------------------------------------------------------
INCREASE (DECREASE)
IN CASH FROM
CONTINUING
OPERATIONS 2,570,807 1,781,383 14,834,087 (2,168,401)

INCREASE (DECREASE)
IN CASH FROM
DISCONTINUED
OPERATION (Note 3) 986,005 102,998 (182,268) (564,979)
--------------------------------------------------------------------
INCREASE (DECREASE)
IN CASH AND CASH
EQUIVALENTS 3,556,812 1,884,381 14,651,819 (2,733,380)
--------------------------------------------------------------------
CASH AND CASH
EQUIVALENTS -
BEGINNING OF
PERIOD 23,033,161 22,463,078 11,938,154 27,080,839
--------------------------------------------------------------------
CASH AND CASH
EQUIVALENTS -
END OF PERIOD 26,589,973 24,347,459 26,589,973 24,347,459
--------------------------------------------------------------------
--------------------------------------------------------------------



Notes to Consolidated Financial Statements (unaudited)
(all figures in Canadian dollars)

1. Basis of Presentation

The accompanying unaudited interim financial statements have been prepared in accordance with Canadian generally accepted accounting principles on a basis consistent with those outlined in the Company's audited financial statements for the year ended December 31, 2004. These notes do not include all of the information and disclosures required by Canadian generally accepted accounting principles for annual financial statements. These interim financial statements should be read in conjunction with the most recent annual financial statements of the Company.

The accompanying unaudited interim financial statements of the Company have been prepared by and are the responsibility of the Company's management. The Company's independent auditors have not performed a review of these financial statements in accordance with standards established by the Canadian Institute of Chartered Accountants.

2. Income Taxes

Effective March 31, 2004, the Company has adopted a new CICA Accounting Standard, EIC 146, in respect of flow through shares. Under this Standard, a future income tax liability must be recognized, and the shareholders' equity reduced, on the date that the Company renounces the tax credits associated with the flow through expenditures, provided that there is reasonable assurance that the expenditures will be made.

A company with future income tax assets that it has not recognized in previous years as a result of applying the "more likely than not" test thereby recording a valuation allowance, must recognize the previously unrecorded future income tax assets as a reduction of income tax expense included in the determination of net income or loss in the period incurred.

The net effect of the adoption of this Standard has resulted in the recognition of tax benefits not previously recognized in the statements of operations of $2,055,000 and a corresponding reduction in shareholders' equity.

3. Disposition of Sleeping Giant Mine

On May 11, 2005, the Company completed the sale of its 50% interest in the Sleeping Giant Mine for net proceeds of $4,984,336. The Company recorded an after-tax gain of $3,954,907 on the transaction. All environmental liabilities and reclamation costs associated with the operation and ultimate closure of the mine have been assumed by the purchaser.

For accounting purposes, the disposition of Sleeping Giant is considered a discontinued operation and its results for 2005 and prior years are presented as a single line item on the Statements of Operations and Cash Flow.

The gain on sale, statements of operations, and cash flow from Sleeping Giant are as follows:



a) Gain on Sale:


Total Consideration $4,984,336

Less:
Net assets disposed of
Cash overdraft ($ 217,312)
Working capital (1,484,013)
Reclamation deposits 1,097,530
Property, plant and equipment 614,004
Mineral properties 3,350,800
Asset retirement obligations (1,587,287)
Other long term liabilities (744,293) 1,029,429
-------------------------------------------------------
Gain on sale $3,954,907
-------------------------------------------------------
-------------------------------------------------------


b) Earnings from discontinued operation:

Three months Six months
ended June 30 ended June 30
--------------------------------------------------------------------
2005 2004 2005 2004
--------------------------------------------------------------------
$ $ $ $

Revenues 2,285,692 5,119,885 5,218,178 8,576,871
Operating costs (2,045,736) (3,683,333) (4,912,706) (6,382,644)
Depreciation
and depletion (181,695) (1,056,821) (441,695) (1,735,155)
Accretion (7,904) (25,330) (33,159) (47,427)
--------------------------------------------------------------------
Net earnings
(loss) 50,357 354,401 (169,382) 411,645
Gain on sale 3,954,907 - 3,954,907 -
--------------------------------------------------------------------
Net earnings
(loss) from
discontinued
operation 4,005,264 354,401 3,785,525 411,645
--------------------------------------------------------------------
--------------------------------------------------------------------

c) Cash flow from discontinued operation:

Three months Six months
ended June 30 ended June 30
--------------------------------------------------------------------
2005 2004 2005 2004
--------------------------------------------------------------------
$ $ $ $

Operating activities 922,078 968,838 335,408 1,539,086
Investing activities (270,965) (1,074,953) (852,568) (2,313,178)
Financing activities 334,892 209,113 334,892 209,113
--------------------------------------------------------------------
Net increase
(decrease) in cash 986,005 102,998 (182,268) (564,979)
--------------------------------------------------------------------
--------------------------------------------------------------------


4. Share Capital

a) Private Placement

On March 31, 2005, the Company completed a private placement of 7,805,555 flow through common shares at a price of $1.80 per share and 3,638,888 common shares at a price of $1.50 per share, resulting in gross proceeds of $19,508,331.

On April 21, 2005, the Company issued a further 2,750,000 flow through common shares at a price of $1.80 per share and 583,333 common shares at a price of $1.50 per share for gross proceeds of $5,825,000. At June 30, 2005 the Company has a commitment to incur $19,049,999 of eligible flow through expenditures at Casa Berardi prior to December 31, 2006.

b) Warrants

Outstanding warrants issued pursuant to private placements as at June 30, 2005 and the changes during the periods ended on those dates are presented below. All of the outstanding warrants expire in the third quarter of 2005. One warrant is exchangeable for one common share:



Three months ended June 30, Six months ended June 30,
2005 2005
--------------------------------------------------------------------
Weighted-average Weighted-average
Shares exercise price Shares exercise price
--------------------------------------------------------------------
Outstanding
at beginning
of period 6,300,370 $2.43 6,300,370 $2.43
Issued - - - -
Exercised - - - -
Expired (180,000) $2.00 (180,000) $2.00
--------------------------------------------------------------------
Outstanding
at end of
period 6,120,370 $2.45 6,120,370 $2.45
--------------------------------------------------------------------
--------------------------------------------------------------------


c) Incentive Stock Options

During the second quarter of 2005, incentive stock options were granted to officers, directors and employees to purchase up to 805,000 shares at an exercise price of $1.50 per share. The exercise price of the incentive stock options was fixed at a 26% premium over the prevailing market price of the shares at the date of grant.

The fair value of the options granted was estimated as $0.40 per share option on the date of grant based on the Black-Scholes option-pricing model with the following weighted average assumptions:



2005
------------------------------------
Expected volatility 57%
Risk-free interest rate 3.22%
Expected lives 3 Years
Dividend yield Nil

Accordingly, the Company recorded a stock based compensation expense
of $322,837 relating to these options.

The status of stock options granted to officers, directors and
employees as at June 30, 2005 and the changes during the periods
ended is presented below:

Three months ended June 30, Six months ended June 30,
2005 2005
--------------------------------------------------------------------
Weighted-average Weighted-average
Shares exercise price Shares exercise price
--------------------------------------------------------------------
Outstanding
at beginning
of period 977,500 $1.93 1,584,500 $1.57
Granted 805,000 $1.50 805,000 $1.50
Exercised (30,000) $1.00 (592,000) $1.00
Expired - $1.00 (45,000) $1.00
--------------------------------------------------------------------
Outstanding
at end of
period 1,752,500 $1.75 1,752,500 $1.75
--------------------------------------------------------------------
--------------------------------------------------------------------


5. Commitments

a) As at June 30, 2005, the Company has contractual obligations in respect of construction and development activities at Casa Berardi totaling $36 million, of which $17 million is due in the second half of 2005, and the balance due in 2006.

b) The Company has a commitment to purchase $1.2 million of mine equipment in the fourth quarter of 2005, of which $120,000 has been advanced as a deposit.


Contact Information

  • Aurizon Mines Ltd.
    David P. Hall
    President
    (604) 687-6600 or Toll Free: 1-888-411-GOLD
    or
    Aurizon Mines Ltd.
    Ian S. Walton
    Chief Financial Officer
    (604) 687-6600 or Toll Free: 1-888-411-GOLD
    (604) 687-3932 (FAX)
    info@aurizon.com
    www.aurizon.com