NEW SLEEPER GOLD CORPORATION
TSX VENTURE : NWS

NEW SLEEPER GOLD CORPORATION

August 18, 2005 09:36 ET

New Sleeper Gold Corporation Announces its Results for the First Quarter Ended June 30, 2005

LONGUEUIL, QUEBEC--(CCNMatthews - Aug. 18, 2005) - New Sleeper Gold Corporation (the "Company" or "New Sleeper") (TSX VENTURE:NWS) announces the Company's unaudited interim financial and management's discussion and analysis for the quarter ended June 30, 2005 which are available through CCNMatthews website at www.ccnmatthews.com. They are also available on New Sleeper's website (www.newsleepergold.com) and on the Sedar's website (www.sedar.com). The Company holds a 50% interest in the Sleeper Project in Nevada.

Financial Results

All financial results are expressed in Canadian dollars unless otherwise indicated.

For the three-month period ended June 30, 2005, the Company incurred a loss of $229,600 or $0.01 per share compared to a loss of $313,100 or $0.01 per share for the three-month period ended June 30, 2004.

Interest income related to the average cash equivalent available to the Company for the quarter amounted to $35,400 and $44,100 for the period ended June 30, 2004.

For the quarter, the Company incurred administrative expenses of $191,200 and business development expenses amounted to $115,700 compared to $317,500 and $122,600 respectively in the previous corresponding quarter ended June 30, 2004.

Stock-based compensation related to options to purchase shares granted in 2004 (see note 8c to the Consolidated Financial Statements) amounted to $21,400 and to $80,100 in the previous period. The contributed surplus was increased by the same amounts.

Gain on foreign exchange for the period amounted to $46,700 compared to a gain of $172,500 for the previous period and resulted mostly from timing differences between the date where investments in monetary items denominated in US dollars were made and the exchange rate as at June 30, 2005.

An analysis of administrative and development expenses can be summarized as follows:



Quarter Ending June 30th

2005 2004

Remuneration $129,600 $218,700
Professional fees,
legal, accounting and other $19,700 $32,200
Travel expenses $37,900 $65,200
Insurance, rentals and
other office expenses $119,700 $124,000
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$306,900 $440,100
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Consolidated Cash Flows

Operating Activities

After making adjustments in respect of stock-based compensation, amortization, gain on foreign exchange, future income tax recovery and other non-cash items, cash used in operations totalled $205,500 for the quarter ended June 30, 2005, compared to $262,700 for the previous period. After changes in working capital items cash flows used in operating activities amounted to $310,600 for the three-month period ended June 30, 2005 and to $580,600 for the previous period.

Investing Activities

For the three-month period ended June 30, 2005, the participation of the Company in exploration expenditures on the property has amounted to $910,000 ($999,600 in cash), of which $365,200 for geology and $275,600 in drilling and assaying costs.

Investments on the property are summarized in the "Consolidated Expenditures on Exploration Projects" statement included in the accompanying interim financial statements for the quarter ended June 30, 2005.

Financing Activities

There was no financing activity during the three-month period ended June 30, 2005 and none in the corresponding period in 2004.
Consolidated Balance Sheet

At June 30, 2005, the Company's assets stood at $32,067,700 ($32,402,100 at March 31, 2005) including $2,867,800 in cash and cash equivalents ($4,198,700 at March 31, 2005) and $25,700,000 in exploration projects ($24,790,000 at March 31, 2005).

At June 30, 2005, working capital stood at $3,021,900, net of current liabilities amounting to $344,100.

Based on assumptions from Management, the present value of the participation of the Company in the environmental obligations to which the Sleeper Project is subjected under the terms of permits granted by the U.S. Bureau of Land Management and the Nevada Division of Environmental Protection in connection with past operations amounts to $511,800 as at June 30, 2005 compared to $526,300 as at June 30, 2004. The Company paid for an insurance-backed financial assurance program including a mine reclamation policy and a pollution legal liability policy for the Sleeper project. The mine reclamation policy included a commutation account of $1,758,700 as at June 30, 2005, ($1,761,000 as at March 31, 2005). This account will be used to pay reclamation costs and indemnity claims paid by the Company from time to time.

The Company has further accounted for $3,264,100 ($3,301,000 as at March 31, 2005) in future income taxes related to the acquisition of the Sleeper Project. As at June 30, 2005, the capital stock amounts to $34,096,200. The contributed surplus related to stock base compensation amounts to $1,042,600 and the deficit totals $7,191,100.

Background

The Company is in a development stage where its activities consist in the exploration and development of the Sleeper Project ("Sleeper Project") through a participation of 50% in a joint venture, New Sleeper Gold LLC ("NSG LLC"). The Sleeper Project, located in the Awakening Mining District, Humboldt County, Nevada, U.S.A. is the principal property on which it intends to expend a substantial portion of its funds. The Company may also stake or acquire other lands or mineral properties as such opportunities arise.

The Company has not yet determined whether its property contains ore reserves that are economically recoverable. The recovery of costs incurred on this property are subject to the discovery of economic ore deposits and the ability to secure appropriate financing to place these properties into production. The Company will periodically have to raise additional funds to continue operations, and while it has been successful in doing so in the past, there can be no assurance it will be able to do so in the future.

Exploration Activities

Initial exploration efforts were focused on the most advanced and best known targets, namely, West Wood, Facilities and the Sleeper Pit areas. Additional exploration work and drilling were carried out in the Alma-Dome-Electrum areas, the Bedrock Casino prospect, the Sleeper South areas, and on Heap Leach Pad 1.

During the quarter, NSG LLC continued the work exploration program to advance the knowledge of the property. In terms of identifying and ranking targets for drilling NSG LLC's goal were to: 1) confirm and increase the level of confidence in known gold resources, and 2) find additional gold resources.

In addition to testing the obvious drill targets, work continued to improve the geologic model of the Sleeper deposit. This entailed geological compilation, ground gravity surveys, electrical geophysics (IP), soil and rock geochemistry, and a mercury vapor survey over all of the non-outcropping areas of the 30 square mile claim block. The strategy behind this activity was to define other exploration targets within the project area that might lead to discovery of another "Sleeper-like" deposit. A number of targets had been identified in the hills to the east of the Sleeper pit and in the pediment west of the pit.

As of the date hereof, no Mineral Resources or Mineral Reserves (under NI 43-101) have been defined at the Sleeper Project. No estimates of Mineral Resources or Mineral Reserves (as defined in NI 43-101) have been made since February 1, 2001, the date NI 43-101 came into force. Further exploration will be required in order to define Mineral Resources (as defined in NI 43-101) at the Sleeper Project and it is not certain that such further exploration will result in the discovery and definition of a Mineral Resource. A technical report on the Sleeper Project was completed in February 2004 by Mine Development Associates and co-authored by RockWorks Limited. The technical report was filed by the Company on March 19, 2004 and is available at www.sedar.com.

Outlook

The Company has liquidity of $2,867,800 as at the end of June 2005 and believes that it will be able to meet its commitments into 2005.

The Company's efforts during the remainder of 2005 will be focused on continuing to find sufficient gold mineralization at Sleeper to justify redevelopment of a mine. The sources of this mineralization could be known areas in the vicinity of the mined-out pit which are currently the subject of a resource calculation exercise, or the discovery of a "new" Sleeper-style gold deposit.

A resource calculation is due for completion in the fourth quarter of calendar 2005. In addition to the resources themselves, some potential economics of mining and processing will be investigated.

Management continues to believe that there is a significant possibility that additional "Sleeper-style" orebodies exist in the vicinity of the mine. Generative exploration activities in 2004 have identified a number of possible targets that will be followed up in 2005.

The Sleeper joint venture technical committee has approved a US $5 million work program for 2005 to advance these activities. However, a significant portion of this is discretionary and predicated on following up exploration success. The participants equally fund the costs of this program.

In addition, the Company's management has identified a number of other projects that are attractive to the Company. Management believes that it is prudent to diversify the Company's portfolio, provided strict criteria are met for any new projects. On July 14, 2005, the Company entered into an option agreement pursuant to which it may acquired up to a 70% interest in a project located in Nevada. It is anticipated that another new project will be brought in during 2005.

The Company's operations and activities are financed through cash resources generated by equity issues. While the Company believes it has sufficient resources to fund its commitments and current planned activities through 2005, it is anticipated that the Company will have to raise further capital towards the end of 2005 or early 2006 in order to fund future operation and exploration activities. The availability of such funding is dependent not only on exploration success but on certain factors beyond its control, such as general market liquidity, price of gold, and willingness of investors to make more speculative exploration investments. Management will use its best efforts to obtain funding and utilize this funding on projects it believes justify such investment.

Forward-Looking Statements

Except for historical information, this press release may contain forward looking statements. These statements involve known and unknown risks, uncertainties, and other factors that may cause the actual results, levels of activity, performance or achievement to be materially different from any future results, levels of activity, performance or achievement expressed or implied by these forward looking statements.

Additional information

Additional information about the Company is available through regular filings and press releases on SEDAR (www.sedar.com) and on the Company's website (www.newsleepergold.com).

The Complete Financial Statements are available on CCNMatthews' website at the following address:
http://www2.ccnmatthews.com/database/fax/2000/sleep.pdf


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