Greetings and welcome to the Aurizon Second Quarter 2010 Earnings Conference Call. At this time all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. (Operator Instructions) As a reminder, this conference is being recorded. It is now my pleasure to introduce your host David Hall, Chief Executive Officer for Aurizon Mines. Thank you Mr. Hall, you may begin.

Thank you operator and good morning everyone and welcome to Aurizon's second quarter conference call. With me in Vancouver today I have Ian Walton our CFO; Martin Bergeron our VP Operations; Roger Walsh, VP Corporate Development; Julie Stokke Corporate Secretary; and Chris McLean our Controller. And before we begin the presentation it is now available on our website, I'll ask Julie to read the forward-looking statement language.

Thank you, David. Some of the information that will be discussed on this call may be forward-looking in nature, including information regarding the company's strategic plans, anticipated production and other estimates or forecast related to the company's future operation. All such information expresses as of the date of this presentation, the company's plans, expectations and belief, and is based on assumptions that the company believes are reasonable. However, by its very nature, forward-looking information is subject to risks and uncertainties and on that basis there could be no assurance that such information will prove to be accurate, or that expectations will be achieved, and except as required under applicable securities legislation the company does not intend and does not assume any obligations to update these forward-looking statements. For description of the assumptions on which forward-looking information discussed on this call is based and of the applicable risks and uncertainties related to that information, we direct you to management's discussion and analysis for the period under discussion, and to our most recent annual information form, both of which are available on SEDAR and on the companies website. Please also refer to the forward-looking statements, cautionary statement to US investors regarding mineral resources, and notes to investors included in the slide presentation for this conference call and webcast, which presentation is also available on the company's website.

Thank you, Julie. So, I am going to refer to the slide presentation that is available on our website and go through that briefly and then we'll open it up for questions. So in summary, I think it was a very active and positive quarter for the company. If we look at the highlights for the second quarter, strong quarter in terms of operations and financial results, gold production of 38,527 ounces, cash flow from operations of $16.5 million, earnings of $5.3 million or $0.03 per share. We ended the quarter with working capital of $122 million, including the $124 million in cash and of course we have no debt. During the quarter, we were successful in increasing the measure of indicated resources at Joanna, and particularly the Hosco deposit at Joanna by 35%. We had very encouraging drill results from the hosted surface drilling that we were doing at Casa Berardi in the area of the Principal zones. And we added to our exploration portfolio by auctioning three very good exploration properties in Quebec. So moving on to the next slide, let's look at our production. Our production is on line with our forecast of producing 145,000 to 155,000 ounces in 2010. As we have indicated previously, we are in a sequence in the mine where the grade is a little bit lower than the average reserve grade, somewhere around 7 grams per ton. Reserve grade for underground is about 7.928 grams per ton. So we did indicate that our production this year would be around about 150,000 ounces a year. But, as we get out of this lower grade sequence at the end of this year move forward and to 2011, 2012 our production should go up to about 170,000 ounces annually, going forward. In terms of cash…

Thank you. We will now be conducting a question-and-answer session. (Operator Instructions) Our first question is from Cosmos Chiu with CIBC. Please proceed with your question.

David, I think you might have touched on this, but at Casa, I guess the grades were quite good this quarter compared to last quarter increasing to $7,200 per ton. But in your MD&A you're still guiding to an average of $6,900 per ton for the year. How should we be looking in terms of the second half of 2010? Are you going to have some lower grade periods in Q3 and Q4?

Yes. I mean I think it's probably fair to say that if you look at the second quarter, that obviously was a little better than the average grade forecast for the year. So, you have to deal on the averages, so we are going to make that up. So, that's why we haven't changed our forecast for the year. So, in the third quarter we'll probably be a bit lower grade than the second quarter but then as we get into the fourth quarter and beyond the grade will pick up again.

And also you've been able to increase your throughput once again to 2,000 ton per day. I guess you're still looking for an average of 2,000 ton per day for 2010. But are there any steps that you can take to maybe surpass that level?

And I'll let Martin comment, but it's really a function of developing the appropriate number of working places. That's why we are pretty active on the exploration at the present time because we have all those resources sitting within about a kilometer east of the shaft that we want to drill and get after and upgrade those into reserves, but probably for the next 12 months maybe longer, probably 2,000 tons a day is what you are looking at, although going beyond that we are looking at ways to increase the throughput. I'll let Martin comment.

No you're absolutely right, Cosmos. With the flexibility we have at the West Mine at the moment, 2,000 tons per day is probably the optimum that we can reach. We don't want to jeopardize our mining cycle by being more aggressive. But as we open other areas and as you now the mill can take a throughput higher than West Mine is able to supply. So as we open other areas and move eastward, we have planned to increase the mining capacity and the throughput of the mill accordingly.

Our next question comes from Catherine Gignac with NCP. Please proceed with your question.

Martin, if I can just follow on the questions on Casa Berardi, for the principal area. This is resource estimate, you got a lot of news that sounds like coming for end of September into October, and we'll wait for that news. But if you are looking at a potential new mining area within the Casa Berardi mine, what do you think the timeline would be for pre-feasibility, feasibility and production decision? Would you not anticipate that could be expedited sooner rather than later and is there anything that you see is an impediment for open pit versus underground?

So far what we've planned for the open pit and we have one with some reserves at the east mine and we're looking certainly at the fair possibility with the principal area. We've always planned to mine those areas later in the life of the mine as to not jeopardize any reserves that could be mined from underground. So that will be the case with the principal area. We have a genuine updated resource that in transferred to BBA who is working on the pre-feasibility study. And there will be also an economic evaluation of what can be mined from the surface and what should be mined from underground in order to maximize the economic potential of that area.

Okay, so and in terms of the timeline on when we'll have the BBA study for the end of the year and then you'll review in the first half of next year then?

That is correct. But the idea as I said would not be to put the Principal pit into production in the short-term

Right and also yes, especially if it's open pit and lower grade material?

Right.

Okay.

And then just to add to that Catherine, obviously from the drilling that we're doing underground on the 118 level. By the end of this year, we'll have a lot more and better information on the configuration and the potential of the 118 zone and the 123 zone and that's why we're doing the drilling. We want to find out what those zones represent and then once we do that, we can figure out ways of mining them, timing for mining them and so on so forth. So I suspect that exercise will start at the end of this year and go through first quarter next year.

Okay that was my next question in terms of (inaudible) level. So okay we'll look for that news and perhaps by the time you'll release your year-end results. Would that be appropriate?

Yes it probably would.

Okay and then you went very quickly in terms of all of the exploration. You've got a nice pipeline from production development compared to earlier stage exploration. And can you just tell me from a financial point of view in terms of the amounts that you're looking at capitalizing versus expensing for the second half of the year?

I'll let Ian answer that.

Yes, Catherine, all the new exploration projects that we've acquired will be expensed Joanna as well even though we're into a feasibility study. All of those costs will be expensed to earnings through certainly through the end of this year. Once we get the feasibility study completed in the green light and from that point forward we'll be capitalizing their cost at Joanna and then we capitalized our exploration costs at Casa Berardi.

Okay and in terms of sustaining capital at Casa Berardi, do you see much of a change from first half of the year?

No, lets say, the $9.8 million that we described in the upward correction is absence of any capital for the second half of the year.

Our next question is from Wayne Atwell with Casimir Capital. Please proceed with the question.

Good morning and thanks for taking my call. Can you give us an update on your M&A thinking? This is high priority, low priority? I realize you can't be very specific but timing, what's the profile here?

I think the profile is that we run it basically in two (inaudible) parts. One is obviously to expand their exploration portfolio which we are working on so that we add to our land position. We think we've done that successfully. We're still looking at other opportunities in that particular sector where we think as I said we can use our financial capacity and technical expertise to add value through the drill bid in terms of things higher or situations higher up the food chain. We continue to evaluate those. We continue to do fairly detailed due diligence in some instances. Obviously, we haven't pulled the trigger on anything yet but that's not something that we're giving up on, that's something that we're still working on. Maybe, I'll let Rodger add a few words on that.

It's not a quarter end. We think very active. We've had a very disciplined process that we're following. And I think the other aspect just to reinforce the excitement that we haven't touched on Quebec activity is that in benchmarking and looking at relative values in other areas, we just don't home to the potential what's in something strong. So we're very active on both sides and continue to see that way.

So basically, you're doing your homework. You are looking but you haven't found anything that's really worth pulling the trigger on?

Very much that, but we've had a dedicated team in house that's being dedicated to doing that. We've been looking as David said very, very actively at a number of opportunities. We've been working very, very closely with a number of companies and actually working with them in terms of sharing some of their technical expertise which is useful for both of us. And we continue to do that. But if we're going to make and pull the trigger on an attractive deal, it has to be one that can be very, very beneficial to our shareholders and also the shareholders in the other party. So, we're very, very conscience of investments that are very strong part our development process.

Right and would this be a high priority and were you being planning to try to acquire something that's fairly close to production or early stage exploration or what sort is your growth?

We've been looking in various areas around actual production through to advanced stage situations through the early exploration. I think that we're focusing on advance stage. We really have to look very, very closely at what value we can bring to the project. And we have look to some situations that have been quite advanced in the whole process and we can review that and think when we add anymore value to that. Obviously, our preference is to work with something that's bridged the various vast exploration and we can actually bring in expertise from out of the underground side, metallurgy, actual development and we've been looking at a number of situations that fit that category.

Our next question comes from Brian Christie with Desjardins Securities. Please proceed with your question.

Just curious David if you guys would look at potentially private placements into exploration companies that may look promising but maybe you don't want to actually get into a joint venture on those projects?

Well, I mean, our preference is to get into the property per say. And that's the deal that we've done being focused on that and one case, I think we did do an equity, small equity placement to help out the company but our preference is to put the money right in the property directly so that we earn interest in the property.

Our next question comes from Paul Burchell with Dundee Securities. Please proceed with your question.

Question first of all on your guidance for the rest of the year. It implies production pretty similar to what we saw at the first half of the year, 35 to 45 announced fiscal quarter. If we assume throughput in grades are similar, your costs are going to come down. How do we attribute that by lower operating cost or is this the function of FX?

While in terms, I mean I think our cost in terms of costs per ton are probably pretty stable throughout the year, about a $107 per ton average. Obviously, the FX has an impact on our cost per ounce also. Looks as though the grades for the year is probably going to come in over a shade under 7 gram, something like that, 6.8, 6.9.

Okay. And this, I'm trying to look at your first half you call it 524. Your second half, your guidance implies 475. So all things be equal and just try to have, have a hard time figuring that out.

Think we may get it. It's all in the grades, in the end FX. I mean we have that our guidance for price is 500 dollars an ounce is predicated on 103 exchange rate. This was very close to the rate like you say in the first half. So but I think the prices are going to be $500 an ounce, plus or minus 500.

Okay.

Okay, on your drilling account that you obviously being very active there over the last couple of years, I suspect that it was pretty obvious that your resources will likely be higher and/or above a higher confidence level, but what about reserves? I know I might be putting you out on a limb here, and if so just tell me, but do you expect to add to your reserves to stay the same? Where do you hope to be when you report, I guess in February?

Well it looks at underground and then looks at principle. If the principle drilling has gone well, if the pre-feasibility study comes out well then obviously we'd pick up some of our reserves in the area of the principal zone that would be open [pitable]. So we're looking for an increase in total reserves coming from that. In terms of the underground the objective is to do a little better than just replenishing our reserves, that's the objective. So far it's going well, but we'll see where we are at the end of the year.

Okay, thanks. And finally can you remind me what the overburdened depth is over the principal zone?

Over overburdened depth, 50 meters.

50, would you freefall that, or how would handle that if you think you are open pitting it?

The decision hasn't been made yet. It seems to be difficult to go ahead with freezing, but we'll look at it in detail. We've done some geo-technical drilling earlier this summer, and we'll have a better grasp of what we will face in the coming months, but every opportunity will be looked at.

Our next question comes from Michael Starke with Edison Investment Research. Please proceed with your question.

David, two quick questions, first in terms of your products contract when do you expect these to expire?

They will expire in the nearly all in the third quarter I think I've got about $5 million of FX in the fourth quarter.

Sorry, can you just repeat the amount on the third quarter.

Well, I think it's just over $9 million in the third quarter and $5 million or so in the fourth quarter.

Okay, and then secondly given your cash position, what are your thoughts on paying the dividend?

Something that we kick around at the Board level and discuss, we haven't made a firm decision on our way but it's something that we'll continue to evaluate and decide whether that is an appropriate use of our cash and if that's one of the things that our shareholder basis is looking at.

(Operator Instructions) Our next question comes from Indi Gopinathan with Scotia Capital. Please proceed with your question.

Just a quick question on the drilling that you are doing, the exploration that you are doing at Joanna, I see that you are planning to do some exploration work at Heva, I wonder if you could remind us of any outstanding sort of permitting end requirements that how about your, I guess not just explore initially but going forward in terms of mining in the future?

I'll let Martin comment indeed but its, I don't think there's any big obstacles there, I mean as far as we're concerned, the target we have got quarter of a million ounces there. We think its good potential to drill and in terms of permitting for an operation, our total focus at this point is in terms of Hosco because if there's any operation going to be built and succeeded there, it has to be built around Hosco.

There are no further questions in the queue at this time. I would now like to turn the floor back over to David Hall for closing comments.

Thank you operator. Well, thank you every one for participating in the call and listening to call. We appreciate you're interest and we look forward to talking to you again during our third quarter conference call in November. Thank you and have a good day.

Ladies and gentlemen, this does conclude today teleconference. You may disconnect your line for this time. Thank you for your participation.