Discussion of Operations & Financial Condition

Yukon Gold has no source of revenue and we continue to operate at a loss. We expect our operating losses to continue for so long as we remain in an exploration stage and perhaps thereafter. As at July 31, 2009, we had accumulated losses of $14,918,377. These losses raise substantial doubt about our ability to continue as a going concern. Our ability to emerge from the exploration stage and conduct mining operations is dependent, in large part, upon our raising additional equity financing.

As described in greater detail below, the Company's major endeavor over the year has been its effort to raise additional capital to meet its administrative expenses and pursue its exploration activities. The Company does not currently have sufficient working capital to continue as a reporting company in the United States and Canada. We are working urgently to obtain additional financing, which may entail the acquisition of additional properties in order to attract such financing.

SELECTED INFORMATION

                                          Three months ended           Three months ended
                                               July 31, 2009                July 31, 2008

Net Loss                                $             11,955         $          1,549,200
Loss per share-basic and diluted        $              (0.00 )       $              (0.05 )


                                                       As at                        As at
                                               July 31, 2009               April 30, 2009

Total Assets                            $             70,268                      108,099
Total Liabilities                       $            218,277                      239,222
Cash dividends declared per share                        Nil                          Nil

Gain on sale of mining property

The only gain generated by the Company during the three month period ended July 31, 2009 was the sale of the Mount Hinton property for a total cash consideration of $110,306 (CDN$125,000). As all costs incurred in acquisition and exploration had been expensed, the entire cash proceeds are recognized as gain during the quarter.

Net Loss

The Company's expenses are reflected in the Consolidated Statements of Operations under the category of Operating Expenses. To meet the criteria of United States generally accepted accounting principles ("GAAP"), all exploration and general and administrative costs related to projects are charged to operations in the year incurred.

(a) General and Administrative Expense

Included in operating expenses for the three months ended July 31, 2009 is general and administrative expense of $114,131 as compared to $366,810 for the three months ended July 31, 2008. General and administrative expense decreased substantially due to Management's endeavor to reduce costs.

(b) Project Expense

Included in operating expenses for the three months ended July 31, 2009 is project expenses of $5,454 as compared with $1,171,909 for the three months ended July 31, 2008. Project expense was a significant expense in the prior period where it represents approximately 75.6% of the total operating expense for the three months ended July, 2008. The Company incurred very little costs during this quarter due to lack of funding.

Agreement with Hinton Syndicate Concerning our Former Mount Hinton Property

The following disclosure relates to our former property known as the "Mount Hinton" property. Our interest in the Mount Hinton property was sold on May 21, 2009.

On July 7, 2002 YGC, the Company's wholly owned subsidiary, entered into an option agreement with the Hinton Syndicate to acquire a 75% interest in the 273 unpatented mineral claims covering approximately 14,000 acres in the Mayo Mining District of Yukon, Canada. This agreement was replaced with a revised and amended agreement (the "Hinton Option Agreement") dated July 7, 2005 which superseded the original agreement and amendments thereto. The new agreement was between the Company, its wholly owned subsidiary YGC and the Hinton Syndicate.

The Hinton Option Agreement pertained to an "area of interest" which included the area within ten kilometres of the outermost boundaries of the 273 mineral claims, which constituted our mineral properties. Either party to the Hinton Option Agreement could stake claims outside the 273 mineral claims, but each must notify the other party if such new claims were within the "area of interest." The non-staking party could then elect to have the new claims included within the Hinton Option Agreement. As of December 11, 2006, there were an additional 24 claims staked, known as the "Gram Claims" which became subject to the Hinton Option Agreement. On May 21, 2009, Gram Claims 1-24 were conveyed by the Company's wholly owned subsidiary to a member of the Hinton Syndicate. On June 16, 2008 an additional 18 claims were staked (#25-#42), known as the "Gram Claims", at a cost of $8,679 (CDN$8,887), which became subject to the Hinton Option Agreement. On May 5, 2009 the Company transferred all of its interest in Gram Claims 25-42 to a member of the Hinton Syndicate.

On May 21, 2009, the Company, through its wholly owned subsidiary, YGC, sold its interest in the Mount Hinton Property to the Hinton Syndicate. All of the claims comprising the Mount Hinton Property were conveyed by the Company's subsidiary to a member of the Hinton Syndicate.

     If the payment is made to Yukon              $89,453 (CDN$115,000)
     Gold within the 12- month
     anniversary of the Closing:

     If the payment is made to Yukon              $129,930 (CDN$140,000)
     Gold after the 12- month
     anniversary of the Closing but
     before the 24- month anniversary
     of the Closing:

     If the payment is made to Yukon              $153,132 (CDN$165,000)
     Gold after the 24- month
     anniversary of the Closing but
     before the 36- month anniversary
     of the Closing:

     If the payment is made to Yukon              $176,334 (CDN$190,000)
     Gold after the 36- month
     anniversary of the Closing but
     before the 48- month anniversary
     of the Closing:

     If the payment is made to Yukon
     Gold after the 48- month
     anniversary of the Closing, it
     shall be increased by $23,202
     (CDN$25,000) for each 12-month
     period following the 49-month
     anniversary of the Closing

In addition, Yukon Gold's subsidiary assigned its work permit to a member of the Hinton Syndicate and the Hinton Syndicate became responsible for any reclamation costs imposed by the government of Yukon in connection with the work permit. As of May 21, 2009, Yukon Gold and its subsidiary have no further interest or obligations with respect to the Mount Hinton Property.

Exploration

During the year ended April 30, 2009, the Company completed its acquisition of the Marg property and currently owns it outright. The Marg Property consists of 402 contiguous mineral claims covering approximately 20,000 acres. Access to the claim group is possible either by helicopter, based in Mayo, Yukon Territory, Canada, located approximately 80 km to the southwest or by small aircraft to a small airstrip located near the Marg deposit. A 50 kilometer winter road from Keno City to the property boundary was completed in 1997. The camp site on the property provides accommodation for up to 12 people. Presently the hydroelectric power grid terminates at Keno City some 50km to the southwest and water is available from the Keno Ladue River, which flows through the property.

.For more information regarding our exploration activities on our properties during the fiscal year ended April 30, 2009, see Item 2 "Description of Property" in the 10K filed for year ended April 30, 2009.

Liquidity and Capital Resources

The following table summarizes the Company's cash flows and cash in hand:

                                                        July 31, 2009           July 31, 2008

Cash and cash equivalent                              $        17,261         $       754,383
Working capital (deficit)                             $      (179,973 )       $       623,616
Cash used in operating activities                     $      (102,841 )       $      (995,569 )
Cash provided by (used in) investing activities       $       110,306         $       (50,447 )
Cash provided in financing activities                              --         $       576,348

As at July 31, 2009 the Company had working capital deficit of $(179,973) as compared to a working capital of $623,616 in the previous period. During the current period the Company did not raise any funds. The Company however sold all its interests in the Mount Hinton Property for a consideration of $110,306 (CDN $125,000).

Off-Balance Sheet Arrangement

The Company has no Off-Balance Sheet Arrangement as of July 31, 2009.

Contractual Obligations and Commercial Commitments

a) The Marg Property

In March 2005, the Company acquired rights to purchase 100% of the Marg Property, which consists of 402 contiguous mineral claims covering approximately 20,000 acres located in the Mayo Mining District of the Yukon Territory of Canada. Title to the claims is registered in the name of YGC.

The Company assumed the rights to acquire the Marg Property under a Property Purchase Agreement ("Agreement") with Atna Resources Ltd. ("Atna"). Under the terms of the Agreement the Company paid $119,189 (CDN$150,000) cash and 133,333 common shares as a down payment. The Company made payments under the Agreement for $43,406 (CDN$50,000) cash and an additional 133,333 common shares of the Company on December 12, 2005; $86,805 (CDN$100,000) cash and an additional 133,334 common shares of the Company on December 12, 2006. On December 12, 2007 the Company paid $98,697 (CDN$100,000) being the next payment then due.

The Company has agreed to make subsequent payments under the Agreement of:
$167,645 (CDN$200,000) in cash and/or common shares of the Company (or some combination thereof to be determined) on or before December 12, 2008. On December 4, 2008 the Company and Atna Resources Ltd. ("Atna") entered into a letter agreement (the "Amendment Agreement") amending the purchase agreement by which the Company acquired its Marg Property (the "Marg Acquisition Agreement"). Under the terms of the Marg Acquisition Agreement the Company was required to pay to Atna $167,645 (CDN$200,000) (in cash or shares of the Company's common stock) on December 12, 2008. In lieu of making such payment, the Amendment Agreement permitted the Company to pay Atna $19,980 (CDN$25,000) in cash on December 12, 2008 (paid) and $188,600 (CDN$225,000) (payable in cash or shares of the Company's common stock) on April 30, 2009. On April 30, 2009, the Company issued to Atna 6,838,906 common shares which represent $188,600 (CDN $225,000), whereby the common shares were valued at $0.0276 (CDN$0.0329) each. Upon the commencement of commercial production at the Marg Property, the Company will pay to Atna $928,074 (CDN$1,000,000) in cash and/or common shares of the Company, or some combination thereof to be determined.

The fourth and final payment of $402,244 (CDN$380,000) was paid on August 15, 2007. On August 31, 2007 the Company re-allocated $537,864 (CDN$508,120) being the balance of the third cash call payment for the Mount Hinton 2007 Work Program from cash call funds previously allocated to the Marg Project. These re-allocated funds were not needed for the Marg Project. On January 23, 2008 the Company was refunded $388,524 (CDN$390,000) as these funds were not needed for the Marg Project.

Critical Accounting Policies

The preparation of financial statements in accordance with accounting principles generally accepted in the United States of America, requires us to make estimates and assumptions that affect reported amounts of assets and liabilities at the date of the financial statements, the reported amount of revenues and expenses during the reporting period and related disclosure of contingent assets and liabilities. On an ongoing basis, we evaluate our estimates and judgments, particularly those related to the determination of the estimated Canadian exploration tax credit receivable and accrued liabilities. To the extent actual results differ from those estimates, our future results of operations may be affected. Besides this critical accounting policy on use of estimates, we believe the following critical accounting policy affects the preparation of our consolidated financial statements.

Acquisition, Exploration and Evaluation Expenditures

The Company is an exploration stage mining company and has not yet realized any revenue from its operations. It is primarily engaged in the acquisition and exploration of mining properties. Mineral property exploration costs are expensed as incurred. Mineral property payments are capitalized only if the Company is able to allocate any economic value beyond proven and probable reserves. When it has been determined that a mineral property can be economically developed as a result of establishing proven and probable reserves, the costs incurred to develop such property will be capitalized. For the purpose of preparing financial information, the Company is unable to allocate any economic value beyond proven and probable reserves and hence all property payments are considered to be impaired and accordingly written off to project expense. All costs associated with a property that has the potential to add to the Company's proven and probable reserves are expensed until a final feasibility study demonstrating the existence of proven and probable reserves is completed. No costs have been capitalized in the periods covered by these financial statements. Once capitalized, such costs will be amortized using the units-of-production method over the estimated life of the probable reserve.

Mineral property acquisition costs will also be capitalized in accordance with the FASB Emerging Issues Task Force ("EITF") Issue 04-2 when management has determined that probable future benefits consisting of a contribution to future cash inflows have been identified and that adequate financial resources are available or are expected to be available as required to meet the terms of property acquisition and budgeted exploration and development expenditures. Mineral property payments are expensed as incurred if the criteria for capitalization is not met.

To date, mineral property exploration costs have been expensed as incurred. As of the date of these financial statements, the Company has incurred only property payments and exploration costs which have been expensed. To date the Company has not established any proven or probable reserves on its mineral properties.

(a) Disclosure Controls and Procedures. The Company's management, with the participation of the principal executive officer and principal financial officer, respectively, has evaluated the effectiveness of the Company's disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the "Exchange Act") as at July 31, 2009. Based on such evaluation, the principal executive officer and principal financial officer of the Company, respectively, have concluded that, as of the end of the current quarter, the Company's disclosure controls and procedures are effective.

(b) Internal Control Over Financial Reporting. There have not been any changes in the Company's internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the quarter ended July 31, 2009 that have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting.

(c) Limitations on the Effectiveness of Controls. We believe that a control system, no matter how well designed and operated, cannot provide absolute assurance that the objectives of the control system are met, and no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within a company have been detected.

DISCLOSURE AND FINANCIAL CONTROLS AND PROCEDURES

The board of directors has concluded that the Company's disclosure controls and procedures are effective. There have been no significant changes in these controls or in other factors that could significantly affect these controls subsequent to the date of their evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.

Internal financial controls and procedures have been designed under the supervision of the Company's board of directors and reviewed by an independent auditor. The internal financial controls provide reasonable assurance regarding the reliability of the Company's financial reporting and preparation of financial statements in accordance with generally accepted accounting principals. There have been no significant changes in these controls or in other factors that could significantly affect these controls since they were instituted, including any corrective actions with regard to significant deficiencies and material weaknesses.