Page 1 The following discussion and analysis of the operations, results and financial position of Coral Gold Resources Ltd. (the Company or Coral ) for the period ended October 31, 2007 should be read in conjunction with the October 31, 2007 Consolidated Financial Statements and the notes thereto. This Management Discussion and Analysis ( MD&A ) is dated December 27, 2007 and discloses specified information up to that date. Coral is classified as a venture issuer for the purposes of National Instrument 51-102. The Company s financial statements are prepared in accordance with generally accepted accounting principles in Canada. Unless otherwise cited, references to dollar amounts are Canadian dollars. Additional information relating to the Company is available on SEDAR at www.sedar.com. We recommend that readers consult the Cautionary Statement on the last page of this report. Business Overview The Company s principal business activities are the acquisition, exploration and development of mineral properties. The Company s mining claims are located in the states of Nevada and California in the United States. The Company s present principal exploration activities have been focused on the Robertson Mining Claims located in Crescent Valley, Nevada. The Company is a reporting issuer in British Columbia, Alberta and Ontario, a foreign issuer with the Securities & Exchange Commission and trades on the TSX Venture Exchange under the symbol CLH, on the OTCBB under the symbol CLHEF and on the Berlin & Frankfurt Stock Exchanges under the symbol GV8. Robertson Property During the third fiscal quarter ended October 31, 2007 Coral announced results of its recently completed deep drilling program on the Robertson Property in which Carlin-type mineralization, locally with strongly anomalous gold values, was encountered in rocks of the lower plate of the Robert Mountains thrust fault. The Robertson property is located along the prolific Battle Mountain-Eureka trend four miles north of the Pipeline/South Pipeline complex operated by Cortez Gold Mines, in eastern Lander County, Nevada. The deep drilling program began July 20 and was completed September 8, 2007. Hole TV07-1 was collared in the northwest corner of the property and drilled vertical to a depth of 2,990 ft, but failed to intersect lower plate rocks. However, the hole did encounter several narrow zone of low-grade gold accompanied by strongly anomalous arsenic and antimony. The second hole, TV07-2, was also collared in the northwest corner of the property and drilled vertical to a depth of 3,450 ft. The hole intersected strongly altered limestone of the lower plate at a depth of 3,080 ft in the immediate footwall of a dike-filled high-angle fault. Locally, the upper 200 ft of the lower plate intercept returned anomalous gold values ranging from 30 to 2,190 ppb, accompanied by anomalous levels for arsenic, antimony and thallium. The significant gold intercepts returned in TV07-2 are summarized below: From (ft) To (ft) Thickness (ft) Gold grade, oz/t 3,090 3,100 10 0.064 3,120 3,140 20 0.042 3,150 3,160 10 0.010
Page 2 The contractor for the deep drilling program was Lang Exploratory Drilling of Elko, NV, a subsidiary of Boart Longyear, Inc. Both holes had down-the-hole gyroscopic directional surveys completed by International Directional Services of Elko, NV, which measure both horizontal and vertical deflection in the drill holes. Coral employed ALS Chemex as its primary assay lab, with sample prep facilities in Elko, NV, and analytical laboratories in Reno NV (USA) and Vancouver, B.C., Canada. During the drilling program, Coral maintained a QA/QC program that consisted of taking rig duplicates at appropriate intervals, inserting coarse blank material and certified reference pulps into the sample stream and sent selected pulp samples to a second lab for check assay. The drilling program was directly supervised by R. T. McCusker, a Qualified Person pursuant to NI 43-101. In December 2007, the Company announced the receipt of the Robertson Property s updated resource estimate prepared by Beacon Hill Consultants (1988) Ltd. ( Beacon Hill ). The estimate incorporates results from drilling programs done by Coral since the last published resource estimate from April 25, 2006 (see Coral s website at www.coralgold.com). The updated resource estimate report is under preparation by Beacon Hill and will be available within 45 days of the date of the news release. The inferred resource, for all zones contained within the Robertson Project, is estimated to be 91.3 million tons grading 0.025 ozau/ton for contained gold of 2.3 million ounces (82.8 million tonnes grading 0.87gAu/tonne). The following table summarizes the resource estimate at a 0.015 ozau/ton (0.467 gau/tonne) cut-off grade: Estimated Inferred Resources by Zone Zone Quantity Grade Quantity Grade Contained Tons ozau/ton Tonnes gau/ton ounces gold Distal 10,355,041 0.0335 9,376,398 1.148 346,893 39A 25,010,247 0.0287 22,690,382 0.984 717,794 Triplet Gulch 5,904,713 0.0269 5,357,012 0.922 158,837 Outside 2,187,500 0.0208 1,984,595 0.713 45,500 Gold Pan Oxide 7,049,181 0.0262 6,395,323 0.898 184,689 Altenburg Hill Oxide 4,558,402 0.0208 4,135,580 0.713 94,815 Porphyry Oxide 19,121,927 0.0213 17,348,243 0.730 407,297 Gold Pan Sulphide 12,053,279 0.0208 10,935,258 0.713 250,708 Altenburg Hill Sulphide 584,016 0.0176 529,845 0.603 10,279 Porphyry Sulphide 4,480,533 0.0223 4,064,934 0.765 99,916 TOTAL 91,284.800 0.025 82,817,600 0.870 2,316,728 For further details, please refer to news release dated December 13, 2007 at www.coralgold.com. Preparation plans for a major drilling program will be announced after the updated resource estimate report is available. Norma Sass Property Following the completion of 15,000 ft. on the Norma Sass and related properties, in February 2007, Agnico-Eagle Mines Ltd. notified Coral Gold that it would not be continuing its option on Coral Gold s Norma Sass, Lander Ranch and Blue Nugget properties because of other corporate priorities. Coral Gold was pleased with the work done by Agnico-Eagle over the past two years as they successfully showed depths to the lower plate sequence across the Norma Sass ground and extended the area of gold mineralization at Lander Ranch. Coral Gold is currently reviewing the results of Agnico-Eagle s exploration programs in order to plan further work.
Page 3 The Norma Sass property is owed 66.6% by Coral Gold and 33.3% by Levon Resources Ltd. Results of operations Three months ended October 31, 2007 compared with the three months ended October 31, 2006 General and administrative expenses General and administrative expenses totaled $469,236 for the quarter ended October 31, 2007 compared with $942,931 for the quarter ended October 31, 2006, a decrease of $473,695. This decrease is attributed to decreases of $55,074 in legal and accounting fees, $7,518 in office and miscellaneous, and $466,833 in stock-based compensation. Offsetting these decreases were increases of $14,235 in investor relations and shareholder information, $30,190 in listing and filing fees, $7,036 in salaries and benefits, $2,799 in transfer agent fees, and $1,471 in travel. The legal and accounting fees were significantly lower in the quarter ended October 31, 2007 because there were very little legal fees regarding a mineral property title search compared to a significant amount during the quarter in 2006. The decrease in office and miscellaneous was a result of no insurance charges in Q3-October 31, 2007 while $8,750 of such expense was recorded in Q3-October 31, 2006. There were stock option grants for both the comparative quarters, but a significantly lower stock-based compensation was charged to operations in the quarter ended October 31, 2007 because the option fair value was lower in the current period and part of the options granted in the current quarter were given to a consultant which requires a different treatment when recording the expense. The increase in shareholder information costs was largely due to increased efforts to promote the Company and the enhancement of the Company s web site. In the quarter ended October 31, 2007, the listing and filing fees were higher because of the filing fees related to a three-for-one split of the Company s share capital and a new director. There was no filing fees incurred in the comparative quarter in 2006. Higher salaries and benefits were due to an increase in personnel to meet increasing regulatory and financial reporting demands. Loss for the period The loss for the quarter ended October 31, 2007 was $442,293 compared with a loss of $906,323 for the quarter ended October 31, 2006, a decrease of $464,030. The primary reasons for the difference between the comparative quarters are the same as those referred to above for the general and administrative expenses. Decreasing the loss further was higher interest income of $52,903 for the recent quarter compared to $35,905 for the quarter ended October 31, 2006, an increase of $16,998. On the other hand, during the current quarter there was a foreign exchange loss of $25,960 compared to an exchange gain of $703 in the previous year s quarter. Nine months ended October 31, 2007 compared with the nine months ended October 31, 2006. Head office-general and administrative expenses General and administrative expenses totaled $1,109,976 for the nine month period ended October 31, 2007 compared with $1,598,636 for the nine month period ended October 31, 2006, a decrease of $488,660. The overall decrease in expenses is primarily due to the same reasons as noted in the quarterly comparison above except for legal and accounting fees. These costs increased by $52,775 in the current period because of more mineral property review and title search related costs and higher audit fees compared to the nine months ended October 31, 2006. Additionally, there was $50,000 in directors fees charged to operations in the nine months ended
Page 4 October 31, 2007 compared to nil in the current period. Those directors fees were a result of the due diligence required of a special committee in addressing the US Gold s buyout offer. Loss for the period Loss for the nine months ended October 31, 2007 was $1,024,342 compared with a loss of $1,493,006 for the nine months ended October 31, 2006, a decrease of $468,664. The primary reasons for the decrease in the loss for the current nine month period are the decreased administrative expenses of approximately $488,660 as discussed above in addition to an increase in interest revenue of $19,137. Offsetting the increased interest revenue was an increase in foreign exchange loss of $39,640 during the current period. Summary of Quarterly Results Period ended 2007 2007 2007 2007 2006 2006 2006 2006 Oct. 31 Jul. 31 Apr. 30 Jan. 31 Oct. 31 Jul. 31 Apr. 30 Jan. 31 Q3 Q2 Q1 Q4 Q3 Q2 Q1 Q4 $ $ $ $ $ $ $ $ Revenue Loss for the period (442,293 ) (225,524) (356,525) (1,035,608) (906,323) (363,147) (223,536) (1,764,749) Loss per share (0.02 ) (0.01) (0.02) (0.05) (0.04) (0.02) (0.01) (0.12) Total assets 18,377,980 18,795,422 14,530,440 14,892,422 15,403,515 15,270,553 15,458,354 11,385,912 There has usually been an increase in overall expenses because of the increase in exploration activities, the associated support staff and continuing efforts to promote company awareness and expenses have risen due to the review of mineral properties and due diligence for the US Gold offer in 2006. This is most apparent in the increase in loss from Q1-April 30, 2006 to Q4-January 31, 2007. The quarter ended January 31, 2006 rose sharply due to stock-based compensation of $1,019,700 and this also significantly impacted Q3-October 31, 2006 for $734,337 and Q3- October 2007 for $267,504. In Q4-January 31, 2007 the loss was increased further by a future income tax expense of $479,270 instead of stock-based compensation. Review and due diligence costs surrounding the Company s mineral claims started to be reduced in the first two quarters of 2007. Because the Company has not generated revenue in recent years, total assets are reduced during the periods when there are no funds raised through private placements. However, the majority of expenditures are capitalized exploration costs so total asset value does not decrease dramatically. Total assets increased in Q1-April 30, 2006 due to a private placement of $4,500,000 and further increased in Q2-July 31, 2007 with a private placement of $4,230,000. Liquidity and capital resources During the quarter ended October 31, 2007 the Company incurred expenditures that increased its mineral property carrying value on the Robertson Property and the Norma Sass/Ruf property by $1,340,245 and $5,235 respectively. At this time the Company has no operating revenues but is earning interest income on its entire cash holdings. At October 31, 2007, the Company had working capital of $4,018,246 and cash and cash equivalents of $3,802,886. During the nine month period ended October 31, 2007, the Company
Page 5 closed a private non-brokered private placement for proceeds of $4,230,000 along with proceeds of $22,100 from the exercising of 13,000 stock options and $13,794 from the exercising of 20,691 warrants The Company is continuing its exploration program and the estimated cost for the current year is $3 million. The Company has sufficient cash on hand at this time to finance the limited exploration work on its mineral properties and maintain administrative operations through January 31, 2008. The Company is in the exploration stage. The investment in and expenditures on the mineral property comprise substantially all of the Company s assets. The recoverability of amounts shown for its mineral property interest and related deferred costs are dependent upon the continued support from its directors, the discovery of economically recoverable reserves and the ability of the Company to obtain the financing necessary to complete development and achieve profitable operations in the future. The outcome of these matters cannot be predicted at this time. Mineral exploration and development is capital intensive, and in order to maintain its interest the Company will be required to raise new equity capital in the future. There is no assurance that the Company will be successful in raising additional new equity capital. Off-balance sheet arrangements The Company has no off-balance sheet arrangements. Transactions with related parties Related party transactions for the nine months ended October 31, 2007 are as follows: a) During the nine month period ended October 31, 2007, the Company paid, or made provision for the future payment, of the following amounts to related parties: i) $22,500 (2006 - $57,500) to a private company controlled by an officer and former Director for management fees; ii) iii) iv) $56,250 (2006 - $12,500) to a private company controlled by an officer and Director for management fees; $29,490 (2006 - $25,615) in management fees to an officer of the Company; $22,500 (2006 - $22,500) in consulting fees to a private company owned by a Director and officer; and v) $30,900 (2006 - $31,800) in geological consulting fees to a private company owned by a Director. vi) $8,750 (2006 - $Nil) in geological consulting fees to a private company owned by a Director. b) The amounts due from related parties include $28,003 (January 31, 2007 - $28,003) due from a joint venture with common management and common directors; $1,187 (January 31, 2007 - $1,471) due from a company controlled by a Director; $1,603 (January 31, 2007 Nil) due from a public company with common directors; and $18,051 (October 31, 2007 - $55,205 less an allowance of $37,154; January 31, 2007: $62,253 less an allowance of $46,036) with a public company with common management and common directors.
Page 6 c) The amounts due to related parties consists of $17,000 (January 31, 2007 - $17,000) due to Directors in regards to past directors fees; $18,804 (January 31, 2007 - $Nil) due to Oniva International Services Corp. ( Oniva ), a private company with common management in regards to a cost sharing agreement for overhead expenses; $3,033 (January 31, 2007 - $Nil) due to a Director in regards to geological consulting services; and $988 (January 31, 2007 - $Nil) due to a private company owned by a director of the Company. d) An allowance in the amount of $209,840 (January 31, 2007 - $209,840) has been accrued during the 2003 fiscal year in respect of advances made to a private company with common management. e) The Company entered into a cost-sharing agreement during 2005 to reimburse Oniva for a variable percentage of its overhead expenses, to reimburse 100% of its out-of-pocket expenses incurred on behalf of the company, and to pay a percentage fee based on the total overhead and corporate expenses referred to above. The agreement may be terminated with one-month notice by either party. During the period a total of $118,184 (2006 - $95,364) was charged to operations in relation to the cost sharing agreement. These transactions are in the normal course of operations and are measured at the exchange amount, which is the consideration established and agreed to by the related parties, unless otherwise noted. Disclosure of Management Compensation During the quarter ended October 31, 2007, $7,500 was paid to a former President and current Vice-President for services as director and officer of the Company, $7,500 was paid to the President for services as director and officer of the Company; $19,500 was paid to a Director for consulting services, $10,000 was paid to the V.P. Explorations for services as a director and geological consultant, $9,000 was paid to the Chief Financial Officer for services as an officer of the Company and $2,550 was paid to the Secretary for services as an officer of the Company. Changes in accounting policies In early 2005, the CICA issued new standards for Comprehensive Income (CICA 1530), Financial Instruments (CICA 3855) and Hedges (CICA 3865), which are effective for fiscal years beginning on or after October 1, 2006. The new standards bring Canadian rules more into line with current rules in the United States. These new standards do affect the Company at present and consequently a statement of comprehensive income is included in the Consolidated Statements of Loss, Comprehensive Income (Loss) and Deficit. Section 1530 introduces the concept of comprehensive income, which includes net income and other comprehensive income. Other comprehensive income represents changes in shareholders equity during a period arising from such items as unrealized foreign currency translation gains or losses arising from self-sustaining foreign operations, unrealized gains and losses on availablefor-sale investments, and changes in the fair value of the effective portion of cash flow hedging instruments. The application of this new standard affected investment securities on the consolidated balance sheet. The result was an increase of $142,695 to investment securities and to accumulated other comprehensive income in shareholders equity. Section 3855 establishes standards for recognizing and measuring financial assets, financial liabilities and non-financial derivatives. It also specifies how financial instrument gains and losses are to be presented. All financial instruments must be classified as held-for-trading, available-for-
Page 7 sale, held-to-maturity, loans and receivables, or other financial liabilities. Initial and subsequent recognition and measurement of changes in the value of financial instruments depends on their initial classification. The application of Section 3855 did have an impact on the Company s interim consolidated financial statements as the Company s investment securities have been designated as available-for-sale shares. Section 3865 provides alternative treatments to Section 3855 for entities which choose to designate qualifying transactions as hedges for accounting purposes, and specifies how hedge accounting is applied and what disclosures are necessary when it is applied. The application of Section 3865 did not have an impact on the Company s interim financial statements as there are no transactions which have been designated as hedges for accounting purposes. Outstanding Share Data At the Annual General Meeting dated July 17, 2007, the shareholders approved an ordinary resolution amending the Company s share structure by subdividing the Company s issued share capital of 8,267,360 common shares without par value into 24,802,080 common shares without par value, every one (1) common share being subdivided into three (3) common shares (the Subdivision ). The Company received regulatory approval of the Subdivision on August 19, 2007. As at December 27, 2007 the Company had the following issued and outstanding share capital: Common shares: 24,882,771 Stock options: Exercise Price Per Share Number of Shares Remaining Subject to Options Expiry Date $0.57 December 1, 2009 714,000 $0.57 April 12, 2010 45,000 $1.18 December 12, 2010 631,500 $1.31 September 6, 2011 750,000 $1.00 September 26, 2012 735,000 2,875,500 Warrants: Exercise Price Per Share Number of Underlying Shares Expiry Date $1.17 May 18, 2008 4,230,000 4,230,000 Disclosure Controls and Procedures The Chief Executive Officer and the Chief Financial Officer of the Company are responsible for evaluating the effectiveness of the Company s disclosure controls and procedures and have concluded, based on our evaluation, that they are effective as at October 31, 2007 to ensure that information required to be disclosed in reports filed or submitted under Canadian securities legislation is recorded, processed, summarized and reported within the time period specified in those rules and regulations.
Page 8 Internal Controls Over Financial Reporting The Chief Executive Officer and the Chief Financial Officer of the Company are responsible for designing internal controls over financial reporting, or causing them to be designed under their supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with Canadian GAAP. The Company assessed the design of the internal controls over financial reporting as at October 31, 2007 and concluded that there are material weaknesses in internal controls over financial reporting, which are as follows: a) Due to the limited number of staff resources, the Company believes there are instances where a lack of segregation of duties exist to provide effective controls; and b) Due to the limited number of staff resources, the Company may not have the necessary in-house knowledge to address complex accounting and tax issues that may arise. The weaknesses and their related risks are not uncommon in a company the size of the Company because of limitations in size and number of staff. The Company believes it has taken initial steps to mitigate these risks by consulting outside advisors and involving the Audit Committee and Board of Directors in reviews and consultations where necessary. However, these weaknesses in internal controls over financial reporting could result in a more than remote likelihood that a material misstatement would not be prevented or detected. The Company believes that it must continue to take additional steps to further mitigate these risks by consulting outside advisors on a regular and timely basis. There have been no changes in the Company s internal controls over financial reporting that occurred during the quarter ended October 31, 2007 that have materially affected, or are reasonably likely to materially affect, the Company s internal controls over financial reporting. Cautionary Statement This MD&A is based on a review of the Company s operations, financial position and plans for the future based on facts and circumstances as of December 27, 2007. Except for historical information or statements of fact relating to the Company, this document contains forwardlooking statements within the meaning of applicable Canadian securities regulations. There can be no assurance that such statements will prove to be accurate, and future events and actual results could differ materially from those anticipated in such statements. Important factors that could cause actual results to differ materially from our expectations are disclosed in the Company s documents filed from time to time via SEDAR with the Canadian regulatory agencies to whose policies we are bound. Forward-looking statements are based on the estimates and opinions of management on the date the statements are made, and we do not undertake any obligation to update forward-looking statements should conditions or our estimates or opinions change. These statements involve known and unknown risks, uncertainties, and other factor that may cause the Company s actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievement expressed or implied by these forward-looking statements.