BOREALIS EXPLORATION LIMITED

INTERIM CONSOLIDATED STATEMENT OF CASH

FLOW FOR THE NINE MONTH PERIOD ENDED

JUNE 30, 1997

(Unaudited)
June 30June 30
1997 1996
Operating Activities
Operating gain/(loss)$ (216,558) $ 51,651
Items not affecting cash
Foreign Exchange (gain) loss on royalty 37,395
Amortization 1,023 903
$ (178,140) $ 52,554
Changes in non-cash working balances
Accounts receivable (increase)-- (24,399)
Accounts payable (decrease)(1,281,358) (704,112)
(1,281,358)(728,511)
$ (1,459,498) $ (675,957)
Financing Activities
Proceeds from Share Issuance$ 1,289,178 $ 1,351,914
Additions (reductions) to loan payable 57,736(430,546)
Advances from (repayment to) a shareholder (74,649)(251,469)
$ 1,272,265 $ 669,899
Investing Activities
Deffered exploration & development cost $ (1364)$ (10,285)
Advances to an affiliated company 185,226 --
$ (183,862)$ (10,285)
Increase (decrease) cash$ (3,371) $ (16,343)
Cash (bank indebtedness), beginning of period $ 13, 632$ (410)
Cash and equivalents, end of period$ 10,261 $ (16,753)

BOREALIS EXPLORATION LIMITED

INTERIM CONSOLIDATED BALANCE SHEET

JUNE 30, 1997

(Unaudited)

ASSETS
June 30June 30
19971996
Current Assets
Cash $ 10,261 $ --
Marketable securities 1,295 1,295
$ 11,556$ 1,295
Investment in shares4,664,749 1,707
Mineral properties including deferred exploration

and development cost and fixed assets


$ 729,584

$ 5,365,408
$ 5,405,889$ 5,368,410

LIABILITIES
Current Liabilities
Bank Indebtedness $ -- $ 16,753
Loans payable57,736 --
Accounts payable1,536,520 1,371,493
Payable to shareholders680,427 425,931
$ 2,274,683 $ 1,814,177
Royalty payable2,595,300 2,547,871
$ 4,869,983 $ 4,362,048

SHAREHOLDERS' EQUITY
Capital Stock:
Authorized 5,000,000 common shares
without par value
Issued (1997 - 4,444,379 shares)
(1996 - 4,148,345 shares) $ 26,175,893$ 25,262,462
Subsidiary Share Capital1,057,259 --
Contributed surplus4,786,726 4,919,539
Deficit(31,483,972) (29,175,639)
$ 535,906 $ 1,006,362
5,405,8895,368,410

BOREALIS EXPLORATION LIMITED

INTERIM CONSOLIDATED STATEMENT OF LOSS AND DEFICIT

JUNE 30, 1997

(Unaudited)
June 30June 30
19971996
Administrative expenses
Interest and exchange (loss)$ 28,960 $ 35,877
Other general and administrative expenses 453,703 268,792
482,663 304,669
Other Items
Revenue303,500 356,320
Foreign Exchange (Loss) on Royalty (37,395)--
$ 266,105 $ 356,320
Decrease (increase) in deficit(216,558) 51,651
Deficit, beginning of period$ (31,267,414) $ (29,227,290)
Deficit, end of period$ (31,483,972) $ (29,175,639)

BOREALIS EXPLORATION LIMITED

401 BARCLAY SQUARE

1300 EIGHTH STREET SOUTHWEST

CALGARY, ALBERTA T2R 1B2 CANADA

Phone: (403) 245-4306 or (503) 621-3286

Fax: (403) 245-4308 or (503) 621-3425

E-mail: pr@borealis.com

Web Site: www.borealis.com


INTERIM REPORT

JUNE 30, 1997