BOREALIS EXPLORATION LIMITED

INTERIM CONSOLIDATED STATEMENT OF CASH

FLOW FOR THE SIX MONTH PERIOD ENDED

SEPTEMBER 30, 1997

(Unaudited)

September 30 September 30
1997 1996
Operating Activities
Operating gain (loss) $ (767,336) $ (576,659)
Items not affecting cash
Foreign Exchange (gain) loss on royalty 18,844 --
Amortization 987 882
(747,505) (575,777)
Increase (decrease) in accounts payable (251,600) 540,072
$ (999,105) $ (35,705)




Financing Activities
Proceeds from Issuance of Shares $ 1,063,748 $ --
Additions (reductions) to loan payable 133,795 --
Advances from (repayment to) a shareholder, net 45,387 167,660
$ 1,242,930 $ 167,660




Investing Activities
Advances to an affiliated company $ (252,428) $ (112,802)
Exploration & development expenses deferred (815) --
$ (253,243) $ (112,802)




Increase (decrease) cash $ (9,418) $ 19,183
Cash (bank indebtedness), beginning of period 10,261 (16,753)
Cash and equivalents, end of period $ 843 $ 2,430












BOREALIS EXPLORATION LIMITED

INTERIM CONSOLIDATED BALANCE SHEET

SEPTEMBER 30, 1997

(Unaudited)

ASSETS

September 30 September 30
1997 1996
Current Assets
Cash $ 843 $ 2,430
Marketable securities 1,295 1,295
2,128 3,725
Investment in shares 4,664,749 1,728
Mineral properties including deferred exploration

and development cost and fixed assets



730,399


5,365,966
$ 5,397,276 $ 5,371,419






LIABILITIES

Current Liabilities
Accounts payable and accrued liabilities $ 1,284,920 $ 1,911,565
Loans payable 227,480 --
Payable to shareholders 335,810 533,931
1,848,210 2,445,496
Royalty payable 2,584,690 2,547,871
$ 4,432,900 $ 4,993,367






SHAREHOLDERS' EQUITY

Capital Stock:
Authorized 5,000,000 common shares
without par value
Issued (1997 ­ 4,869,878 shares)
(1996 ­ 4,148,345 shares) $ 28,429,018 $ 25,262,462
Contributed surplus 4,786,726 4,919,539
Deficit (32,251,368) (29,803,949)
964,376 378,052
$ 5,397,276 $ 5,371,419












BOREALIS EXPLORATION LIMITED

INTERIM CONSOLIDATED STATEMENT OF LOSS AND DEFICIT

SEPTEMBER 30, 1997

(Unaudited)

September 30 September 30
1997 1996
General and administrative expenses
Interest and exchange $ 20,053 $ 39,035
Other general and administrative expenses 728,499 537,624
748,552 576,659
Other Items
Foreign Exchange (Loss) on Royalty (18,844) --
767,336 576,659
Decrease (increase) in deficit $ (767,336) $ (576,559)
Deficit, beginning of period $ (31,483,972) $ (29,227,290)
Deficit, end of period $ (32,251,368) $ (29,802,949)












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

SEPTEMBER 30, 1997