Fiscal 1st Quarter 1998 Numbers

BOREALIS EXPLORATION LIMITED

INTERIM STATEMENT OF CASH

FLOW FOR THE NINE MONTH PERIOD ENDED

DECEMBER 31st, 1997

(Unaudited)

December 31 December 31
1997 1996
Operating Activities
Operating gain (loss) $ 1,888,856 $ (948,840)
Items not affecting cash
Assignment of debt (2,631,790)
Foreign Exchange (gain) loss on Royalty 27,360 --
Amortization 953 870
(714,621) 947,970
Changes in non-cash working balances
Accounts payable (decrease) 660,857 63,965
660,857 63,965
$ (53,764) $ (884,005)




Financing Activities
Advances from (to) a shareholder, net $ 279,763 $ (42,821)
Shares issued in subsidiary companies -- 1,241,348
Proceeds from issuance of share and stock

options



2,352,926


2,261,931
$ 2,632,689 $ 3,460,458




Investing Activities
Advances to an affiliated company $ (378,874) $ (2,542,955)
Investment in shares of affilicted company (2,186,256) --
Exploration and development expenses

deferred



(5,515)


--
$ (2,570,645) $ (2,542,955)




Increase (decrease) cash $ 8,280 $ 33,498
Cash, beginning of period $ 843 $ 2,430
Cash and equivalents, end of period $ 9,123 $ 35,928










BOREALIS EXPLORATION LIMITED

INTERIM BALANCE SHEET

DECEMBER 31st, 1997

(Unaudited)

ASSETS
December 31 December 31
1997 1996
Current Assets
Cash $ 9,123 $ 35,928
Marketable securities 1,295 1,295
10,418 37,223
Share subscription receivable -- 173,000
Investment in shares 7,258,342 156,728
Mineral properties, including deferred

exploration and development cost

and fixed assets





735,914




5,361,269
$ 8,004,674 $ 5,728,220




LIABILITIES
Current Liabilities
Accounts payable $ 2,659,594 $ 1,998,737
Payable to shareholders 415,573 491,110
Royalty payable -- 2,567,813
$ 3,075,167 $ 5,057,660




SHAREHOLDERS' EQUITY
Capital Stock:
Authorized 5,000,000 common shares
without par value
Issued (1997 - 4,869,878 shares)
(1996 - 4,148,345 shares) $ 27,534,575 $ 25,262,462
Shares issued in subsidiary companies 1,485,359 1,241,348
Contributed surplus 6,272,085 4,919,539
Deficit (30,362,512) (30,752,789)
Equity 4,929,507 670,560
$ 8,004,674 $ 5,728,220














BOREALIS EXPLORATION LIMITED

INTERIM STATEMENT OF LOSS AND DEFICIT

DECEMBER 31st, 1997

(Unaudited)

December 31 December 31
1997 1996
General and administrative expenses
Interest and exchange $ 27,420 $ 14,840
Other general and administrative expenses 1,063,154 1,290,530
1,090,574 1,305,370
Other Income (Expenses)
Foreign Exchange (loss) on Royalty (27,360) --
Revenue -- 356,530
Assignment of debt 2,631,790 --
Gain on settlement of Debt 375,000 --
2,979,430 356,530
Decrease (increase) in deficit 1,888,856 (948,840)
Deficit, beginning of period (32,251,368) (29,803,949)
Deficit, end of period $ (30,362,512) $ (30,752,789)






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: http://www.borealis.com





Interim Report

December 31, 1997