UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C.  20549



FORM 20-F



[]

REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934

OR

[ X ]

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended June 30, 2011

OR

[     ]

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ____________ to __________

OR

[     ]

SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Date of event requiring this shell company report



Portal Resources Ltd.

(Exact name of Registrant as specified in its charter)



British Columbia, Canada

(Jurisdiction of incorporation or organization)



Suite 750  625 Howe Street, Vancouver, British Columbia, Canada V6C 2T6

(Address of principal executive offices)



Securities to be registered pursuant to Section 12(b) of the Act:

None



Securities to be registered pursuant to Section 12(g) of the Act:

Common Shares, without par value

(Title of Class)



Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act: None



Indicate the number of outstanding shares of each of the Companys classes of capital or common stock as of the close of the period covered by the annual report.     48,745,539 Common Shares



Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

Yes ___     No   xxx

If this report is an annual or a transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934. Yes XXX  No ___



Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 12 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past ninety days.

Yes XXX  No ___



Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer or a non-accelerated filer.  See definition of accelerated filer and large accelerated filer in Rule 12b-2 of the Exchange Act.



Large accelerated filer __  Accelerated filer  __  Non-accelerated filer X



Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:



U.S. GAAP [  ]

International Financial Reporting Standards as issued

Other [ X]

by the International Accounting Standards Board [  ]



Indicate by check mark which financial statement item the registrant has elected to follow:

Item 17 _X_  Item 18 ___



If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ___   No  _X_ N/A __









Page 2 of 95

Index to Exhibits on Page 69













Portal Resources Ltd.

Form 20-F Annual Report



Table of Contents



|          | PART I                                                                       | Page
|--------- | ---------------------------------------------------------------------------- | ----
|          |                                                                              |     
|Item 1.   | Identity of Directors, Senior Management and Advisors                        | 4   
|Item 2.   | Offer Statistics and Expected Timetable                                      | 4   
|Item 3.   | Key Information                                                              | 4   
|Item 4.   | Information on the Company                                                   | 13  
|Item 5.   | Operating and Financial Review and Prospects                                 | 24  
|Item 6.   | Directors, Senior Management and Employees                                   | 36  
|Item 7.   | Major Shareholders and Related Party Transactions                            | 46  
|Item 8.   | Financial Information                                                        | 47  
|Item 9.   | The Offer and Listing                                                        | 52  
|Item 10.  | Additional Information                                                       | 54  
|Item 11.  | Quantitative and Qualitative Disclosures about Market Risk                   | 65  
|Item 12.  | Description of Other Securities Other Than Equity Securities                 | 65  
|          |                                                                              |     
|          | PART II                                                                      |     
|          |                                                                              |     
|          |                                                                              |     
|Item 13.  | Defaults, Dividend Arrearages and Delinquencies                              | 65  
|Item 14.  | Material Modifications to the Rights of Security Holders and Use of Proceeds | 65  
|Item 15.  | Controls and Procedures                                                      | 65  
|Item 16.  | Reserved                                                                     | 67  
|Item 16A. | Audit Committee Financial Expert                                             | 67  
|Item 16B. | Code of Ethics                                                               | 67  
|Item 16C. | Principal Accountant Fees and Services                                       | 67  
|Item 16D. | Exemptions from Listing Standards for Audit Committees                       | 68  
|Item 16E. | Purchase of Equity Securities by the Issuer and Affiliated Purchasers        | 68  
|Item 16F. | Change in Registrants Certifying Accountant                                 | 68  
|          |                                                                              |     
|          | PART III                                                                     |     
|          |                                                                              |     
|Item 17.  | Financial Statements                                                         | 68  
|Item 18.  | Financial Statements                                                         | 69  
|Item 19.  | Exhibits                                                                     | 69  







- 3 -









Part I



Item 1.  Identity of Directors, Senior Management and Advisors



|Table No. 1
Company Officers and Directors
|------------------------------------------
|                                          
|Name                                      
|David N. Hottman                          
|Barry J. Reid                             
|Mark T. Brown                             
|John M. MacRae                            
|Gary D. Nordin                            
|Frank Wheatley                            



The Company's auditor for the financial statements contained within this annual report is Devisser Gray LLP, Chartered Accountants, 401  995 West Pender Street, Vancouver, British Columbia, Canada, V6C 1L6. Devisser Gray LLP has been auditor of the Company since inception.



On November 8, 2011, the Company determined to propose to shareholders at its Annual General and Special Meeting of Shareholders held on December 16, 2011 to appoint MNP LLP, Chartered Accountants, 800, 700  6th Avenue SW, Calgary, Alberta, Canada as the Company's new auditor. There were no disagreements between the Company or the prior auditor, DeVisser Gray LLP, and no reservations or modified opinions contained within the audit reports.



Item 2.  Offer Statistics and Expected Timetable



Not Applicable



Item 3.  Key Information



As used within this Annual Report, the terms Portal, Portal de Oro Resources Ltd., Gateway, the Company, Issuer and Registrant refer collectively to Portal Resources Ltd., its predecessors, subsidiaries and affiliates.





- 4 -





SELECTED FINANCIAL DATA



The selected financial data of the Company for the Year Ended June 30, 2011, 2010 and 2009 were derived from the financial statements of the Company which have been audited by DeVisser Gray LLP, Chartered Accountants, also as indicated in its audit reports which are included elsewhere in this Annual Report. The financial data for the years ended June 30, 2008 and June 30, 2007 has also been derived from the financial statements of the Company as audited by DeVisser Gray LLP, although the financial statements and audit report are not included in this Annual Report.



The selected financial data should be read in conjunction with the financial statements and other financial information included elsewhere in the Annual Report.



The Company has not declared any dividends on its common shares since incorporation and does not anticipate that it will do so in the foreseeable future.  The present policy of the Company is to retain future earnings, if any, for use in its operations and the expansion of its business.



Table No. 2 is derived from the financial statements of the Company, which have been prepared in accordance with Canadian Generally Accepted Accounting Principles (GAAP), the application of which, in the case of the Company, conforms in all material respects for the years presented with US GAAP, except as disclosed in Note 14 to the financial statements.



|Table No. 2
Selected Financial Data
(CDN$ in 000, except per share data)
|------------------------------------------------------------------------
|                                                                        
|                                                                        
|                                                                        
|Revenue                                                                 
|Interest Income                                                         
|Net Income (Loss)                                                       
|Net Income (Loss) Per Share                                             
|Dividends Per Share                                                     
|Wtg. Avg. Shares  (000)                                                 
|Working Capital                                                         
|Mineral Properties                                                      
|Oil and Gas Properties                                                  
|Long-Term Debt                                                          
|Shareholders Equity                                                    
|Total Assets                                                            
|                                                                        
|US GAAP Net Loss                                                        
|US GAAP Loss Per Share                                                  
|US GAAP Wtg. Avg. Shares                                                
|US GAAP Equity                                                          
|US GAAP Total Assets                                                    
|US GAAP Mineral Properties                                              





- 5 -





In this Annual Report, unless otherwise specified, all dollar amounts are expressed in Canadian Dollars (CDN$).



Table No. 3 sets forth the rate of exchange for the Canadian Dollar at the end of the five most recent years ended December 31st, the average rates for the period, and the range of high and low rates for the period. Table No. 3 also sets forth the rate of exchange for the Canadian Dollar at the end of the six most recent months, and the range of high and low rates for these periods.



For purposes of this table, the rate of exchange means the noon buying rate in New York City for cable transfers in foreign currencies as certified for customs purposes by the Federal Reserve Bank of New York.  The table sets forth the number of Canadian dollars required under that formula to buy one U.S. Dollar.  The average rate means the average of the exchange rates on the last day of each month during the period.



|Table No. 3
Canadian Dollar/U.S. Dollar
|---------------------------------------
|                                       
|Period                                 
|                                       
|Year Ended 12/31/10                    
|Year Ended 12/31/09                    
|Year Ended 12/31/08                    
|Year Ended 12/31/07                    
|Year Ended 12/31/06                    
|                                       
|Three Months Ended   9/30/11           
|Three Months Ended   6/30/11           
|Three Months Ended   3/31/11           
|Three Months Ended 12/31/10            
|Three Months Ended   9/30/10           
|Three Months Ended   6/30/10           
|Three Months Ended   3/31/10           
|Three Months Ended 12/31/09            
|Three Months Ended   9/30/09           
|Three Months Ended   6/30/09           
|Three Months Ended   3/31/09           
|Three Months Ended 12/31/08            
|                                       
|November 2011                          
|October 2011                           
|September 2011                         
|August 2011                            
|July 2011                              
|June 2011                              



The exchange rate was $1.02 on November 30, 2011.





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Forward Looking Statements



Certain Statements presented in this Annual Report are forward-looking statements which may include conclusions of prefeasibility and feasibility studies, estimates of future production, capital and operating costs, prices of resource commodities, and other known and unknown risks.  These and other factors and uncertainties may cause material differences from future results as expressed or implied by these forward-looking statements.  These risks, uncertainties and other factors include but are not limited to the risks involved in the exploration, development and mining business.



Statement of Capitalization and Indebtedness



Not Applicable



Risk Factors



An investment in the Common Shares of the Company must be considered speculative due to the nature of the Companys business and the present stage of exploration and development of its non producing mineral properties. In particular, the following risk factors apply:



Risks Associated with Oil and Gas Production and Exploration



Oil and gas exploration has a high degree of risk and the Companys exploration efforts may be unsuccessful which would have a negative effect on the Companys operations

There is no certainty that the expenditures to be made by the Company in the exploration of its current projects, or any additional project interests the Company may acquire, will result in discoveries of recoverable oil and gas in commercial and economic quantities.  An exploration project may not result in the discovery of commercially recoverable reserves and the level of recovery of hydrocarbons from a property may not be a commercially recoverable (or viable) reserve which can be legally and economically exploited. If exploration is unsuccessful and no commercially recoverable reserves are defined, management would be required to evaluate and acquire additional projects which would require additional capital, or the Company would have to cease operations altogether.



Hydrocarbon exploration and production has substantial operating and drilling hazards which could result in failure of the Companys projects or substantial liabilities which may not be covered by insurance

Oil and natural gas exploration and production operations are subject to all the risks and hazards typically associated with such operations. Hazards include well fires, explosions, blowouts, and oil or chemical spills, each of which could result in substantial damage to oil and natural gas wells, producing facilities, other property and the environment or in personal injury. Although the Operator of each property in which the Company has an interest typically maintains liability insurance in an amount which they consider adequate the nature of these risks is such that liabilities could exceed policy limits, in which event the Company as an owner of an interest in these wells could incur significant costs that could have a materially adverse effect upon its financial condition. Oil and natural gas production operations are also subject to all the risks typically associated with such operations, including premature decline of reservoirs and the invasion of water into producing formations. Any unforeseen hazard could result in the failure of the Companys operations on that project, which would have a negative effect on the Companys financial condition or cause the Company to cease operations altogether.





- 7 -





The oil and gas industry is highly competitive, and if the Company is unsuccessful in competing with other oil and gas companies, it would negatively effect the Companys ability to operate

The Oil and Gas industry is highly competitive, including the acquisition of property interests, equipment, skilled personnel, and product marketing. The Company is required to directly compete with a substantial number of other oil and gas companies. Many of these other companies, both public and private, have significantly greater financial and personnel resources than the Company. Such competitors could outbid the Company for such projects, equipment or personnel, or produce oil and gas at lower costs which would have a negative effect on the Companys operations and financial condition, including forcing the Company to cease operations altogether.



Commodity prices may not support corporate profit

The petroleum industry in general is intensely competitive and there is no assurance that, even if commercial quantities of oil or gas are discovered and developed, a profitable market will exist for the sale of same.  Factors beyond the control of the Company may affect the marketability of any substances discovered.  The price of natural resources are volatile over short periods of time, and is affected by numerous factors beyond the control of the Company, including international economic and political trends, expectations of inflation, currency exchange fluctuations, interest rates and global or regional consumption patterns, speculative activities and increased production due to improved recovery techniques. If the Company is unable to economically produce oil and gas from its projects, it would have a negative effect on the Companys financial condition, or require the Company to cease operations altogether.



No economic reserves may exist on its properties

One property in which the Company has a working interest has advanced to the production stage, with the remainder at the exploration stage.  No SEC-compliant reserve reports have yet been prepared for any of the properties in which the Company has an interest, and no economic oil and gas reserves have been established on any of the properties. Finding oil and gas deposits is dependent on a number of factors, not the least of which is the technical skill of exploration personnel involved.  Even in the event commercial quantities of oil and gas are discovered, the exploration properties might not be brought into a state of commercial production. The commercial viability of an oil and gas deposit once discovered is also dependent on a number of factors, some of which are particular attributes of the property, such as size, proximity to infrastructure, taxes, environmental laws, and commodity prices.  Most of these factors are beyond the control of the Company. The Company is an exploration stage company with no history of pre-tax profit and no income from its operations.  Even if the Companys properties are brought into production, operations may not be profitable.



The Company is not the operator of certain of its projects, and is dependent upon other companies

Portal has a non-operating working interest in certain of its properties. Therefore, other companies operate and control those assets, and the Company has limited influence over the operation of those properties and the associated costs. This position may have a negative effect on the Company's financial performance and operating condition.





- 8 -





The Companys operations are subject to substantial environmental regulations which could have a negative effect on the Companys operations and financial condition

The current and anticipated future operations of the Company require permits from various federal, provincial and local governmental authorities and such operations are and will be governed by laws and regulations governing various elements of the petroleum industry.  The Companys exploration activities are subject to various laws governing land use, the protection of the environment, prospecting, development, production, exports, taxes, labor standards, occupational health, waste disposal, toxic substances, and other matters. Such operations and exploration activities are also subject to substantial regulation under these laws by governmental agencies and may require that the Company obtain permits from various governmental agencies.



The Company believes it is in substantial compliance with all material laws and regulations which currently apply to its activities. All permits which the Company may require for future exploration may not be obtainable on reasonable terms or such laws and regulations, or new legislation or modifications to existing legislation, could have an adverse effect on any project that the Company might undertake.



Failure to comply with applicable laws, regulations and permitting requirements may result in enforcement actions thereunder, including orders issued by regulatory or judicial authorities causing operations to cease or be curtailed, and may include corrective measures requiring capital expenditures, installation of additional equipment or remedial actions.



Amendments to current laws, regulations and permits governing operations and activities of oil and gas companies, or more stringent implementation thereof, could have a material adverse impact on the Company, which may adversely effect the Companys financial condition, or require the Company to cease operations altogether.



The Companys title to its properties may be disputed by third parties which could result in the Company losing title to its properties

The Company has only done a preliminary title survey of its exploration properties in accordance with industry standards. These procedures do not guarantee the Companys title and therefore, in accordance with the laws of the jurisdictions in which these properties are situated, their existence and area could be in doubt. Unregistered agreements or transfers, or native land claims, may affect title.  If title is disputed, the Company will have to defend its ownership through the courts, which would likely be an expensive and protracted process and have a negative effect on the Companys operations and financial condition. In the event of an adverse judgment, the Company would lose its property rights.



Canada is a signatory to the Kyoto Protocol which could negatively change future operations by restricting the Companys activities or increasing operating costs

Canada is a signatory to the United Nations Framework Convention on Climate Change and has ratified the first phase of the Kyoto Protocol to set legally binding targets to reduce nationwide emissions of greenhouse gases, including carbon dioxide, methane, and nitrous oxide. Oil and gas exploration and production and other petroleum operations and related activities emit some greenhouse gases, which may subject the Canadian oil and gas industry, including the Company, to legislation or other regulatory initiatives designed to regulate emissions of greenhouse gasses. Future international treaties as well as Canadian Federal or Provincial emission reduction requirements, may require the reduction of emissions produced by the Companys operations and facilities. These new requirements and the additional costs required to comply could have a material effect on the Companys operations and financial condition.





- 9 -





Risks Relating to the Financing of the Company



The Company is likely to require additional financing which could result in substantial dilution to existing shareholders

The Company, while engaged in the business of exploring resource properties, is dependent on additional financing for planned exploration programs and property acquisitions for the next twelve months as outlined herein.  Management anticipates being able to raise the necessary funds by means of equity financing.  The ongoing exploration of the Companys properties is dependent upon the Companys ability to obtain financing through the joint venturing of projects, debt financing, equity financing or other means. Such sources of financing may not be available on acceptable terms, if at all.  Failure to obtain such financing may result in delay or indefinite postponement of exploration work on the Companys resource properties, as well as the possible loss of its interest in such properties. Any transaction involving the issuance of previously authorized but unissued shares of common or preferred stock, or securities convertible into common stock, could result in dilution, possibly substantial, to present and prospective holders of common stock. These financings may be on terms less favorable to the Company than those obtained previously.



The Company has a history of net losses and expects losses to continue for the foreseeable future

The Company has had a history of losses and there is no assurance that it can reach profitability in the future.  The Company will require significant additional funding to meet its business objectives.  The Company may not be able to obtain additional financing on reasonable terms, or at all.  The Company has historically financed its operations through the sale of equity. If equity financing is required, as expected, then such financings could result in significant dilution to existing shareholders.  If the Company is unable to obtain sufficient financing, the Company might have to dramatically slow exploration efforts and/or lose control of its projects. The Company has historically obtained the preponderance of its financing through the issuance of equity, and the Company has no current plans to obtain financing through means other than equity financing.



The Company has a lack of cash flow to sustain operations

Only one of the properties in which the Company has an interest has advanced to the commercial production stage and the Company has no history of earnings and limited cash flow from operations.  The Company has paid no dividends on its shares since incorporation and does not anticipate doing so in the foreseeable future.  Historically, the only source of funds available to the company has been through the sale of its common shares. Any future additional equity financing would cause dilution to current stockholders. If the Company does not have sufficient capital for its operations, management would be forced to reduce or discontinue its activities which would likely have a negative effect on the stock price.





- 10 -





Risks Relating to an Investment in the Securities of the Company



The market for the Companys stock has been subject to volume and price volatility which could negatively effect a shareholders ability to buy or sell the Companys shares

The market for the common shares of the Company may be highly volatile for reasons both related to the performance of the Company or events pertaining to the industry (ie. mineral price fluctuation/high production costs/accidents) as well as factors unrelated to the Company or its industry.  In particular, market demand for products incorporating resource commodities fluctuate from one business cycle to the next.  The Companys common shares can be expected to be subject to volatility in both price and volume arising from market expectations, announcements and press releases regarding the Companys business, and changes in estimates and evaluations by securities analysts or other events or factors.  In recent years the securities markets in the United States and Canada have experienced a high level of price and volume volatility, and the market price of securities of many companies, particularly small-capitalization companies such as the Company, have experienced wide fluctuations that have not necessarily been related to the operations, performances, underlying asset values, or prospects of such companies.  For these reasons, the price of the Companys common shares can also be expected to be subject to volatility resulting from purely market forces over which the Company will have no control.  Further, despite the existence of a market for trading the Companys common shares in Canada, stockholders of the Company may be unable to sell significant quantities of common shares in the public trading markets without a significant reduction in the price of the stock.



The Company has a dependence upon key management employees, the absence of which would have a negative effect on the Company's operations

The Company strongly depends on the business and technical expertise of its management and key personnel, including President and Chief Executive Officer David Hottman, Chief Operating Officer Barry Reid. and Chief Financial Officer Mark Brown.  There is little possibility that this dependence will decrease in the near term.  As the Companys operations expand, additional general management resources will be required. The Company may not be able to attract and retain additional qualified personnel and this would have a negative effect on the Companys operations.



Certain officers and directors may have conflicts of interest

Certain of the directors and officers of the Company are also directors and/or officers and/or shareholders of other natural resource companies.  While the Company was engaged in the business of exploiting mineral properties, such associations may have given rise to conflicts of interest from time to time.  The Directors of the Company are required by law to act honestly and in good faith with a view to the best interests of the Company and to disclose any interest that they may have in any project or opportunity of the Company.  If a conflict of interest arises at a meeting of the board of directors, any director in a conflict must disclose his interest and abstain from voting on such matter.  In determining whether or not the Company will participate in any project or opportunity, the directors will primarily consider the degree of risk to which the Company may be exposed and its financial position at the time.



The Company could be deemed a passive foreign investment company which could have negative consequences for U.S. investors

The Company could be classified as a Passive Foreign Investment Company (PFIC) under the United States tax code. If the Company is declared a PFIC, then owners of the Companys Common Stock who are U.S. taxpayers generally will be required to treat any so-called "excess distribution" received on its  common  shares, or any  gain  realized  upon a disposition of common shares, as ordinary income and to pay an interest charge on a portion of such distribution or gain, unless the taxpayer makes a qualified electing fund ("QEF") election or a mark-to-market election with respect to the Companys shares. A U.S. taxpayer who makes a QEF election generally must report on a current basis its share of the Companys net capital  gain and  ordinary earnings for any year in which the Company is classified as a PFIC, whether or not the Company distributes any amounts to its shareholders.





- 11 -





U.S. investors may not be able to enforce their civil liabilities against the Company or its directors, controlling persons and officers

It may be difficult to bring and enforce suits against the Company. The Company is a corporation incorporated in Canada under the laws of British Columbia. All of the Companys directors and officers are residents of Canada and all of the Companys assets and its subsidiaries are located outside of the United States.  Consequently, it may be difficult for United States investors to effect service of process in the United States upon those directors or officers who are not residents of the United States, or to realize in the United States upon judgments of United States courts predicated upon civil liabilities under United States securities laws.  There is substantial doubt whether an original action could be brought successfully in Canada against any of such persons or the Company predicated solely upon such civil liabilities under the U.S. Securities Act.



Broker-Dealers may be discouraged from effecting transactions in our common shares because they are considered penny stocks and are subject to the penny stock rules

Rules 15g-1 through 15g-9 promulgated under the Securities Exchange Act of 1934, as amended, impose sales practice and disclosure requirements on FINRA broker-dealers who make a market in "a penny stock".  A penny stock generally includes any non-NASDAQ equity security that has a market price of less than $5.00 per share. The additional sales practice and disclosure requirements imposed upon broker-dealers may discourage broker-dealers from effecting transactions in our shares, which could severely limit the market liquidity of the shares and impede the sale of our shares in the secondary market.



Under the penny stock regulations, a broker-dealer selling penny stock to anyone other than an established customer or "accredited investor" (generally, an individual with net worth in excess of US$1,000,000 or an annual income exceeding US$200,000, or US$300,000 together with his or her spouse) must make a special suitability determination for the purchaser and must receive the purchaser's written consent to the transaction prior to sale, unless the broker-dealer or the transaction is otherwise exempt.



In addition, the penny stock regulations require the broker-dealer to deliver, prior to any transaction involving a penny stock, a disclosure schedule prepared by the US Securities and Exchange Commission relating to the penny stock market, unless the broker-dealer or the transaction is otherwise exempt.  A broker-dealer is also required to disclose commissions payable to the broker-dealer and the registered representative and current quotations for the securities.  Finally, a broker-dealer is required to send monthly statements disclosing recent price information with respect to the penny stock held in a customer's account and information with respect to the limited market in penny stocks.



As a Foreign Private Issuer, the Company is exempt from the Section 14 Proxy Rules and Section 16 of the 1934 Securities Act

The submission of proxy and annual meeting of shareholder information (prepared to Canadian standards) on Form 6-K may result is shareholders having less complete and timely data.  The exemption from Section 16 rules regarding sales of common shares by insiders may result in shareholders having less data.





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Item 4.  Information on the Company



DESCRIPTION OF BUSINESS



Introduction



The Companys executive office is located at:

Suite 750  625 Howe Street, Vancouver, British Columbia, Canada V6C 2T6

Telephone: (604) 629-1929

Facsimile: (604) 629-1930

E-Mail: info@portalresources.net

Website: www.portalresources.net



The Contact person in Vancouver is David Hottman, President, CEO and Chairman.



The Company currently leases its corporate office space in Vancouver under a lease in effect through February 28, 2013.



The Company's fiscal year ends June 30th.



The Company's common shares trade on the TSX Venture Exchange under the symbol "PDO".



The authorized share capital of the Company consists of 100,000,000 common shares and 100,000,000 preferred shares. As of June 30, 2011, the end of the most recent fiscal year, there were 48,745,539 common shares and no preferred shares issued and outstanding.



Corporate Background



The Company was originally incorporated under the Company Act of British Columbia under the name of Gateway Enterprises Ltd. on August 14, 2000. On January 6, 2004, the Company changed its name to Portal de Oro Resources Ltd. due to the acquisition of Portal de Oro Resources (B.V.I.) Ltd. by Gateway. On December 20, 2004, the Company changed its name to Portal Resources Ltd. in order to simplify and shorten its name in English.



At the Companys Annual General Meeting held on December 20, 2004, shareholders approved new Articles of Incorporation under the new British Columbia Business Corporations Act which replaced the Company Act of British Columbia.



The Company presently has two wholly owned subsidiaries, Portal Resources US Inc., a company incorporated under the laws of the State of Colorado, and Portal de Oro (B.V.I.) Ltd., a company incorporated under the laws of the British Virgin Islands.



Currently, the Company conducts oil and gas exploration and production in Canada, and all of the Companys assets are located in Canada.



History and Development of the Business



The Company was originally incorporated as a Capital Pool Company (CPC) under the policies of the TSX Venture Exchange.  On March 15, 2004, the Company completed the acquisition of all the outstanding shares of Portal de Oro (B.V.I.) Ltd. as its qualifying transaction under the policies of the TSX Venture Exchange. Portal de Oro (B.V.I.) Ltd. had an option to earn a 100% interest in the Arroyo Verde gold exploration project located in Argentina through its 100% owned subsidiary, El Portal de Oro, S.A. Consideration for the acquisition of Portal de Oro (B.V.I.) Ltd. was 2,000,000 common shares of the Company at a deemed value of $0.10 per share. Since the acquisition, the Company has been primarily focused on exploration in the Arroyo Verde, San Rafael and Anchoris areas. The Company has increased the size of the Arroyo Verde property to approximately 40,000 hectares through: application for an additional three cateos totaling approximately 22,000 hectares in December 2004; and acquisition in July 2004 of approximately 18,000 hectares of mineral exploration property in Chubut and Rio Negro provinces through application for four separate cateos.





- 13 -





In July 2004, the Company acquired an option to acquire a 100% interest in the San Rafael project located in Mendoza Province, Argentina. The option consists of two separate agreements. Under the first, the Company can acquire a 100% interest in mineral exploration concessions totaling 133,996 hectares by making cash payments of US$15,000 in each of the first three years, with an extension of up to three years for additional yearly payments totaling US$265,000. The Company can exercise its right to acquire a 100% interest in any of up to four project areas by paying US$50,000 for each area that it many elect to designate. The acquisition is subject to a 15-20% Net Profits Interest (NPI) of which the Company can purchase 10% at any time for US$1.0 million. Under the second agreement, Portal may acquire a 100% interest in concessions totaling 47,357 hectares by making payments of US$830,000 over 7 years. In the fourth quarter 2004, the Company increased its mineral rights holdings in the San Rafael area through the application for an additional 20 cateos totaling 85,000 hectares.



In February 2007, the Company announced that it had assembled the Tiger Uranium project consisting of six cateos totaling over 26,000 hectares in the Sierra Pintada Uranium district. The project was held under the two existing San Rafael project agreements. In April 2007, through an agreement with Consolidated Pacific Bay Minerals Ltd., an unrelated public company, Portal has the right to earn a 60% interest in the Cerro Solo uranium joint venture of 3 concessions totaling 30,000 hectares located in Chubut Province, Argentina. Under the agreement, the Company was required to pay a total of US$145,000 cash on or before April 20, 2010, and expend an aggregate of US$1,200,000 in exploration expenditures on the property on or before April 20, 2011, to earn a 60% interest in Consolidated Pacific Bays concessions. In February 2009, the Company terminated the Cerro Solo agreement.



In June 2007, Portal entered into an option agreement to earn an initial 60% interest in the Slick Rock Uranium exploration project in San Miguel County, Colorado. Under the agreement, the Company issued 100,000 common shares and must pay US$101,000 cash on or before June 22, 2009, and expend an aggregate of US$445,000 by June 22, 2010, with a minimum expenditure of US$100,000 required in each year. Portal could earn an additional 15% interest (for a total of 75%) in the project through the expenditure of an additional US$250,000 on exploration over the following two years. In June 2008, after disappointing drill results, the Company dropped its option to acquire an interest in the property.



In May 2008, the Company announced that it had expanded the Tiger Uranium project to 9 claims totaling 44,924 hectares (174 square miles) and rescheduled the US$70,000 payment due on June 10, 2008 under the MRDP agreement to July 10, 2008. As part of the reorganization of the San Rafael project, the San Pedro agreement was terminated and the 53 claims totaling 144,856 held under the MRDP agreement, including the Anchoris copper-gold project, were returned to the vendor.  On June 10, Portal informed MRDP of the Companys decision to declare the 9 claims comprising the Tiger project to be a Development Area under the MRDP agreement, and pay MRDP US$50,000. MRDP subsequently informed the Company that it rejected the declaration of a Development Area, and notified the Company that the MRDP contract was null and void for failure to make the US$70,000 payment on the new due date of July 10, 2008.  Portal believes the declaration of a Development Area was valid, and thus the MRDP contact is in good standing. The Company announced that it retained legal counsel to defend its position and was seeking avenues to resolve the dispute.



The Company terminated its option on the Arroyo Verde property and disposed of all its remaining assets in Argentina during the fourth quarter or the year. In May 2009, the Company sold its Portal de Oro S.A. subsidiary for $99,127.





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In September 2008, the Company announced that it had optioned 3 metal exploration projects located in the State of Nevada. The projects include the Golden Snow property, an advanced Carlin-type gold exploration project, the Fish Project, a skarn-manto gold/silver and base metal exploration project, and the CPG Project, an early-stage porphyry and skarn copper-gold-molybdenum prospect. In May 2009, the company closed an assignment agreement with Pengram Corporation to transfer all the rights on these Nevada properties in exchange for 150,000 shares of Pengram common stock.



In November 2008, the Company signed a joint-venture agreement to participate in the exploration, exploitation and production of petroleum and natural gas from lands located in Central Alberta, Canada. Under the original Bigwave Joint Venture agreement, the Company agreed to participate for a 15% interest and agreed to pay a 5.5% Gross Over Riding Royalty (GORR) on all products produced from certain geological formations. The Company later modified the agreement in December 2008 to a 20% interest. In January 2009 the Company signed the Participation Agreement where the Company agreed to pay 100% of the Companys cost per Drill Spacing Unit to earn 100% of their interest until pay-out and then after pay-out to drop to 70% interest per Drill Space Unit. In April 2010, the Company agreed to purchase the Participation Agreement to increase its interest to 22% in the 10,720 acres of the JV for a total of C$5,000 cash and the issuance of 500,000 common shares. In September 2010, the Company acquired an additional 6.5% interest in the Bigwave JV (for a total interest of 28.5%) by granting the seller a non-convertible gross overriding royalty ("GORR") of 5%-15% on all future oil production and a 15% GORR on all future gas production on the acquired 6.5% working interest.



In September 2010, the Company entered into a binding Farm-in Agreement Term Sheet with all the Bigwave JV partners. Under the Agreement, Portal would have had the right to increase its working interest, on a progressive basis, up to an average of 70% in certain lands owned by the JV. However, the Company and the JV partners were not able to conclude a definitive Farm-In Agreement acceptable to all parties, and the  Company's interest in the 11,360 acres in the Bigwave JV remained at a 28.5% working interest.



In March 2009, the Company entered into the Manito JV agreement to participate a 33.3% interest in the exploration, exploitation and production of petroleum and natural gas from an area of interest in central Alberta, Canada. The Company agreed to pay a 5.5% GORR on all products produced from certain geological formations. To date, the Manito JV has acquired one section of land through Alberta Crown Sale.



In May 2010, the Company acquired a 100% interest in two parcels of land totaling 560 acres through Alberta Crown Land Sale. The two parcels lie within the Esther Field, and the primary target is Bakken oil using horizontal drilling.



In March 2011, the Company entered into an agreement to participate in the development of an oil play in west-central Saskatchewan in the Birdbear formation. Under the agreement, Portal has the right to earn a 25% non-operating working interest in a total of four sections of land totaling 2,560 acres which is known as the "Salt Lake Project". Portal would earn a 25% working interest in the first two sections by participating in and paying a 50% cost share of the drilling of one vertical and one horizontal well. An interest in the additional two sections would be earned by participation and payment on a straight-up basis (25% of the costs for a 25% working interest). Subsequent to the initial Salt Lake agreement, the Company secured two additional sections of contiguous land through a seismic option. Five wells were drilled at Salt Lake during 2011, with three wells brought to stream and producing oil. A fourth well was brought on stream in July and is being monitored,  with the fifth well requiring additional completion testing. Through the drilling of these wells, the Company has earned its 25% working interest in the project.





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During calendar 2011, the Company also acquired 3.2 sections of land totaling 2,048 acres in the Provost area of Alberta through Crown land auctions. These sections are subject to a 6% gross overriding royalty and provincial royalties. The Company also acquired a 50% working interest in two sections of land totaling 1,280 acres in the area of Primate, Saskatchewan.



In October 2011, the Company entered into a purchase and sale agreement to acquire oil and gas production assets located in west-central Saskatchewan for total of $9,100,000. The acquisition includes a 100% working interest in 19 sections of land totaling 13,340 acres, two sections totaling 1,280 acres of gross overriding royalty lands, approximately 20 sections of proprietary 3D seismic and 125 line kilometers of proprietary 2D seismic. There are 38 wellbores on the property. Oil is produced to single well batteries and natural gas production is tied into approximately 30 kilometers of natural gas pipeline, with all associated infrastructure and equipment included in the purchase. Production at the time of the initial agreement was approximately 365 barrels of oil equivalent per day ("boe/day"), consisting of 65% heavy oil and 35% non-associated sweet gas. An updated engineering report on the property is being prepared. An initial payment of $500,000 was made to be held in trust until closing, with the transaction also being subject to the approval of the TSX Venture Exchange and financing. Closing was originally scheduled for November 30, 2011 but was subject to change upon agreement by both parties. As of the date of this Annual Report, the transaction has not closed, but both parties are currently  negotiating amendments to the acquisition, including a new closing date.



Business Overview



The Company currently has an interest in oil and gas exploration projects located in Alberta and Saskatchewan, Canada. Portal formerly had interests in mineral exploration operations located in Argentina and the United States, all of which were disposed of in Fiscal 2009. Currently, one of the oil and gas properties in which the Company has an interest has commenced commercial production, with the remainder at the exploration stage. There is no assurance that a commercially viable resource is present on any of the Companys properties, and additional exploration is required before it is determined if the Company's exploration stage properties are economically and legally viable.



Operations are not seasonal as the Company can conduct certain activities on its properties year-round. To date, the Companys revenue has been limited to interest on its cash balances and limited initial oil and gas production from its Salt Lake project. The Company is not dependent upon any patents, licenses or manufacturing processes. The Companys operations are dependent upon exploration rights and claims as well as the terms of option and/or joint venture agreements on those properties. Please see the individual property descriptions below for the details of each of the Companys current projects.





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Government Regulations



In Alberta, the Companys operations are primarily subject to the provisions of the Environmental Protection and Enhancement Act(Alberta) and associated regulations. In Saskatchewan, operations are subject to provisions under several Acts and regulations, including the Oil and Gas Conservation Act. Spilling or otherwise releasing or permitting the release of a substance into the environment, which includes water, land and air, in an amount or concentration or at a rate that may cause a significant adverse effect is prohibited, unless authorized by regulation or by an approval. Where a substance that has caused or may cause an adverse environmental effect is released into the environment, the person responsible for the substance must, as soon as that person becomes aware of the release, take all reasonable measures to remedy and confine the effects and remove or dispose of the substance so as to maximize environmental protection. Any contamination found on, under or originating from the properties may be subject to legislated remediation requirements. A property owner and/or operator could be required to remove or remediate wastes disposed of or released by prior owners or operators. Failure to comply with these environmental laws and regulations could result in the assessment of administrative, civil or criminal penalties and, in some instances, the issuance of injunctions to limit or cease operations.



Oil and Gas Production Royalties



All of the Company's current oil and gas projects are located in Saskatchewan and Alberta, and any oil and natural gas produced by the Companys operations will be subject to both Canadian (Federal) and Provincial regulations, including royalties. Oil and gas production on Crown lands are subject to Crown royalties which are determined by government regulation and are generally calculated as a percentage of the value of the gross production. The rate of royalties payable generally depends in part on prescribed reference prices, well productivity, geographical location, field discovery date and the type or quality of the petroleum product produced. As of the date of this Annual Report, one of the oil and gas projects in which the Company has an interest which is located in Saskatchewan has begun commercial production.



Saskatchewan has varying oil and gas royalty rates based on many factors, including type of well, location, production volume, and prevailing commodity price. Newly drilled oil wells qualify under a Provincial drilling incentive program that caps the Provincial royalty at 2.5% for the first 100,000 barrels of oil produced, and new exploratory natural gas wells qualify for the 2.5% Provincial royalty for the first 25 million cubic meters produced.



Alberta has adjusted its oil and gas royalty rates several times since 2009. Overall royalty rates on oil and gas production in the Province of Alberta were increased in 2009, although changes were also made to rate caps and the price and volume sensitive rates for less productive wells. In March 2009, the Alberta Government announced further changes to the Provincial royalty structure. In order to stimulate new oil and gas drilling in the Province during the period of low commodity prices, the Province introduced temporary lower royalty rates on new conventional oil and gas wells. The new structure dropped royalties on new wells to 5% or less for a year on the first 50,000 barrels of oil or 500 million cubic feet of natural gas. and drilling royalty credits are given to smaller companies. Beginning January 1, 2011, new royalty rates went into effect which lowered the maximum royalties on natural gas production to 36% from 50%, and on conventional oil to 40% from 50%.





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OIL AND GAS PROPERTIES



The Company currently has participation interests in one currently producing oil and gas project in Saskatchewan and in oil and gas exploration ventures located in Saskatchewan and Alberta, Canada. The individual projects are described below.



Salt Lake Project



The Salt Lake Project is a producing oil project located in central Saskatchewan. The Company has a 25% working interest in the project, which currently totals 3,840 acres.



Acquisition Details



On March 8, 2011, the Company entered into an agreement to earn a 25%, non-operating, working interest in a total of four sections of land totaling 2,560 acres. A 25% working interest in the first two sections was earned by participating in, and paying a 50% cost share of, the drilling of one vertical and one horizontal well. An interest in an additional two sections of land was earned with participation on a straight up basis (25% of costs for a 25% working interest) in the drilling of a subsequent horizontal well. Subsequent to the additional agreement, two additional sections of land totaling 1,280 acres contiguous to the original acreage were secured by way of a seismic option. Future production from these lands is subject to a sliding scale nonconvertible royalty.



Property Description



The primary target is the Birdbear carbonate/dolomite formation that correlates to the Nisku formation in Alberta. The formation lies at a depth of approximately 800 meters with a pay zone of four to seven meters. Production is heavy oil of 12° API.



Current and Anticipated Work



During 2011, the Company announced that it had drilled and completed two horizontal wells and one vertical well on the project. It had also completed two well re-entries on the project. Three of the wells (two vertical and one horizontal) were brought on stream and began commercial production in June 2011. The fourth and fifth wells have recompletion and workover pending. As of September 2011, the three wells in production were averaging production at a gross rate of 85 bopd (21 bopd net to Portal)



During the first quarter of 2012, the Company participated in the drilling of a third horizontal well (25% working interest to Portal) on the project. The well was drilled to a total depth of 1,225 meters with a horizontal leg of 289 meters. Completion and equipping operations are being scheduled. Each of the horizontal wells qualify for the Province of Saskatchewans drilling incentive program with a maximum 2.5% government royalty on the first 100,000 barrels of production.



Additional drill locations have been identified on the project and additional horizontal wells may be drilled in fiscal 2012.





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Bigwave Joint Venture



The Bigwave JV is and oil and gas exploration project located in central Alberta, Canada. The project consists of 11,360 acres, and the Company currently has a 28.5% participation interest in the project.



Acquisition Details



Under an agreement dated November 1, 2008 between the Company, Bigwave Exploration Inc. (Bigwave), Bigwave Exploration 2008 Limited Partnership, Lochfayne Resources Ltd., Genesis Production and Resources Ind, Ran Energy Ltd, Larimide Oil and Gas Ltd., Owlco Resources Ltd. and Discovery Resource Corp., the Company agreed to a 15% participation interest in the exploration, exploitation, and production of petroleum and natural gas relating to lands in Central Alberta, Canada known as the Bigwave Joint-Venture. Each Joint-Venture partner agrees to pay its participating interest percentage of costs and expenses, with Bigwave as Operator and Manager. The agreement covers an Area of Interest of 100 square miles under which the Operator may bid for or purchase additional lands on behalf of the JV that are prospective for petroleum and natural gas under the same geological type. Within the Area of Interest, the Company has agreed to pay a 5.5% Gross Over Riding Royalty (GORR) on all products produced from certain geological formations. In December 2008, the agreement was modified to allow the Company to participate to a 20% interest, and in August 2009 the Company increased its interest in the Joint-Venture to 22%.



In January 2009, the Company signed an additional participation agreement (the Participation Agreement) with certain other participants in the Bigwave Joint-Venture. Under the Participation Agreement, Portal agreeing to pay 100% of the other participants cost per Drill Spacing Unit to earn 100 % of their interest until pay-out and then after pay-out to drop to 70% interest per Drill Spacing Unit. In April 2010, Portal agreed to purchase the Participation Agreement for $5,000 cash and 500,000 Portal common shares.



In September 2010, the Company acquired an additional 6.5% interest in the JV from Lochfayne Resources Ltd., which increased the Companys interest in the Bigwave JV to 28.5%. In return for Lochfaynes 6.5% interest, the Company granted Lochfayne a non-convertible gross overriding royalty in the acquired 6.5% interest of 5-15% on all future oil production, and 15% on all future gas production. Portal also assumes all of Lochfaynes future obligations under the Bigwave JV agreement.



Property Description



The Bigwave JV covers a source oil sand-shale sequence which covers several potential reservoirs in a Bakken Formation type play. The JV leases currently cover 11,360 acres, and primary target light oil utilizing horizontal drilling and multi-stage hydraulic fracture stimulation. The first well commenced drilling in August 2009 and in October 2009 the Company announced that drilling was completed. The rock in the prospective formation is less porous than originally anticipated and will require fracture stimulation in order to test the wells productive capacity. Currently, operations of the project are conducted by Bigwave Exploration.



During Fiscal 2011, the Company contributed $121,109 (Fiscal 2010 - $180,129) to the Bigwave Joint-Venture.





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Manito Joint Venture



The Manito Joint-Venture is located in Central Alberta, Canada. The Company currently has a 33.3% participation interest in an Area of Mutual Interest covering 72 square miles, in which the JV has acquired one section of land through Alberta Crown Sale.



Under an agreement dated March 19, 2009 between the Company and Bigwave Exploration Inc., the Company agreed to a 33.3% participation interest in the exploration, exploitation, and production of petroleum and natural gas relating to lands in Central Alberta, Canada known as the Manito Joint-Venture. Under the agreement, each Joint-Venture partner agrees to pay its participating interest percentage of costs and expenses, with Bigwave as the Operator of the project. The Joint-Venture covers and Area of Mutual Interest of 72 square miles, and within that area one Petroleum and Natural Gas Lease has been acquired. The Company has agreed to pay a 5.5% Gross Over Riding Royalty (GORR) on all products produced from certain geological formations within the Area of Mutual Interest.



During Fiscal 2011, the Company contributed $Nil (Fiscal 2010 - $Nil) to the Joint-Venture.



Border Play



In May 2010, the Company acquired a 100% interest in two parcels of land totaling 560 acres through Alberta Crown Land Sale which was held on April 7, 2010. The two parcels lie within the Esther Field located in eastern Alberta in the Bakken Sandstone. The primary exploration target is Bakken oil offsetting currently producing light oil wells (held by non-related third parties) using horizontal drilling.



During Fiscal 2011, the Company incurred lease costs of $784 (Fiscal 2010 - $30,366) on the project.



Provost



During calendar 2011, the Company acquired a 100% interest, subject to a 6% gross over-riding royalty and provincial royalties, in 3.2 sections of land totaling 2,048 acres located in the Provost area of east-central Alberta. The prospect is a Mannville channel play of medium gravity oil and natural gas. The Company is reviewing available seismic data and finalizing plans to re-enter or re-complete existing wells to test productivity and pursuing the possibility of acquiring offsetting lands.



Primate



The Company acquired a 50% working interest in calendar 2011 in two sections of land totaling 1,280 near Primate in west-central Saskatchewan. An evaluation of existing seismic data indicates two potential Mannville oil channel locations with additional offset locations. A strategy for development is underway which involves the acquisition of additional lands, 3-D seismic data and identification of additional drilling locations. It is anticipated that 3-D seismic will be followed by drilling operations in the first quarter of 2012.





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Pending Acquisition



In October 2011, the Company entered into a purchase and sale agreement to acquire oil and gas production assets located in west-central Saskatchewan for total of $9,100,000. The acquisition includes a 100% working interest in 19 sections of land totaling 13,340 acres, two sections totaling 1,280 acres of gross overriding royalty lands, approximately 20 sections of proprietary 3D seismic and 125 line kilometers of proprietary 2D seismic. There are 38 wellbores on the property. Oil is produced to single well batteries and natural gas production is tied into approximately 30 kilometers of natural gas pipeline, with all associated infrastructure and equipment included in the purchase. Production at the time of the initial agreement was approximately 365 boe/day, consisting of 65% heavy oil and 35% non-associated sweet gas. An updated engineering report on the property is being prepared. An initial payment of $500,000 was made to be held in trust until closing, with the transaction also being subject to the approval of the TSX Venture Exchange and financing. Closing was originally scheduled for November 30, 2011 but was subject to change upon agreement by both parties. As of the date of this Annual Report, the transaction has not closed, but both parties are currently negotiating amendments to the acquisition, including a new closing date.



Production and Reserves



As of June 30, 2011, the Companys had producing oil wells at the Salt Lake project in Saskatchewan, Canada. The Companys wells at the end of the fiscal year ended June 30, 2011 were as follows:





|          | Oil   | Natural Gas
|--------- | ----- | -----------
|          | Gross | Net        
|          |       |            
|Producing | 3.00  | 0.75       
|Shut-In   | 3.00  | 0.79       
|TOTAL     | 6.00  | 1.54       



During the fiscal year ended June 30, 2011, the Company drilled the following wells:



|              | Exploratory Wells | Development Wells
|------------- | ----------------- | -----------------
|              | Gross             | Net              
|              |                   |                  
|Oil           | 0                 | 0                
|Natural Gas   | 0                 | 0                
|Dry Wells     | 0                 | 0                
|Service Wells | 0                 | 0                
|              |                   |                  
|Total  Wells  | 0                 | 0                



The following is the Companys total net oil and gas production for the fiscal year ended June 30, 2011. The Company began production from the Salt Lake project in fiscal 2011 and had no production in prior fiscal years.



|Fiscal Year Ended June 30, 2011 | Natural Gas
Oil
Natural Gas Liquids | 0 Mcf
723 barrels
0 barrels
|------------------------------- | ----------------------------------- | ---------------------------



The following table includes the average prices the Company received for its production for the fiscal year ended June 30, 2011.



|    | Fiscal year
ended June 30,
2011
|--- | -------------------------------
|    |                                
|Oil | $65.05  bbl                    





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The following table includes the average production costs, including royalties, per unit of production for the fiscal year ended June 30, 2011.



|                         | Fiscal year
ended June 30,
2011
|------------------------ | -------------------------------
|                         |                                
|Production Costs ($/BOE) | $ 25.61                        
|Royalties ($/BOE)        | 2.05                           
|                         |                                



As of the date of this annual report, the Company has not prepared a reserve estimate on its Salt Lake property as defined under the rules and regulations of the Securities and Exchange Commission for the fiscal year ended June 30, 2011.



The following table discloses the Companys landholdings as of June 30, 2011:



|                | Undeveloped | Developed | Total
|--------------- | ----------- | --------- | -----
|                | Gross       | Net       | Gross
|                |             |           |      
|Alberta (acres) | 14,965      | 4,696     | 640  
|Saskatchewan    | 1,280       | 640       | 3,840





Mineral Properties



The Company currently has no operations in the mineral exploration sector as it disposed of all of its mineral exploration property interests during Fiscal 2009.



Argentina Properties



Arroyo Verde Project



The Arroyo Verde Project was located in Chubut province, Argentina. The Company had an option to earn a 100% interest in the project, subject to a 2% Net Smelter Return (NSR). During the Fiscal Year ended June 30, 2009, the Company disposed of its entire interest in the Arroyo Verde Project.



The project was at the exploration stage and did not contain proven mineral reserves.



The Company terminated its option on the Arroyo Verde property during the fourth quarter of fiscal 2009, and wrote-off the remaining $4,102,710 capitalized value of the Arroyo Verde project. The Company has no further interest in the Arroyo Verde project.





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Tiger Uranium Project



The Tiger Uranium Project was located in Mendoza Province, Argentina. During the Fiscal Year ended June 30, 2009, the Company disposed of its entire interest in the Tiger Uranium Project.



The project was at the exploration stage and did not contain proven mineral reserves.



The Company terminated its option on the Tiger Project during the fourth quarter of fiscal 2009. The Company wrote-off the remaining $92,483 capitalized value of the Tiger project and has no further interest.



La Pampa Uranium Project



The La Pampa Project was located in Chubut Province, Argentina. During the Fiscal Year ended June 30, 2009, the Company disposed of its entire interest in the La Pampa Uranium Project.



The project was at the exploration stage and did not contain proven mineral reserves.



During Fiscal 2009, the Company reassessed the potential of the project as well as the agreement with Pacific Bay and determined that the potential did not justify further work. Portal renounced the mining rights under the project, and wrote-off the capitalized project expenditures of $679,343.





United States Properties



Nevada Properties



On September 2, 2008, the Company announced that it had entered into an option agreement under which it has the right to acquire from Claremont Nevada Mines, Scoonover Exploration, and JR Exploration (the Vendors) 100% interest (subject to a 3% NSR) in three properties located in the Walker Lane Belt and Battle Mountain/Eureka Trend in Nevada. Terms of the renewable ten year option include total cash advance royalty payments of US$10,000 on the first anniversary, $15,000 on the second, $20,000 on the third, $25,000 on the fourth, and $30,000 on the fifth and each subsequent anniversary date to maintain the option in good standing. Portal, through its subsidiary, Portal Resources US Inc., could acquire a 100% interest in the properties by making an additional payment of $1,000 and delivering a final feasibility study on any of the properties. The Vendors will retain a 3% NSR, which Portal may reduce to 1% for a payment of US$1,000,000.



The Golden Snow property is an advanced Carlin-type gold target comprised of 114 unpatented lode mining claims (3.5 square miles) on the Battle Mountain / Eureka Trend. Substantial historical exploration has been conducted on the property including geologic mapping, 932 soil samples and detailed ground-based gravity geophysical surveys. Based on this work, several distinct target zones have been outlined and it is interpreted that the Ratto Ridge Fault zone, which controls the mineralization on the South Eureka property contiguous to the north, may continue south onto the Golden Snow property. These target areas are well located and permitting with the U.S. Bureau of Land Management (BLM) for a Phase I drilling program is set to begin.





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The Fish Project is situated within the Walker Lane Mineral Belt, Lone Mountain District, Esmeralda County, Nevada about 12 miles west of the historic mining town of Tonopah, Nevada. The project consists of 58 unpatented lode mining claims (1.9 square miles). The project is a skarn-manto gold-silver and base metal prospect where prior rock chip sampling returned gold, silver, zinc and lead values. Permitting with the BLM for a Phase I drilling program is well advanced.

The CPG Project is also situated within the Walker Lane Mineral Belt in Mineral County, Nevada. The property consists of 44 unpatented lode mining claims (1.3 square miles).  The property hosts an early stage porphyry and skarn type copper-gold-molybdenum prospect where samples returned interesting gold, silver, copper and molybdenum values.



Disposal of Nevada Project Interests



Under an Assignment Agreement dated May 29, 2009 between the Company and Pengram Corporation, the Company agreed to transfer all the rights on the Nevada claims in exchange for 150,000 Pengram common shares. With the completion of the assignment agreement, the Company has no further interest in the Golden Snow, Fish and CPG properties.







Item 5.  Operating and Financial Review and Prospects



Overview



The Company's financial statements are stated in Canadian Dollars (CDN$) and are prepared in accordance with Canadian GAAP, the application of which, in the case of the Company, conforms in all material respects for the years presented with US GAAP, except as disclosed in Note 14 to the financial statements.  The value of the U.S. Dollar in relationship to the Canadian Dollar was $1.02 on November 30, 2011.



The Company has since inception financed its activities through the issuance of equity.  The Company anticipates having to raise additional funds by equity issuance in the next several years, as the majority of the Companys properties are at the exploration stage. The Company is currently in the process of purchasing operating oil and gas assets for $9.1 million, depending upon TSX Venture Exchange approval and financing. The timing of such offerings is dependent upon the success of the Companys exploration programs as well as the general economic climate.





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Results of Operations



Year Ended 6/30/11 vs. Year Ended 6/30/10



During the year, the Company acquired a 25% working interest and began oil production on the Salt Lake project in Saskatchewan and increased its interest in the Bigwave JV 28.5%.



The net loss for the year was ($1,221,297), or ($0.04) per share, compared to the net loss of ($1,145,548), or ($0.04) per share, in the year ended June 30, 2010. The higher net loss was primarily due to higher operational expenses related to the newly acquired oil and gas properties and additional salaried employees.



Revenue for the year was $45,560, with the entire amount received from Oil and Gas Revenue on the Salt Lake project of $47,041 and Royalties of ($1,481). General and Administrative expenses increased to ($1,276,753) from ($1,127,317). Large increases in expenses included Consulting and Management Fees, which rose to ($179,043) from ($96,901), and Salaries and Benefits, which increased to ($364,795) from ($234,187), as the Company increased these expenditures to support the additional property acquisitions; Office and Miscellaneous rose to ($101,074) from ($94,203) due to higher support costs for the additional personnel; Investor Relations, which rose to ($140,399) from ($71,590) due to additional investor conference attendance to increase awareness of the Company's projects and an increase in attorney's fees paid in relation to the Company's annual general meeting; Rent increased to ($107,274) from ($90,035) due to a decrease in rent recoveries from office space rented to other companies; and Travel increased to ($50,012) from ($26,332) due to a higher number of trips to the Company's oil and gas projects. The Company also had expenses related to the initiation of oil and gas production in fiscal 2011, including Oil and Gas Operating Expenses of ($19,672) and Depletion of Oil and Gas Properties of ($11,565). Large decreases in expense items occurred in Project Investigation, which declined to ($15,175) from ($158,152) as management shifted focus to the newly acquired projects; Stock-based Compensation, which fell to ($173,235) from ($219,842) due to a decreased vesting of officer, director and employee stock options; and Accounting and Audit, which declined to ($8,600) from ($27,210) due to a reduction of auditor's fees.



Interest Income fell to $324 from $5,554 due to lower cash balances and lower rates of return on cash and cash equivalents. The Company also had a Gain on the Sale of Equipment of $9,026, and the Unrealized Gain on Marketable Securities of $546 related to the increase in market value of the Companys 150,000 common shares of Pengram Corporation received from the sale of its Nevada mineral exploration properties.





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Year Ended 6/30/10 vs. Year Ended 6/30/09



During the year, the Company increased its interest in the Bigwave JV to 22%, which was subsequently increased after the year-end to 28.5%.



The net loss for the year was ($1,145,548), or ($0.04) per share, compared to the net loss of ($6,366,236), or ($0.21) per share, in the year ended June 30, 2009. The lower net loss was primarily due to a higher loss on sale of mineral properties during Fiscal 2009, as well as reduced expenses during Fiscal 2010.



The loss of the sale of mineral properties in Fiscal 2009 totaled ($5,052,205) as the Company sold its subsidiary which held its Argentina property interests and sold its interests in the Nevada properties. There were no property write offs in Fiscal 2010. General and Administrative expenses decreased to ($1,127,317) from ($1,394,172). Large changes in expenses occurred in Salaries and Benefits, which declined to ($234,187) from ($533,915) due to decreased staffing levels as well as a non-recurring $150,000 compensation package paid to an officer and director in fiscal 2009; Consulting and Management Fees, which fell to ($96,901) from ($130,738) due to consulting services on the Companys Argentina projects which ended with the sale of the properties; Accounting and Audit, which declined to ($27,210) from ($62,116), Legal, which declined to ($34,623) from ($74.420), Travel, which declined to ($26,332) from ($70,775), and Office and Miscellaneous, which fell to ($94,203) from ($139,729), all were lower in Fiscal 2010 due to the sale of the Companys mineral properties. Rent expense declined to ($90,035) from ($101,395) due to an increase of recovery changes from other companies which sub-leased office space from the Company. Increases in expense items occurred in Project Investigation, which rose to ($158,152) from ($67,119) as the Company increased its efforts in finding new project opportunities; Foreign Exchange, which rose to ($9,905) from a gain of $624 due to unfavorable exchange rates during fiscal 2010; and Stock-based Compensation, which increased to ($219,842) from ($21,811) as the Company granted options to its officers, directors, employees and consultants in fiscal 2010.



Interest Income fell to $5,554 from $65,418 due to lower cash balances and lower rates of return on cash and cash equivalents. The Company also had a Gain on the Sale of Equipment of $1,509, and the Unrealized Loss on Marketable Securities of ($25,294) related to the decrease in market value of the Companys 150,000 common shares of Pengram Corporation received from the sale of its Nevada mineral exploration properties.



Year Ended 6/30/09 vs. Year Ended 6/30/08



During the year the Company disposed of all of its mineral exploration properties located in Argentina and Nevada. Interests in two oil and natural gas exploration joint-ventures in Alberta, Canada were acquired. The Company also established an administrative office in Hermosillo, Mexico to search for possible acquisition of gold and silver projects.



The net loss for the year was ($6,366,236), or ($0.21) per share, compared to a loss of ($3,288,433), or ($0.11) per share, in the year ended June 30, 2008. The higher net loss was primarily due to the loss on sale of mineral properties and higher salaries and consulting fees.





- 26 -





The loss of the sale of mineral properties totaled ($5,052,205) as the Company sold its subsidiary which held its Argentina property interests and sold its interests in the Nevada properties. The Company also recorded a Write-off of Unproven Mineral Rights of ($4,215) compared to the prior year which totaled ($1,782,804). General and Administrative expenses decreased to ($1,394,172) from ($1,667,058). Large increases in expenses occurred in Consulting and Management Fees, which rose to ($130,738) from ($55,115) due to finders fees and project search services; Project Investigation, which rose to ($67,119) from ($41,451) as the Company searched for new resource exploration projects; and Legal Fees, which rose to ($74,420) from ($40,236) as the company negotiated and sold its mineral exploration projects. Rent increased to ($101,395) from ($44,991) as a company with directors in common ended its sublease of a portion of the Companys office space, and Salaries and Benefits rose to ($533,915) from ($459,298) due to a compensation package of ($150,000) paid to an officer and director, and lower salary recovery costs from other companies. Large decreases in expenses occurred in Bank Charges and Interest, which fell to ($6,993) from ($21,102); Investor Relations, which declined to ($124,780) from ($412,068) due to lesser attendance at investor conferences and a cost reduction related to the Companys annual report; and Stock-based Compensation, which fell to ($21,811) from ($147,744) as fewer stock options were granted to management and directors in the current year. Certain expenses declined due to the disposal of all of the Companys mineral property interests in Argentina, including Foreign Asset Tax, which fell to ($496) from ($21,938), Valuation Allowance for Foreign Value Added Tax Credit (IVA) which declined to ($1,751) from ($46,197), and Foreign Exchange, which was a gain of $624 compared to a loss of ($34,120) in the prior year.



Interest Income fell to $65,418 from $161,429 due to lower cash balances and lower rates of return on cash and cash equivalents. The Company also had a Gain on the Sale of Equipment of $25,167, and the Unrealized Loss on Marketable Securities of ($6,229).



Liquidity and Capital Resources



The Companys working capital position at June 30, 2011 was $857,830, including cash of $1,000,723, short term investments of $26,696, and marketable securities of $10,127. The Company will require additional funding for its anticipated exploration and development budget of approximately $3,000,000 in fiscal 2012. The Company will also require additional funding of $8,600,000 in order to complete the acquisition of operating oil and gas assets in west-central Saskatchewan which was announced in October 2010.



The Company has financed its operations through the issuance of common shares. The following sales and issuances of common stock have been completed in the last 5 fiscal years.



|Table No. 4
Common Share Issuances
|----------------------------------
|                                  
|Fiscal Year
Ended June 30         
|                                  
|2007                              
|                                  
|                                  
|                                  
|2008                              
|                                  
|                                  
|2009                              
|                                  
|2010                              
|                                  
|2011                              
|                                  
|                                  
|                                  





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Fiscal Year Ended 6/30/2011



At the end of the fiscal year, the Company's working capital position at June 30, 2011 was $822,318 compared to $464,427 as of June 30, 2010. During the year, Operating Activities used cash of ($1,023,677), which included the net loss for the year of ($1,221,297). Items not involving cash included Stock-based Compensation of $173,235, Amortization of $22,392, Depletion of Oil and Gas Properties of $11,565, Unrealized Gain on Marketable Securities of ($546), and Gain on Sale of Equipment of ($9,026). Changes in Non-cash Working Capital included an increase in Amounts Receivable of ($6,215), an increase in Prepaid Expenses of ($19,551), and an increase in Accounts Payable and Accrued Liabilities of $130,951. Investing Activities used cash of ($1,391,880). Expenditures on Oil and Gas Properties used cash of ($1,591,807), and Purchase of Equipment used cash of ($64,099). Proceeds from the Sale of Equipment provided cash of $15,500 and the sale of Short-term Investments provided cash of $248,526. Financing Activities provided cash of $3,173,486, with Shares Issued for Cash providing cash of $3,282,750 and Exercise of Stock Options providing cash of $27,676. Share Issue Costs used cash of ($136,940).



During the year, the Company complete three private placements of its common shares. In February 2011, a placement of 6,410,000 units was close at a price of $0.125 per unit for gross proceeds of $801,250. Each unit consisted of one common share and one common share purchase warrant. Each warrant is exercisable to buy one common share at a price of $0.15 until February 17, 2012. In May 2011, the company closed two private placements. Under the first, the Company sold 10,152,500 units at a price of $0.20 per unit for gross proceeds of $2,030,500. Each unit consisted of one common share and one-half of a share purchase warrant, with each full warrant exercisable into a common share at a price of $0.25. 2,988,750 of the warrants are exercisable until May 20, 2012 and 2,087,500 are exercisable until May 30, 2012. Under the second private placement in May, the Company sold 1,804,000 flow-through units at a price of $0.25 per unit for gross proceeds of $451,000. Each flow-through unit consisted of one flow-through common share and one-half of a common share purchase warrant with each full warrant exercisable into a common share of the Company at a price of $0.35. Of these warrants, 870,000 are exercisable until May 20, 2012 and 32,000 are exercisable until May 30, 2012. The Company also received cash proceeds of $27,676 from the exercise of 227,500 share purchase options.



Cash and cash equivalents and short-term investments totaled $1,000,723 at June 30, 2011, compared to $137,609 at June 30, 2010, an increase of $863,114.



Fiscal Year Ended 6/30/2010



At the end of the fiscal year, the Companys working capital was $464,427 compared to $1,493,622 as of June 30, 2009. During the year, Operating Activities used cash of ($936,712), which included the net loss for the year of ($1,145,548). Items not involving cash included Stock-based Compensation of $219,842, Amortization of $14,370, and Unrealized Loss on Marketable Securities of $25,294. The Company also recorded a Gain on Sale of Equipment of ($1,509). Changes in non-cash working capital included an increase in Amounts Receivable of ($59,485), a decrease in Prepaid Expenses of $364, and an increase in Accounts Payable and Accrued Liabilities of $9,960. Investing Activities provided cash of $825,749, with the largest component consisting of cash provided by the sale of Short-term Investments of $980,734. Proceeds from the sale of Equipment provided cash of $5,000, while the Purchase of Equipment used cash of ($855), and Expenditures on Oil and Gas Properties used cash of ($159,130). There were no Financing Activities during the Fiscal Year. A total of 500,000 common shares were issued at a deemed price of $0.18 pursuant to the acquisition of Oil & Gas interests.



Cash and cash equivalents and short-term investments totaled $412,831 at June 30, 2010, compared to $1,504,528 at June 30, 2009, a decrease of ($1,091,697).





- 28 -





Fiscal Year Ended 6/30/2009



At the end of the fiscal year, the Companys working capital was $1,493,622 compared to $3,194,438 compared to as of June 30, 2008. During the year, Operating Activities used cash of ($1,097,448), which included the net loss for the year of ($6,366,236). Items not involving cash included Loss on Sale of Mineral Properties of $5,052,205, Stock-based Compensation of $21,811, Amortization of $27,217, Unrealized Loss on Marketable Securities of $6,229, and Write-off of Unproven Mineral Properties of $4,215. The Company also recorded a Gain on Sale of Equipment of ($25,167). Changes in non-cash working capital included decrease in Amounts Receivable of $99,917, decrease in Prepaid Expenses of $100,402, and a decrease in Accounts Payable and Accrued Liabilities of ($18,041). Investing Activities provided cash of $1,158,469, with the largest component consisting of cash provide by the sale of Short-term Investments of $1,605,797. Proceeds from the sale of Equipment provided cash of $63,297, and Proceeds on the Sale of Mineral Properties provided cash of $99,127. Purchase of Equipment used cash of ($25,896), Expenditures on Unproven Mineral Rights used cash of ($261,054), and Expenditures on Oil and Gas Properties used cash of ($322,802). There were no Financing Activities during the Fiscal Year, and no common shares were issued during the year.



Cash and cash equivalents and short-term investments totaled $1,504,528 at June 30, 2009, compared to $3,049,304 at June 30, 2008, a decrease of ($1,544,776).



Critical Accounting Policies and Estimates



Management is required to make judgments, estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period.  On a regular basis, we evaluate our estimates and assumptions. We base our estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form that basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources.  Actual results may differ from these estimates under different assumptions or conditions.



Basis of presentation and principles of consolidation

The Company's consolidated financial statements have been prepared in accordance with generally accepted accounting principles in Canada (Canadian GAAP). The differences between those principles and the ones that would be applied under U.S. generally accepted accounting principles (U.S. GAAP) are disclosed in Note 14.



References to the Company are inclusive of the Canadian parent company; its wholly owned U.S. subsidiary, Portal Resources US Inc, and its formerly owned Argentinean subsidiary, Portal del Oro S.A. (Portal S.A.). All significant inter-company transactions and balances have been eliminated.



Foreign Currency Translation

The financial statements are presented in Canadian dollars.  Foreign denominated monetary assets and liabilities are translated to their Canadian dollar equivalent using foreign exchange rates at the balance sheet dates.  Non-monetary items are translated at historical exchange rates.  Revenues and expenses are translated using average rates of exchange during the year.  Exchange gains or losses arising from currency translation are included in the determination of net income.



Use of estimates

The preparation of financial statements in conformity with Canadian generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities as at the date of the financial statements and revenues and expenses during the reporting period.  Actual results could differ from these estimates.





- 29 -





Revenue

Revenue is recognized when it is probable that the economic benefits will flow to the Company and delivery has occurred, the sales price is fixed or determinable, and collectability is reasonably assured. These criteria are generally met at the time the product is shipped and delivered to the customers and, depending on the delivery conditions, title and risk have passed to the customer and acceptance of the product, when contractually required, has been obtained. Revenue is measured based on the price specified in the sales contract.



Unproven mineral rights

Mineral right acquisition costs and their related exploration costs are deferred until the rights are placed into production or disposed of.  These costs will be amortized over the estimated useful life of the rights following the commencement of production, or written-off if the rights are disposed of.



Cost includes the cash consideration and the fair market value of shares issued on acquisition of mineral rights.  Rights acquired under option agreements or joint ventures, whereby payments are made at the sole discretion of the Company, are recorded in the accounts at such time as the payments are made.  The proceeds from options granted are netted against the cost of the related mineral rights and any excess is applied to operations.



The Company reviews capitalized costs on its mineral rights on a periodic basis and will recognize impairment in value based upon current exploration results and upon managements assessment of the future probability of profitable revenues from the rights or from the sale of the rights.  Managements assessment of the rights estimated current fair market value is also based upon a review of other similar mineral rights transactions that have occurred in the same geographic area as that of the rights under review.



Oil and Gas Properties

Oil and natural gas properties are accounted for using the successful efforts method of accounting. Geological and geophysical costs are expensed in the period in which they are incurred and costs of drilling an unsuccessful well are expensed when it becomes known the well did not result in a discovery of proven reserves or where one year has elapsed since the completion of drilling and efforts to establish proved reserves are not practical. All other costs of exploring and developing proven reserves are capitalized as oil and gas properties.



Oil and gas properties are assessed, at least annually, for impairment to ensure that the carrying value of the property on the balance sheet is recoverable. If a property's carrying value exceeds the sum of undiscounted future cash flows resulting from its use and eventual disposition, its value is impaired. An impairment loss is recognized for the amount by which the carrying value exceeds its recoverable amount. This loss is charged to depletion expense.



Capitalized costs, together with estimated future capital costs associated with proven developed reserves, are depleted and depreciated using the unit-of-production method based on estimated proven developed reserves (before royalties) of petroleum and natural gas. For purposes of this calculation, reserves and production are converted to equivalent units of oil based on relative energy content of six thousand cubic feet of natural gas to one barrel of oil.



The Company recognizes the fair value of a liability for an asset retirement obligation in the year in which it is incurred and when a reasonable estimate of the fair value can be made based on expected future cash outflows discounted to present value.





- 30 -





Asset Retirement Obligations

The associated asset retirement costs are capitalized as part of the carrying amount of long lived assets. The liability is accreted over the estimated time period until settlement of the obligation and the asset is depreciated over its estimated remaining useful life. Changes in the liability for an asset retirement obligation due to the passage of time will be measured by applying an interest method of allocation.  The amount will be recognized as an increase in the liability and an accretion expense in the statement of operations.  Changes resulting from revisions to the timing or the amount of the original estimate of undiscounted cash flows are recognized as an increase or a decrease in the carrying amount of the liability and the related capitalized asset retirement cost.



Impairment of long-lived assets

Long-lived assets are assessed for impairment when events and circumstances warrant, when the carrying amount of the asset exceeds its estimated undiscounted net cash flow from use or its fair value, at which time the impairment is charged to earnings.



Environmental expenditures

The operations of the Company have been and may in the future, be affected in varying degrees by changes in environmental regulations, including those for site restoration costs. Both the likelihood of new regulations and their overall effect upon the Company vary greatly from country to country and are not predictable. Environmental expenditures that relate to ongoing environmental and reclamation programs are charged against operations as incurred or capitalized and amortized depending on their expected future economic benefit. Estimated future removal and site restoration costs are recognized when the ultimate liability is reasonably determinable, and are charged against operations over the estimated remaining life of the related business operations, net of expected recoveries.



Equipment

Equipment is recorded at cost net of accumulated amortization. Amortization is provided for using the straight-line method at the following annual rates: Computer equipment  30%; Computer software  50%, Vehicles  30%, Field equipment & Furniture and fixtures  20%.



Share capital

Common shares issued for non-monetary consideration are recorded at their fair market value based upon the trading price of the Companys shares on the TSX Venture Exchange.



Stock-based compensation

The Company accounts for stock options granted to directors, officers, employees and nonemployees using the fair value method of accounting. Accordingly, the fair value of the options at the date of the grant is determined using the Black-Scholes option pricing model and stock-based compensation is accrued and charged to operations, with an offsetting credit to contributed surplus, on a straight-line basis over the vesting periods. The fair value of stock options granted to non-employees is re-measured at the earlier of each financial reporting or vesting date, and any adjustment is charged or credited to operations upon re-measurement. If and when the stock options are exercised, the applicable amounts of contributed surplus are transferred to share capital. The Company has not incorporated an estimated forfeiture rate for stock options that will not vest; rather the Company accounts for actual forfeitures as they occur.



The proceeds received by the Company on the exercise of options are credited to share capital.





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Flow-through shares

Share capital includes flow-through shares issued pursuant to certain provisions of the Income Tax Act. Under the Act, where the share proceeds are used for eligible expenditures, the related income tax deductions may be renounced to the flow-through shareholders. As tax deductions are renounced, share capital and future income taxes are adjusted by an amount equal to the estimated future income taxes payable by the Company as a result  of the renunciations.



Loss per share

Loss per share has been calculated using the weighted-average number of common shares outstanding during the period.  Fully diluted loss per share amounts are not presented, as they are anti-dilutive.



Comprehensive loss

Comprehensive loss is the overall change in the net assets of the Company for the period, other than changes attributed to transactions with shareholders. It is made up of net loss and other comprehensive loss. The historical make up of net loss has not changed. Other comprehensive loss includes gains or losses, which GAAP requires to be recognized in a period but excluded from net income for that period. The Company has no items of other comprehensive loss in any period presented. Accordingly, net loss as presented in the Companys statement of operations and comprehensive loss equals comprehensive loss.



Income taxes

The Company accounts for the tax consequences of future tax assets and liabilities attributable to temporary differences between the financial statement carrying amounts of existing assets and liabilities and their tax bases using tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be settled. When the future realization of income tax assets does not meet the test of being more likely than not to occur, a valuation allowance in the amount of the potential future benefit is taken and no asset is recognized.  The Company has taken a valuation allowance for the full amount of all potential net tax assets.



Financial instruments

The Company classifies its financial instruments into one of the following categories: held-to-maturity investments, loans and receivables, available-for-sale, held for trading or other financial liabilities. The Company has designated its cash, marketable securities, and short-term investments as held-for-trading, amounts receivable as loans and receivables and accounts payable and accrued liabilities as other financial liabilities.



All financial instruments are measured in the balance sheet at fair value except for loans and receivables, held-to-maturity investments and other liabilities, which are measured at amortized cost. Subsequent measurement and changes in fair value will depend upon initial classification as follows: held-for-trading financial instruments are measured at fair value and changes in fair value are recognized in net income; available-for-sale financial instruments are measured at fair value with changes in fair value in other comprehensive income until the investment is no longer recognized or impaired, at which time the amounts would be recorded in net income.



Transaction costs that are directly attributable to the acquisition or issue of financial instruments and that are classified as other than held-for-trading, are expensed as incurred and included in the initial carrying value of such instruments.



Comparative figures

Certain comparative figures have been reclassified to conform with the presentation adopted in the current year.





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US GAAP Reconciliation with Canadian GAAP



Oil and Gas Properties

With respect to the Companys oil and gas properties, the company uses successful efforts method of accounting. Under this method, oil and gas lease acquisition costs and intangible drilling costs associated with exploration efforts that result in the discovery of proved reserves and costs associated with development drilling, whether or not successful, are capitalized when incurred. If proved commercial reserves are not discovered, such drilling costs are expensed. In some circumstances, it may be uncertain whether proved commercial reserves have been found when drilling has been completed. Under Financial Accounting Standard Board (FASB) Accounting Standards Codification (ASC) Topic 932, Extractive Activities  Oil and Gas (ASC 932), such exploratory well drilling costs may continue to be capitalized if the reserve quantity is sufficient to justify its completion as a producing well and sufficient progress in assessing the reserves and economic and operating viability of the project is being made. We assess our capitalized exploratory wells pending evaluation periodically to determine whether costs should remain capitalized or should be charged to earnings. As at June 30, 2011, there was no difference in the financial statements in applying these methods of accounting.



Unproven Mineral Rights

Under Canadian GAAP for junior mining exploration companies, mineral exploration expenditures can be deferred on prospective mineral rights until such time as it is determined that further exploration work is not warranted, at which time the mineral right costs are written-off. Under U.S. GAAP, all exploration expenditures are expensed until an independent feasibility study has determined that the mineral rights are capable of economic commercial production.



Flow-through shares

Under Canadian income tax legislation, the Company is permitted to issue shares whereby the Company agrees to incur qualifying expenditures (as defined under the Canadian Income Tax Act) and renounced the related income tax deductions to the investors. Under Canadian GAAP, flow-through shares are accounted for as part of the issuance of share capital at the price paid for the shares, net of any future income tax liability (FIT). Under US GAAP, SFAS 109 ASC Topic 740, Accounting for Income Taxes (SFAS109), the proceeds should be allocated between the offering of the shares and the sale of tax benefits when the shares are offered. The allocation is made based on the difference between the quoted price of the shares and the amount the investor pays for the flow-through shares. A liability is recognized initially for the premium paid by the investors. For the fiscal year ended June 30, 2011, the Company recognized future tax related to premium on flow-through financing under U.S. GAAP of ($90,200).



Recent Accounting Policies Not Yet Adopted



Convergence to international Financial Reporting Standards (IFRS)



In February 2008, the CICA announced that Canadian GAAP for publicly accountable enterprises will be replaced by International Financial Reporting Standards (IFRS) for fiscal years beginning on or after January 1, 2011. Companies will be required to provide IFRS comparative information for the previous fiscal year. The transition date of July 1, 2011 will require the restatement for comparative purposes, amounts reported by the Company for the year ended June 30, 2012, for which the current and comparative information will be prepared under IFRS.





- 33 -





Business combinations



In January 2009, the CICA issued the new handbook Section 1582, Business Combinations effective for fiscal years beginning on or after January 1, 2011. Earlier adoption of Section 1582 is permitted. This pronouncement further aligns Canadian GAAP with US GAAP and IFRS and changes the accounting for business combinations in a number of areas. It establishes principles and requirements governing how an acquiring company recognizes and measures in its financial statements identifiable assets acquired, liabilities assumed, any non-controlling interest in the acquisition, and goodwill acquired. The section also establishes disclosure requirements that will enable users of the acquiring companys financial statements to evaluate the nature and financial effects of its business combinations. Although the Company is considering the impact of adopting this pronouncement on the consolidated financial statements, it will be limited to any future acquisitions beginning in fiscal 2012.



Consolidated financial statement and non-controlling interests



In January 2009, the CICA issued the new handbook Section 1601, Consolidated Financial Statements, and Section 1602, Non-controlling Interests, effective for fiscal years beginning on or after January 1, 2011. Earlier adoption of these recommendations is permitted. These pronouncements further align Canadian GAAP with US GAAP and IFRS. Sections 1601 and 1602 change the accounting and reporting for ownership interest in subsidiaries held by parties other than the parent. Non-controlling interests are to be presented in the consolidated statement of financial position within equity but separate from the parents equity. The amount of consolidated net income attributable to the parent and to the non-controlling interest is to be clearly identified and presented on the face of the consolidated statement of income. In addition, these pronouncements establish standards for a change in a parents ownership interest in a subsidiary and the valuation of retained non-controlling equity investments when a subsidiary is deconsolidated. They also establish reporting requirements for providing sufficient disclosures that clearly identify and distinguish between the interests of the parent and the interests of the non-controlling owners. The Company is currently considering the impact of adopting these pronouncements on its consolidated financial statements in fiscal 2012 in connection with the conversion to IFRS.



Variation in Operating Results



During the fiscal year ended June 30, 2011, the Company began commercial oil production from its 25% interest in the Salt Lake Property in Saskatchewan. Revenue from operations may be highly variable, depending on volume of products produced, prevailing commodity prices and production costs. The Company also derives interest income on its bank deposits, which depend on the Company's ability to raise funds.



Management periodically, through the exploration process, reviews results both internally and externally through mining related professionals.  Decisions to abandon, reduce or expand exploration efforts is based upon many factors including general and specific assessments of mineral deposits, the likelihood of increasing or decreasing those deposits, land costs, estimates of future mineral prices, potential extraction methods and costs, the likelihood of positive or negative changes to the environment, permitting, taxation, labor and capital costs.  There cannot be a pre-determined hold period for any property as geological or economic circumstances render each property unique.



The Company's financial statements are stated in Canadian Dollars (CDN$) and are prepared in accordance with Canadian GAAP, the application of which, in the case of the Company, conforms in all material respects for the years presented with US GAAP, except as noted in Note 14 to the financial statements.  The value of the Canadian Dollar in relationship to the US Dollar was $1.02 on November 30, 2011.





- 34 -





Research and Development



The Company conducts no Research and Development activities, nor is it dependent upon any patents or licenses.



Trend Information



The Company knows of no trends, uncertainties, demands, commitments or events that are reasonably likely to have a material effect on the Companys operations or financial condition.



Off-Balance Sheet Arrangements



The Company has no Off-Balance Sheet Arrangements.



Tabular Disclosure of Contractual Obligations



The following table discloses the Company's contractual obligation as of June 30, 2011.





|Table No. 5
Contractual Obligations
As of June 30, 2011
|-------------------------------------------------------
|                                                       
|                                                       
|                                                       
|Operating Lease Commitments                            



The Companys Operating Lease Commitment is an obligation under a lease for corporate offices in Vancouver that is in effect until February 28, 2013.





- 35 -





Item 6.  Directors, Senior Management and Employees



Table No. 6 lists as of November 30, 2011 the names of the Directors of the Company.  The Directors have served in their respective capacities since their election and/or appointment and will serve until the next Annual General Meeting or until a successor is duly elected, unless the office is vacated in accordance with the Articles/By-Laws of the Company.  All Directors are residents of Canada and are citizens of Canada except for David Hottman, who is a citizen of the United States. The anticipated date of expiry of the current term for directors will be the 2011 Annual General Meeting, which is scheduled to be held on December 16, 2011.



|Table No. 6
Directors 
|----------------------
|                      
|Name                  
|Mark T. Brown (1)     
|David Hottman (2)     
|John M. MacRae        
|Gary D. Nordin (2)    
|Barry J. Reid         
|Frank Wheatley (1) (2)



(1)

Member of the Corporate Governance Committee

(2)

Member of Audit Committee.



The Corporate Governance Committee has the responsibility to select (or recommend the board select) the director nominees for the next annual meeting of shareholders, and reviews the adequacy and form of compensation of directors and its senior executives. The Board also reviews the Companys Corporate Governance guidelines and administers the system to ensure it is effective in the discharge of the Companys obligations to shareholders.



Members of the audit committee meet periodically to approve and discuss the annual financial statements and each quarterly report before filing and mailing. The committee operates under a written charter as first adopted at the Companys Annual and Extraordinary General Meeting held on December 1, 2005, and as detailed in the Management Information Circular dated November 18, 2011.  Details of the charter are contained in Item 6, Board Practices below.





- 36 -





Table No. 7 lists, as of November 30, 2011, the names of the Executive Officers of the Company.  The Executive Officers serve at the pleasure of the Board of Directors.  All Executive Officers are citizens of Canada except for David Hottman, who is a citizen of the United States.



|Table No. 7
Executive Officers
|------------------------------
|                              
|Name                          
|David Hottman                 
|Barry J. Reid                 
|Mark T. Brown                 



David Hottman has over 20 years of experience in the mineral exploration and mining sector in both management and in corporate finance. He was a founder and Director of HRC Development and Eldorado Gold Corporation and was involved in business development for Bema Gold, HRC Development and Eldorado. He was a founder, Director and Chairman of Nevada Pacific Gold Ltd., a gold mining company from 1997 to its acquisition by US Gold Corp in 2007. He currently serves as Chairman of Galileo Minerals, a private mineral exploration company and as President and Chief Executive Officer of Orestone Mining Corp, a mineral exploration company traded on the TSX Venture Exchange. Mr. Hottman devotes approximately 75% of his time to the Companys affairs.



Barry J. Reid is a graduate of the University of Alberta and is accomplished mechanical engineer with 25 years of oil and gas experience in Western Canada. His work has covered all aspects of the oil and gas business from corporate start ups, project evaluations and acquisitions through design and implementation, to the management and optimization of production projects. Most recently he has successfully built and sold two of his own private E&P companies, and has also been self-employed as a Geological Consultant since 2002. During his career Mr. Reid has held positions with Husky Energy/Renaissance Energy and Dome Petroleum among others. As a Senior Exploitation Engineer with Husky Energy Mr. Reid's responsibilities included pool development, optimization and an ongoing review of new techniques for horizontal drilling, water shut-offs, stimulations and re-completions. He is currently President of Bay Trail Resources Ltd., a private oil and gas company. Mr. Reid devotes approximately 75% of his time to the Companys affairs.



Mark T. Brown has been a Chartered Accountant since 1993 and is President of Pacific Opportunity Capital Ltd., a private company which provides small and medium sized companies with financial, equity and management solutions. From 1990 to 1994, he worked with PricewaterhouseCoopers before becoming controller of Miramar Mining Corporation. In 1996, he became controller of Eldorado Gold Corporation where his duties included debt and equity financings, international acquisitions, corporate reporting and system implementation. He also is a former and current officer and director of other public companies. His current officer and directorships include: A Director of Almaden Minerals Ltd., a resource exploration company traded on the TSX and the NYSE Amex; a Director of Animas Resources Ltd., a mineral exploration company traded on the TSX Venture Exchange; a Director of Avrupa Minerals Ltd. (formerly Everclear Capital Ltd.), a resource exploration company traded on the TSX Venture Exchange; Chief Financial Officer, Corporate Secretary and a Director of Big Sky Petroleum, an oil and gas exploration company traded on the TSX Venture Exchange; A Director of Estrella Gold, a mineral exploration company traded on the TSX Venture Exchange; Chief Financial Officer of Pitchstone Exploration Ltd., a mineral exploration company traded on the TSX Venture Exchange; A Director of Rare Element Resources Ltd., a mineral exploration company traded on the TSX Exchange and NYSE Amex; a Director of Strategem Capital Corporation, a merchant banking company traded on the TSX Venture Exchange; and A Director of Sutter Gold Mining Inc., a mineral exploration company traded on the TSX Venture Exchange; Mr. Brown devotes approximately 10% of his time to Company affairs.





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John M. MacRae is an accomplished petroleum geologist with over 40 years of experience in Canada's oil and gas industry. He has extensive experience evaluating the geology and undiscovered petroleum and natural gas potential of the Western Canada Sedimentary Basin, as well as all British Columbia onshore and offshore sedimentary basins. Mr. MacRae's past experience includes positions of increasing responsibility with the Province of British Columbia Ministry of Energy & Mines, serving as Director of Petroleum Geology (1988-1998), Section Head Reservoir Geology (1986-1988), and Reservoir Geologist (1982-1986). Since 2000, he has a private consulting company which provides advisory services to Canadian oil and gas companies. He is a member of the Association of Professional Engineers, Geologists and Geophysicists of Alberta, the Canadian Society of Petroleum Geologists, and past President of the Geological Association of Canada, Pacific Section. Mr. MacRae devotes approximately 75% of his time to the Companys affairs.



Gary Nordin is a geologist with 40 years of experience in exploration and development of gold and metals deposits. He holds a B.Sc. in Geology (Honors) from the University of Alberta. He is a founder and former Director and Vice President Exploration of Bema Gold Corporation from 1982 to 1989, and from 1990 to 2001 he was a founder and Director and Vice President Exploration of Eldorado Gold Corporation where he was responsible for property evaluation as well as exploration and development of the companys gold projects and mines. Since 1989, he has been President of Discovery Resource Corp, a private mineral exploration company, and served as a Director and Vice-President of Portal from 2004 until September 2009. He also currently serves as a Director of Canasil Resources, a mineral exploration company traded on the TSX Venture Exchange; a Director of Fortunate Sun Mining, a mineral exploration company traded on the TSX Venture Exchange; a Director of Rae Wallace Mining, a mineral exploration company traded OTC in the United States;  and a VP Exploration and Director of Orestone Mining Corp, a mineral exploration company traded on the TSX Venture Exchange. He devotes approximately 15% of his time to the Companys affairs.



Frank Wheatley is an attorney who holds Bachelor of Commerce and Bachelor of Laws degrees from the University of British Columbia. He has 22 years of experience as a director, senior officer and legal counsel to a number of public mining and mineral exploration companies. He was in private legal practice from 1985 until 1996 when he became Vice-President, Legal Affairs with Eldorado Gold Corporation.  From 1999 to 2010 Mr. Wheatley was Vice-President and General Counsel of Gabriel Resources Ltd., a gold development company developing a gold project in Romania which is traded on the TSX Exchange. Since 2010, Mr. Wheatley has been a Director and Executive Director Corporate Affairs and Strategy of Talison Lithium Limited, a lithium production company traded on the TSX Exchange. Mr. Wheatley is also currently a Director and Corporate Secretary of Lithic Resources, a mineral exploration company traded on the TSX Venture Exchange, and a Director of Teranga Gold, a gold producer traded on the TSX Exchange. Mr. Wheatley devotes approximately 5% of his time to the Companys affairs.



No Director and/or Executive Officer has been the subject of any order, judgment, or decree of any governmental agency or administrator or of any court or competent jurisdiction, revoking or suspending for cause any license, permit or other authority of such person or of any corporation of which he or she is a Director and/or Executive Officer, to engage in the securities business or in the sale of a particular security or temporarily or permanently restraining or enjoining any such person or any corporation of which he or she is an officer or director from engaging in or continuing any conduct, practice, or employment in connection with the purchase or sale of securities, or convicting such person of any felony or misdemeanor involving a security or any aspect of the securities business or of theft or of any felony.



There are no arrangements or understandings between any two or more Directors or Executive Officers, pursuant to which he or she was selected as a Director or Executive Officer. No members of the Board of Directors are related.





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COMPENSATION



The Company has no arrangements pursuant to which directors are compensated by the Company for their services in their capacity as directors, or for committee participation. There are no directors service contracts providing for benefits upon termination of employment.



Independent Directors receive compensation of $2,000 per quarter. Additionally, any Independent Director that acts as chair of a committee receives an additional $2,000 per year.



To assist the Company in compensating, attracting, retaining and motivating personnel, the Companys shareholders approved a formal stock option plan for the granting of incentive stock options during the most recently completed fiscal year. An amendment to the formal stock option plan was approved by shareholders at the Annual General Meeting held on December 14, 2007. An amended and restated stock option plan was approved by the Board of Directors on November 8, 2011, and will be voted  upon by shareholders at the 2011 Annual General and Special Meeting of Shareholders scheduled to be held on December 16, 2011. Refer to ITEM #10, "Stock Options".



Table No. 8 sets forth the compensation paid to the Companys executive officers and members of its administrative body during the last three fiscal years.



|Table No. 8
Summary Compensation Table
All Figures in Canadian Dollars unless otherwise noted
|---------------------------------------------------------------------------------------------
|                                                                                             
|Name                                                                                         
|David Hottman,
President and CEO (from 8/1/2008)
Chairman & Director (1)                     
|                                                                                             
|Barry Reid,
Chief Operating Officer
& Director                                               
|                                                                                             
|Bruce Winfield,
President and CEO (to 8/1/08)
and former Director (1)(2)                     
|                                                                                             
|Mark T. Brown,
CFO (from 2/29/08)
and Director (3)                                           
|                                                                                             
|John MacRae,
Director (4)                                                                    
|                                                                                             
|Gary Nordin,
Director (5)                                                                    
|                                                                                             
|Frank Wheatley,
Director                                                                     
|                                                                                             
|Joe Tai,
Former Director                                                                     
|                                                                                             
|Winnie Wong,
Former Director                                                                 



(1)

Other Compensation for Bruce Winfield and David Hottman includes insurance benefit obligations paid by the Company.

(2)

$150,000 of Mr. Winfields Other Compensation relates to a compensation package received when he ceased to be the CEO.

(3)

Mark Browns Other Compensation is administrative consulting fees paid to Pacific Opportunity Capital, a private consulting firm for which Mr. Brown is President and a director.

(4)

John MacRae's "Other Compensation" is consulting fees paid to XWUP XWUP Energy Inc., a private company owned by Mr. MacRae.

(5)

Gary Nordins Other Compensation is consulting fees paid to Discovery Resource, a private company owned by Mr. Nordin.



No funds were set aside or accrued by the Company during Fiscal 2011 to provide pension, retirement or similar benefits for Directors or Executive Officers.





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Board Practices



The Board of Directors mandate is to manage or supervise the management of the business and affairs of the Company and to act with a view to the best interests of the Company. The Board, among other matters, is responsible for:



•

reviewing and approving the Companys overall business strategies and its annual business plan;

•

reviewing and approving the annual corporate budget and forecast;

•

reviewing and approving significant capital investments outside the approved budget;

•

reviewing major strategic initiatives to ensure that the Companys proposed actions accord with shareholder objectives;

•

reviewing succession planning;

•

assessing managements performance against approved business plans and industry standards;

•

reviewing and approving the reports and other disclosure issued to shareholders;

•

ensuring the effective operation of the Board;

•

and safeguarding shareholders equity interests through the optimum utilization of the Companys capital resources.



The Board meets regularly to review financial and continuous disclosure matters as well as the Companys financial budget and business plan for the ensuing year and its overall strategic objectives. The Board also meets as required to deal with matters requiring decisions between regularly scheduled Board meetings.



Corporate Governance Committee



The duties of the Corporate Governance include:



•

selecting (or recommending that the Board select) the director nominees for the next annual meeting of shareholders;

•

developing qualification criteria for Board members for recommendation to the Board in accordance with the Companys corporate governance guidelines;

•

in conjunction with the Chairman, assigning Board members to the various committees of the Board;

•

reviewing annually or more often if appropriate:

(a)

committee members qualifications and requirements;

(b)

committee structure (including authority to delegate); and

(c)

committee performance (including reporting to the Board). The committee is to make recommendations to the Board, as appropriate, based on its review;

•

recommending to the Board compensation policies and guidelines for the Company and for implementing and overseeing compensation policies approved by the Board;

•

developing and recommending to the Board corporate governance principles applicable to the Company;

•

monitoring the Companys overall approach to corporate governance issues and administering a corporate governance system which is effective in the discharge of the Companys obligations to its shareholders;

•

in conjunction with the Chairman, overseeing the evaluation of the Board and of the Company and making recommendations to the Board as appropriate;





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•

reviewing and reassessing at least annually the adequacy of the Companys corporate governance guidelines and the Corporate Governance Committees terms of reference and recommending any proposed changes to the Board for approval. The Corporate Governance Committee must also annually review its own performance;

•

monitoring and making recommendations to the Board in respect of total compensation paid by the Company to its senior executives; and

•

reviewing the adequacy and form of compensation of directors and ensure that the compensation realistically reflects the responsibilities and risks involved in being a director.



The Board annually, and at such other times as it deems appropriate, reviews the performance and effectiveness of the Board, the directors and its committees to determine whether changes in size, personnel or responsibilities are warranted. To assist in its review, the Board conducts informal surveys of its directors, receives an annual report from the Corporate Governance Committee on its assessment of the functioning of the Board and reports from each committee respecting its own effectiveness. As part of the assessments, the Board or the individual committee may review their respective mandate or charter and conduct reviews of applicable corporate policies.



The Board determines new nominees to the Board through recommendations of the Corporate Governance Committee. The nominees may also be the result of recruitment efforts by other Board members, including both formal and informal discussions among Board members and the President and Chief Executive Officer. The Corporate Governance Committee monitors the performance of individual Board members or committee members or their contributions.



The Board expects management to operate the business of the Company in a manner that enhances shareholder value and is consistent with the highest level of integrity. Management is expected to execute the Company's business plan and to meet performance goals and objectives.



The Corporate Governance Committee currently consists of directors Mark T. Brown and Frank Wheatley.



Audit Committee



At the Companys Annual and Extraordinary General Meeting held on December 1, 2005, shareholders approved a revised Audit Committee Charter. The Audit Committee currently consists of David Hottman, Gary Nordin, and Frank Wheatley.



A copy of the current Audit Committee Charter was included in the Companys Management Information Circular dated November 18, 2011.





- 41 -





Mandate

The primary function of the audit committee (the Committee) is to assist the Board of Directors (Board) in fulfilling its financial oversight responsibilities by reviewing the financial reports and other financial information provided by the Company to regulatory authorities and shareholders, the Companys systems of internal controls regarding finance and accounting and the Companys auditing, accounting and financial reporting processes. The Committees primary duties and responsibilities are to:

•

serve as an independent and objective party to monitor the Companys financial reporting and internal control system and review the Companys financial statements;

•

review and appraise the performance of the Companys external auditor; and

•

provide an open avenue of communication among the Companys auditor, financial and senior management and the Board.

Composition

The Committee shall be comprised of at least three directors as determined by the Board, all of whom shall be independent directors except as permitted by applicable securities regulatory guidelines (including applicable exemptions while the Company is a venture issuer within the meaning of applicable securities legislation). A quorum of the Committee shall be a majority of the members. Each member of the Committee will be a member of the Board. In the event of an equality of votes, the Chair of the Committee shall not have a second casting vote.

The members of the Committee shall be elected by the Board at its first meeting following the annual shareholders meeting. Unless a Chair is elected by the Board, the members of the Committee may designate a Chair by a majority vote of the full Committee membership.

Meetings

The Committee shall meet a least once annually, or more frequently as circumstances dictate or as may be prescribed by securities regulatory requirements. As part of its job to foster open communication, the Committee will meet at least annually with the Chief Financial Officer and the external auditor in separate sessions.

Responsibilities and Duties

To fulfill its responsibilities and duties, the Committee shall:



1.

Documents/Reports

(a)

review and update, if applicable or necessary, this Audit Committee Charter annually;

(b)

review with management and the independent auditor the Companys annual and interim financial statements, managements discussion and analysis, any annual and interim earnings press releases and any reports or other financial information to be submitted to any governmental and/or regulatory body, or the public, including any certification, report, opinion, or review rendered by the external auditor for the purpose of recommending their approval to the Board prior to their filing, issue or publication. The Chair of the Committee may represent the entire Committee for purposes of this review in circumstances where time does not allow the full Committee to be available;

(c)

review analyses prepared by management and/or the external auditor setting forth significant financial reporting issues and judgements made in connection with the preparation of the financial statements, including analyses of the effects of alternative GAAP methods on the financial statements;





- 42 -





(d)

review the effect of regulatory and accounting initiatives, as well as off balance sheet structures, on the financial statements of the Company;

(e)

review policies and procedures with respect to directors and officers expense accounts and management perquisites and benefits, including their use of corporate assets and expenditures related to executive travel and entertainment, and review the results of the procedures performed in these areas by the external auditor, based on the terms of reference agreed upon by the external auditor and the Committee;

(f)

review expenses of the Board Chair and Chief Executive Officer, Chief Financial Officer and Chief Operating Officer annually; and

(g)

ensure that adequate procedures are in place for the review of the Companys public disclosure of financial information extracted or derived from the Companys financial statements, as well as review any financial information and earnings guidance provided to analysts and rating agencies, and periodically assess the adequacy of those procedures.

.2.

External Auditor

(a)

review annually, the performance of the external auditor who shall be ultimately accountable to the Board and the Committee as representatives of the shareholders of the Company;

(b)

obtain annually, a formal written statement of external auditor setting forth all relationships between the external auditor and the Company;

(c)

review and discuss with the external auditor any disclosed relationships or services that may have an impact on the objectivity and independence of the external auditor;



(d)

take, or recommend that the Board take, appropriate action to oversee the independence of the external auditor, including the resolution of disagreements between management and the external auditor regarding financial reporting;

(e)

recommend to the Board the selection and, where applicable, the replacement of the external auditor nominated annually for shareholder approval;

(f)

recommend to the Board the compensation to be paid to the external auditor;

(g)

at each meeting, where desired, consult with the external auditor, without the presence of management, about the quality of the Companys accounting principles, internal controls and the completeness and accuracy of the Companys financial statements;

(h)

review and approve the Companys hiring policies regarding partners, employees and former partners and employees of the present and former external auditor of the Company;

(i)

review with management and the external auditor the audit plan for the year-end financial statements; and





- 43 -





(j)

review and pre-approve all audit and audit-related services and the fees and other compensation related thereto, and any non-audit services, provided by the Companys external auditor. The authority to pre-approve non-audit services may be delegated by the Committee to one or more independent members of the Committee, provided that such pre-approval must be presented to the Committees first scheduled meeting following such pre-approval. Pre-approval of non-audit services is satisfied if:

(i)

the aggregate amount of all the non-audit services that were not pre-approved is reasonably expected to constitute no more than 5% of the total amount of fees paid by the Company and subsidiaries to the Companys external auditor during the fiscal year in which the services are provided;

(ii)

the Company or a subsidiary did not recognize the services as non-audit services at the time of the engagement; and

(iii)

the services are promptly brought to the attention of the Committee and approved, prior to completion of the audit, by the Committee or by one or more of its members to whom authority to grant such approvals has been delegated by the Committee.

3.

Financial Reporting Processes

(a)

in consultation with the external auditor, review with management the integrity of the Companys financial reporting process, both internal and external;

(b)

consider the external auditors judgments about the quality and appropriateness of the Companys accounting principles as applied in its financial reporting;



(c)

consider and approve, if appropriate, changes to the Companys auditing and accounting principles and practices as suggested by the external auditor and management;

(d)

review significant judgments made by management in the preparation of the financial statements and the view of the external auditor as to appropriateness of such judgments;

(e)

following completion of the annual audit, review separately with management and the external auditor any significant difficulties encountered during the course of the audit, including any restrictions on the scope of work or access to required information;

(f)

review any significant disagreement among management and the external auditor in connection with the preparation of the financial statements;

(g)

review with the external auditor and management the extent to which changes and improvements in financial or accounting practices have been implemented;

(h)

review any complaints or concerns about any questionable accounting, internal accounting controls or auditing matters;





- 44 -





(i)

review certification process;

(j)

establish a procedure for the receipt, retention and treatment of complaints received by the Company regarding accounting, internal accounting controls or auditing matters; and

(k)

establish a procedure for the confidential, anonymous submission by employees of the Company of concerns regarding questionable accounting or auditing matters.

4.

Other

(a)

review any material related party transactions;

(b)

engage independent counsel and other advisors as it determines necessary to carry out its duties; and

(c)

to set and pay compensation for any independent counsel and other advisors employed by the Committee.



Staffing



The Company currently has 3 employees and 3 executive officers. The employee are an accountant, an executive assistant, and an investor relations person, all located in Vancouver.



During the last 3 fiscal years, the Company has sublet office space to exploration and development stage companies, and have provided office services to others. Several of these companies have officers/directors in common with Portal. Portal charges these companies for Rent, Human Resources, and Office Expenses. In fiscal 2011 ended June 30, 2011, the companies that sublet office space from Portal were Nanika Resources and Changyu MedTech.  The Companies to which Portal provided office services and human resources in Fiscal 2011 were Canasil Minerals, Galileo Minerals Ltd., and Orestone Mining. The fiscal 2011 chargers to these companies were $54,428 (fiscal 2010 - $67,566; fiscal 2009 - $69,366).



Oil and Gas exploration is currently conducted by the Company and the Companys joint-venture partners as operator. Portal utilizes outside contractors under the supervision of Company personnel when needed.



Share Ownership



The Registrant is a publicly owned Canadian corporation, the shares of which are owned by U.S. residents, Canadian residents and other foreign residents.  The Registrant is not controlled by another corporation as described below.





- 45 -





Table No. 9 lists, as of November 22, 2011, Directors and Executive Officers who beneficially own the Registrant's voting securities and the amount of the Registrant's voting securities owned by the Directors and Executive Officers as a group.



|Table No. 9
Shareholdings of Directors and Executive Officers
|-------------------------------------------------------------
|                                                             
|Title
of
Class                                               
|                                                             
|Common                                                       
|Common                                                       
|Common                                                       
|Common                                                       
|Common                                                       
|Common                                                       
|                                                             
|                                                             



(1)

Of these shares, 728,600 represent exercisable share purchase options.

(2)

Of these shares, 50,000 are owned in Spartacus Management Inc., a private company which is beneficially owned by Mark T. Brown; 427,500 are owned by Pacific Opportunity Capital, a private company controlled by Mark T. Brown; and 370,000 represent exercisable share purchase options.

(3)

Of these shares, 200,000 represent exercisable share purchase options.

(4)

Of these shares, 340,000 shares are owned by Discovery Resource Corporation, a private company owned by Gary Nordin, and 375,000 represent exercisable share purchase options.

(5)

Of these shares, 400,000 represent exercisable share purchase options.

(6)

Of these shares, 300,000 represent exercisable share purchase options.



Based upon 48,745,539 shares outstanding as of November 22, 2011, share purchase warrants and Stock options held by each beneficial holder exercisable within sixty days as detailed in Table No. 13, Stock Options Outstanding below.



Item 7.  Major Shareholders and Related Party Transactions



The Registrant is a publicly owned Canadian corporation, the shares of which are owned by U.S. residents, Canadian residents and other foreign residents.  The Registrant is not controlled by another corporation as described below.  The Company's common shares are issued in registered form and the following information is taken from the records of Computershare Investor Services, 100 University Avenue, 9th Floor, Toronto, Ontario, M5J 2Y1.



On November 22, 2011 the shareholders' list for the Company's common shares showed 25 registered shareholders, including depositories, and 48,745,539 shares issued and outstanding. Of the total registered non-depository shareholders, 10 are resident in Canada holding 44,084,374 common shares, or 90.4% of the total issued and outstanding; 11 shareholders are resident in the United States holding 4,375,000 common shares, or 9.0% of the issued and outstanding, and 4 shareholders are resident in other nations, holding 286,165 common shares, or 0.6% of the issued and outstanding.





- 46 -





The Company is aware of one persons/companies who beneficially own 5% or more of the Registrant's voting securities. Table No. 10 lists as of November 22, 2011, persons and/or companies holding 5% or more beneficial interest in the Companys outstanding common stock.



|Table No. 10
5% or Greater Shareholders
|---------------------------------------
|                                       
|Title of
Class                         
|                                       
|Common                                 



Based upon 48,745,539 shares outstanding as of November 22, 2011, share purchase warrants and Stock options held by each beneficial holder exercisable within sixty days as detailed in Table No. 13, Stock Options Outstanding below.



No shareholders of the Company have different voting rights from any other shareholder.



RELATED PARTY TRANSACTIONS



During Fiscal 2011, the Company paid Pacific Opportunity Capital, a private company with Mark T. Brown as an officer and director in common, an aggregate of $7,101 (2010 - $11,755; 2009 - $9,707) for fees and expense reimbursements.



During Fiscal 2011, the Company paid XWUP XWUP Energy, a private energy consulting company with John MacRae as President, $69,942 (2010 - $Nil; 2009 - $Nil) for consulting services.



During Fiscal 2011, the Company received $26,418 (2010 - $57,861; 2009 - $18,832) from Galileo Minerals Ltd, a private mineral exploration company with David Hottman as directors in common, for administrative expenses and expenses reimbursements.



During Fiscal 2011, the Company received $47,772 (2010 - $8,685; 2009 - $42,374) from Canasil Resources Inc., a public mineral exploration company with Gary Nordin as Director in common, for rent, parking, and office expenses.



During Fiscal 2011, the Company received $Nil (2010 - $1,050; 2009 - $3,124) from Discovery Resource Corp., a private mineral exploration company with Gary Nordin as Director in common, for rent expense. The Company also paid $Nil (2010 - $5,040; 2009 - $Nil) to Discovery Resource for consulting services.





Item 8.  Financial Information



The financial statements as required under ITEM #8 are attached hereto and found immediately following the text of this Annual Report.  The audit report of DeVisser Gray LLP, Chartered Accountants, is included herein immediately preceding the financial statements and schedules.





- 47 -





RESTATEMENT OF THE FINANCIAL STATEMENTS



During 2010, the Company undertook a review of its previously issued financial statements for the differences between Canadian and United States Generally Accepted Accounting Principles (see Note 15 of the Financial Statements).  As a result, the following adjustments were made to Note 15:



a)

The Company corrected its accounting treatment for expensing oil and gas properties to be in accordance with Statement of Financial Accounting Standards No. 19 Financial Accounting and Reporting by Oil and Gas Producing Companies (SFAS 19).  All references to adjusting the capitalized oil and gas properties to operations have been removed.

b)

The Company has segregated the amounts associated with costs incurred during the current period that are capitalized under Canadian GAAP but expensed for U.S. GAAP, from amounts associated with costs incurred in earlier periods and capitalized under Canadian GAAP which are written off in the current period under Canadian GAAP.

c)

The Company added the proceeds from the sale of unproven mineral rights to Operations as the unproven mineral rights had previously been expensed under U.S. GAAP.

d)

The Company eliminated its reclassification of its cash proceeds on the sale of mineral properties from investing to operating activities as there is no difference from Canadian GAAP.



As a result of the adjustments, Note 15 for the fiscal year ended June 30, 2010 was restated as follows:



|                                  |  | As previously
reported under
U.S. GAAP |  | Adjustment        |  | As restated      
|--------------------------------- |  | -------------------------------------- |  | ----------------- |  | -----------------
|                                  |  |                                        |  |                   |  |                  
|Oil and gas properties            |  | $                  -                   |  | $        361,437  |  | $         361,437
|                                  |  |                                        |  |                   |  |                  
|Net loss                          |  | $   (1,762,078)                        |  | $        361,437  |  | $    (1,400,641) 
|                                  |  |                                        |  |                   |  |                  
|Deficit                           |  | $ (14,032,851)                         |  | $        361,437  |  | $  (13,671,414)  
|                                  |  |                                        |  |                   |  |                  
|Cash flows - operating activities |  | $   (1,441,946)                        |  | $          83,444 |  | $    (1,358,502) 
|                                  |  |                                        |  |                   |  |                  
|Cash flows - investing activities |  | $      1,643,198                       |  | $     (223,675)   |  | $      1,419,523 



Change from Canadian GAAP to International Financial Reporting Standards ("IFRS")



On February 13, 2008, the Canadian Accounting Standards Board (AcSB) confirmed the mandatory changeover date to International Financial Reporting Standards (IFRS) for Canadian profit-oriented publicly accountable entities (PAEs) such as the Company.

The AcSB requires that IFRS compliant financial statements be prepared for annual and interim financial statements commencing on or after January 1, 2011. For PAEs with a December 31 year-end, the first unaudited interim financial statements under IFRS will be the quarter ending March 31, 2011, with comparative financial information for the quarter ended March 31, 2010. Therefore, for the Company, the first audited financial statements will be for the year ending June 30, 2012, with comparative financial information for the year ended June 30, 2011. This also means that all opening balance sheet adjustments relating to the adoption of IFRS must be reflected in the July 1, 2010 opening balance sheet which will be issued as part of the comparative financial information in the September 30, 2011 unaudited interim financial statements.





- 48 -





IFRS ACCOUNTING POLICIES



The Company intends to adopt these requirements as set out by the AcSB and other regulatory bodies. At this time, the impact of adopting IFRS cannot be reasonably quantified.



The Company has identified the following differences between current Canadian GAAP and IFRS which may have a significant effect on its future financial reporting:



Property, plant and equipment (PP&E):PP&E is the most significant area impacted by the adoption of IFRS. The Company currently follows the successful efforts method of accounting, which has no equivalent guideline under IFRS but is generally consistent with the requirement under IFRS. The Company is required to retrospectively determine the carrying amount of oil and gas assets at the date of transition to IFRS, or use the fair value or revaluation amount as the new deemed cost under IFRS.



In moving to IFRS, the Company may adopt different accounting policies for pre-exploration activities, Exploration and Evaluation (E&E), depletion, and accounting for gains and losses on property dispositions, significant components of PP&E, and other material non-monetary transactions.



Pre-exploration costs are costs incurred before the Company obtains the legal right to explore an area. The Company currently expenses these total costs, which is consistent with the requirements under IFRS.



During the E&E phase, the Company expenses all geological and geophysical costs as they are incurred, and capitalizes all other E&E costs for these projects until such time as the related well is determined to be successful or not. Depending on this determination, the other costs may be capitalized or expensed. Under IFRS, the Company has the choice to either capitalize E&E costs until technical feasibility and commercial viability of an E&E project are determined or to expense these costs as incurred. Once technical feasibility and commercial viability of an E&E project is determined, the related costs, net of any impairment, are transferred to the Developed and Producing (D&P) category. If the Companys policy is to continue capitalizing E&E project costs under IFRS, the Company has the alternative to either begin depleting the related costs when in the E&E phase or to deplete the costs once the project has demonstrated technical feasibility and commercial viability and is in the D&P phase.



Under successful efforts accounting, the Company calculates depletion at the pool level. Under IFRS, depletion may be calculated at a lower or higher unit of account. Under IFRS, the Company has the option to continue depleting its reserves over total proved developed reserves or use another basis which more accurately reflects the useful life of the Companys oil and gas assets.



Impairment Testing:Under Canadian GAAP, the recoverable amount of the Companys oil and gas assets for impairment test purposes is determined using undiscounted future cash flows from proved developed reserves. Under IFRS, the recoverable amount is calculated using discounted future cash flows from proved or proved plus probable reserves. In addition, impairment testing under Canadian GAAP is performed at the country cost level, while under IFRS it will be performed at a lower level referred to as cash-generating unit. Canadian GAAP prohibits reversal of impairment losses. Under IFRS, if the conditions giving rise to impairment have reversed, impairment losses previously recorded would be partially or fully reversed to eliminate the write-downs recorded.





- 49 -





Asset Retirement Obligation:Under Canadian GAAP, the Company recognizes a liability for the estimated fair value of future asset retirement obligations associated with PP&E. The fair value is capitalized and amortized over the same period as the underlying assets. The liability is calculated based on the estimated costs to abandon and reclaim its net ownership interest in wells and facilities, including an estimate for the timing of the costs to be incurred in future periods. These cash outflows are discounted using a credit adjusted risk-free rate of 8% under Canadian GAAP. Changes in the net present value of the future retirement obligation are expensed through accretion as part of depletion.



Under IFRS, asset retirement obligations are calculated at each reporting period by estimating the risk-adjusted future cash outflows which are discounted using a risk-free rate. Due to the change in the discount rate from a credit-adjusted rate to risk-free rate, the Company anticipates an increase in the discounted future asset retirement obligation.



Stock Based Compensation:IFRS 2 (Share-Based Payments) requires the expense related to share based payments to be recognized as the options vest. For options with different vesting periods, each vesting tranche must be treated as a separate option grant which accelerates the expense recognition in comparison to Canadian GAAP, and allows for the expense to be recognized on a straight-line basis over the period the options vest. The Company must also apply an estimated forfeiture rate at the initial grant date for each option tranche.



Income Tax:In transitioning to IFRS, the Companys deferred tax balances will be directly impacted by the tax effects resulting from changes required by the above IFRS accounting policy differences. As the Company is still determining the impact of the IFRS transition, the income tax impacts of the differences are not reasonably determinable at this time.



DISCLOSURE CONTROLS AND PROCEDURES



The transition to IFRS is not expected to have a significant impact on its disclosure controls and procedures. The Company will continue to asses stakeholders information requirements and will ensure that adequate and timely information is provided so that all stakeholders remain apprised through the transition.



IMPACT TO THE COMPANY'S BUSINESS



The Company does not expect that the adoption of IFRS will have a significant impact or influence on its business activities, operations or strategies going forward. Management will continue to closely monitor the impact of IFRS on its business activities.



The Company has evaluated and will implement necessary changes to its information systems for significant areas of impact.



The majority of the Companys audit committee is sophisticated business people with knowledge in accounting or has taken professional courses relevant to IFRS conversion, and as such, does not need to be convinced or re-educated as to the specifics of IFRS conversion. The Companys staff, in conjunction with its CFO, has adequate resources with which to carry out the conversion, as well as to carry on the day-to day operations of the Company. The Companys staff is taking professional development courses relating to IFRS conversion.



At present, the Company has no contracts, debt covenants, capital requirements or compensation contracts that may be affected by changes to financial reporting because of IFRS.



The actual conversion work will occur in fiscal 2010, 2011, and 2012 in anticipation of the preparation of the July 1, 2010 balance sheet that will be required for comparative purposes for the fiscal year ending June 30, 2012.





- 50 -



FINANCIAL INSTRUMENTS AND OTHER INSTRUMENTS

The fair values of the Companys cash, marketable securities, short-term investments, amounts receivable, accounts payables and accrued liabilities approximate their carrying values.



The Companys financial instruments are exposed to certain financial risks, including currency risk, credit risk, liquidity risk and interest risk.



(a)

Currency risk



The Company may acquire property interests in foreign jurisdictions that may make it subject to foreign currency fluctuations and inflationary pressures which may adversely affect the Companys financial position, results of operations and cash flows. The Company is affected by changes in exchange rates between the Canadian Dollar and foreign functional currencies. The Company does not invest in foreign currency contracts to mitigate the risks.



(b)

Credit risk



The Companys cash and cash equivalents are held in a Canadian financial institution. The Company does not have any asset-backed commercial paper in its cash and cash equivalents or short-term investments. The Companys amounts receivable consists primarily of recovered rent and office expense, and tax due from the federal government of Canada.



(c)

Liquidity risk



Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they fall due. The Company manages liquidity risk through the management of its capital structure. Accounts payable and accrued liabilities are due within the current operating period.



(d)

Interest rate risk



Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The risk that the Company will realize a loss as a result of a decline in the fair value of the cash and cash equivalents is limited because they are generally held to maturity. A 1% change in the interest rate, with other variables unchanged, would affect the Company by an annualized amount of interest equal to approximately $1,000.



(e)

Commodity Price Risk



Commodity price risk is the risk that future cash flows will fluctuate as a result of changes in commodity prices, affecting results of operations and cash generated from operating activities. Such prices may also affect the value of exploration and development properties and the level of spending for future activities. Prices received by the Company for its production are largely beyond the Companys control as oil and gas prices are impacted by world economic events that dictate the levels of supply and demand.



The Company did not have any commodity price contracts in place as at or during the year ended June 30, 2011.





- 51 -





Current Legal Proceedings



The Company knows of no material, active or pending, legal proceedings against them; nor is the Company involved as a plaintiff in any other material proceeding or pending litigation.  The Company knows of no active or pending proceedings against anyone that might materially adversely affect an interest of the Company.



Dividends



The Company has not declared any dividends on its common shares since inceptions and does not anticipate that it will do so in the foreseeable future.  The present policy of the Company is to retain future earnings, if any, for use in its operations and the expansion of its business.







Item 9.  Offer and Listing of Securities



As of June 30, 2011 the authorized capital of the Company consisted of 100,000,000 Common Shares without par value and 100,000,000 Preferred Shares without par value.  There were 48,745,539 Common Shares and no Preferred Shares issued and outstanding as of June 30, 2011 and November 30, 2011.



NATURE OF TRADING MARKET



The Company's common shares trade on the TSX Venture Exchange in Vancouver, British Columbia, Canada under the stock symbol is PDO. The CUSIP number is 736114 10 9. The Company's common shares are not registered to trade in the United States in the form of American Depository Receipts (ADR's) or similar certificates.



Table No. 11 lists the volume of trading and high, low and closing sale prices on the TSX Venture Exchange for the Company's common shares for:



•

each of the last six months ending November 2011;



•

each of the last twelve fiscal quarters ending the three months ended September 30, 2011; and



•

each of the last five fiscal years ending June 30, 2011.



|Table No. 11
TSX Venture Exchange
Common Shares Trading Activity
|----------------------------------------------------------------
|                                                                
|                                                                
|                                                                
|Period                                                          
|                                                                
|November 2011                                                   
|October 2011                                                    
|September 2011                                                  
|August 2011                                                     
|July 2011                                                       
|June 2011                                                       
|                                                                
|Three Months Ended   9/30/11                                    
|Three Months Ended   6/30/11                                    
|Three Months Ended   3/31/11                                    
|Three Months Ended 12/31/10                                     
|                                                                
|Three Months Ended   9/30/10                                    
|Three Months Ended   6/30/10                                    
|Three Months Ended   3/31/10                                    
|Three Months Ended 12/31/09                                     
|                                                                
|Three Months Ended   9/30/09                                    
|Three Months Ended   6/30/09                                    
|Three Months Ended   3/31/09                                    
|Three Months Ended 12/31/08                                     



|Fiscal Year Ended 6/30/11 | $0.28 | $0.08 | $0.24
|------------------------- | ----- | ----- | -----
|Fiscal Year Ended 6/30/10 | $0.27 | $0.05 | $0.10
|Fiscal Year Ended 6/30/09 | $0.21 | $0.03 | $0.09
|Fiscal Year Ended 6/30/08 | $0.78 | $0.17 | $0.23
|Fiscal Year Ended 6/30/07 | $0.94 | $0.32 | $0.76





- 52 -





Table No. 12 lists, as of November 22, 2011, share purchase warrants outstanding, the exercise price, and the expiration date of the share purchase warrants.



|Table No. 12
Share Purchase Warrants Outstanding
|------------------------------------------------
|                                                
|Number of Share Purchase WarrantsOutstanding    
|6,410,000                                       
|173,950                                         
|3,093,750                                       
|870,000                                         
|26,250                                          
|2,087,500                                       
|32,000                                          
|TOTAL    12,693,450                             



American Depository Receipts.  Not applicable.

Other Securities to be Registered. Not applicable



The TSX Venture Exchange



The TSX Venture Exchange (TSX-V) is a result of the acquisition of the Canadian Venture Exchange by the Toronto Stock Exchange.



The Canadian Venture Exchange was a result of the merger between the Vancouver Stock Exchange and the Alberta Stock Exchange which took place on November 29, 1999. On August 1, 2001, the Toronto Stock Exchange completed its purchase of the Canadian Venture Exchange from its member firms and renamed the Exchange the TSX Venture Exchange. The TSX-V currently operates as a complementary but independent exchange from its parent.



The initial roster of the TSX-V was made up of venture companies previously listed on the Vancouver Stock Exchange or the Alberta Stock Exchange and later incorporated junior listings from the Toronto, Montreal and Winnipeg Stock Exchanges. The TSX-V is a venture market as compared to the TSX Exchange which is Canadas senior market and the Montreal Exchange which is Canadas market for derivatives products.



The TSX-V is a self-regulating organization owned and operated by the TSX Group.  It is governed by representatives of its member firms and the public.



The TSX Group acts as a business link between TSX Venture Exchange members, listed companies and investors.  TSX-V policies and procedures are designed to accommodate companies still in their formative stages and recognize those that are more established. Listings are predominately small and medium sized companies.



Regulation of the TSX Venture Exchange, its member firms and its listed companies is the responsibility of Investment Industry Regulatory Organization of Canada ("IIROC"). IIROC is a not-for-profit, independent Canadian self-regulatory organization that, among other things, oversees trading in exchanges and marketplaces.



IIROC administers, oversees and enforces the Universal Market Integrity Rules (UMIR). To ensure compliance with UMIR, IIROC monitors real-time trading operations and market-related activities of marketplaces and participants, and also enforces compliance with UMIR by investigating alleged rule violations and administering any settlements and hearings that may arise in respect of such violations.



Investors in Canada are protected by the Canadian Investor Protection Fund (CIPF). The CIPF is a private trust fund established to protect customers in the event of the insolvency of a member of any of the following Self-Regulatory Organizations: the TSX Venture Exchange, the Montreal Exchange, the TSX, the Toronto Futures Exchange and the IIROC.



United States Market



Portal is a Reporting Issuer with the United States Securities and Exchange Commission, and the Company is subject to the reporting obligations and requirements under the Exchange Act of 1934. However, as a Foreign Private Issuer, the Company is exempt from sections 14(a), 14(b), 14(c), 14(f) and 16 of the Act, which includes the Proxy Rules of Section 14 and the Short-Swing Profit Rules of Section 16.





- 53 -





Item 10.  Additional Information



Share Capital



The Company has financed its operations through the issuance of common shares through private placements, the exercise of warrants issued in the private placements, and the exercise of stock options. The changes in the Companys share capital during the last 3 fiscal years are as follows:



During the fiscal year ended June 30, 2011, the Company completed three private placements of its common shares. In February 2011, a placement of 6,410,000 units was close at a price of $0.125 per unit for gross proceeds of $801,250. Each unit consisted of one common share and one common share purchase warrant. Each warrant is exercisable to buy one common share at a price of $0.15 until February 17, 2012. In May 2011, the company closed two private placements. Under the first, the Company sold 10,152,500 units at a price of $0.20 per unit for gross proceeds of $2,030,500. Each unit consisted of one common share and one-half of a share purchase warrant, with each full warrant exercisable into a common share at a price of $0.25. 2,988,750 of the warrants are exercisable until May 20, 2012 and 2,087,500 are exercisable until May 30, 2012. Under the second private placement in May, the Company sold 1,804,000 flow-through units at a price of $0.25 per unit for gross proceeds of $451,000. Each flow-through unit consisted of one flow-through common share and one-half of a common share purchase warrant with each full warrant exercisable into a common share of the Company at a price of $0.35. Of these warrants, 870,000 are exercisable until May 20, 2012 and 32,000 are exercisable until May 30, 2012. The Company also received cash proceeds of $27,676 from the exercise of 227,500 share purchase options.



During fiscal 2010, the Company issued 500,000 common shares pursuant to the acquisition of oil & gas interests at a deemed value of $90,000.



No common shares were issued during fiscal 2009.



Shares Issued for Assets Other Than Cash



On March 15, 2004, the Company issued 2,000,000 common shares at a deemed price of $0.10 per share in relation to the acquisition of Portal de Oro (B.V.I) Ltd. On February 3, 2006, the Company issued 148,225 common share units, with each consisting of one common share and one common share purchase warrant, as Finders Fees for a private placement. During the fiscal year ended June 30, 2007, the Company reserved 100,000 common shares for property interests. During the fiscal year ended June 30, 2010, the Company issued 500,000 common shares pursuant to the acquisition of oil & gas interests.



Shares Held By Company



-No Disclosure Necessary-



Stock Options



Stock Options to purchase securities from Registrant can be granted to Directors and Employees of the Company on terms and conditions acceptable to the regulatory authorities in Canada, notably the TSX Venture Exchange.



The Company's Stock Option Plan was first approved by shareholders at the Companys Annual and Extraordinary General Meeting held on December 10, 2004 and subsequently amended at the Companys Annual and Extraordinary General Meetings held on December 5, 2006 and at the Companys Annual General Meeting held on December 14, 2007. A newly amended and restated Stock Option Plan was approved by Portal's Board of Directors on November 8, 2011 and is scheduled for a vote of shareholders at the Company's 2011 Annual General and Special Meeting scheduled to be held on December 16, 2011.





- 54 -





Under the Amended and Restated Stock Option Plan, stock options may be issued to qualified Officers, Directors, Employees and Consultants. The number of common shares reserved for issuance under the Plan is 10% of the issued and outstanding common shares. These options may be granted from time to time, provided that stock options in favor of any one individual who is an insider or associate of an insider may not exceed 5% of the issued and outstanding common shares, while grants to any one consultant may not exceed 2% of the issued and outstanding common shares, and grants to all optionees who are employed to provide investor relations activities may not exceed 2% of the issued and outstanding shares in any 12-month period.



The exercise prices for stock options are determined in accordance with TSX Venture Exchange guidelines provided the exercise price shall not be less than the market price less applicable discounts permitted by the Exchange, or such other minimum exercise price as may be required by the Exchange. The prevailing exercise price of an option may be repriced, subject to applicable regulatory requirements and approval. Any reduction in the exercise price of an option held by an Optionee who is an insider at the time of the proposed amendment is subject to disinterested shareholder approval if and as may be required by the Exchange.



The term of an option may be up to five years from the date of grant. The vesting schedule shall be determined at the time the option is granted. If there is a takeover bid or tend offer made for all or any of the issued and outstanding shares, the options, by resolution by the Board or the Board Committee designated to administer the Stock Option Plan, may permit all options outstanding to become immediately exercisable in order to permit the shares issuable under such options to be tendered to such bid or offer.



A complete copy of the Companys Stock Option Plan is included in the Companys Management Information Circular for the Annual and Extraordinary General Meeting held on December 10, 2004 which has been filed as an exhibit to Portals 20-F Registration Statement. The details of the Amended Stock Option Plan is included in the Companys Management Information Circular for the Annual and Extraordinary General Meeting to be held on December 16, 2011 which was filed in Form 6-K on EDGAR on December 1, 2011.



The names and titles of the Directors/Executive Officers of the Registrant to whom outstanding stock options have been granted and the numbers of common shares subject to such options are set forth in Table No. 13 as of November 22, 2011, as well as the number of options granted to Directors and all employees as a group.





- 55 -





|Table No. 13
Stock Options Outstanding             
|---------------------------------------------------
|                                                   
|Name                                               
|                                                   
|David Hottman,
President,
Chairman and Director    
|                                                   
|Mark T. Brown,
CFO, Secretary and
Director         
|                                                   
|Barry Reid
COO/Director                            
|                                                   
|John MacRae
Director                               
|                                                   
|Gary Nordin,
Director                              
|                                                   
|Frank Wheatley,
Director                           
|                                                   
|Employees/Consultants                              
|                                                   
|Total Officers and Directors                       
|                                                   
|Total Employees/
Consultants                       
|                                                   
|Total Officers/Directors/
Employees and Consultants





Resolutions/Authorization/Approvals



-No Disclosure Necessary-





- 56 -





Memorandum and Articles of Association



The Company was originally incorporated under the Company Act of British Columbia on August 14, 2000 under the name Gateway Enterprises Ltd.. After the completion of the acquisition of Portal de Oro (B.V.I.) on March 15, 2004, the Company changed its name to Portal De Oro Resources Ltd.. At the Annual and Extraordinary General Meeting held on December 10, 2004, shareholders approved the change of name to Portal Resources Ltd. and adopted a new Charter and Articles under the Business Corporations Act (British Columbia) which replaced the Company Act of British Columbia.



There are no restrictions on the business the company may carry on in the Articles of Incorporation.



Under the Companys articles and bylaws a director is not allowed to vote on any transaction or contract with the Company in which he has a disclosable interest unless all directors have a disclosable interest in that transaction.



Part 16 of the Companys bylaws address the duties of the directors, while Part 8 discusses the Borrowing Powers. The Company may, if authorized by the directors, may:



a)

borrow money in the manner and amount, on the security, from the sources and on the terms and conditions that the directors consider appropriate;



b)

issue bonds, debentures, and other debt obligations either outright or as security for any liability or obligation of the Company or any other person and at such discounts or premiums and on such other terms as they consider appropriate;



c)

guarantee the repayment of money by any other person or the performance of any obligation of any other person;



d)

mortgage, charge, whether by way of specific or floating charge, grant a security interest in, or give other security on, the whole or any part of the present and future assets and undertaking of the Company.



There are no age limit requirements pertaining to the retirement or non-retirement of directors and a director need not be a shareholder of the Company.



The Company may determine that directors may receive remuneration for acting as directors. Any remuneration will be determined by the shareholders. That remuneration may be in addition to any salary or other remuneration paid to any officer or employee of the Company as such. The Company may also reimburse each director for the reasonable expenses that he or she may incur in or about the business of the Company. If any director performs any professional or other services for the Company that in the opinion of the directors is outside the ordinary duties of a director, or if any director is otherwise specially occupied in or about the Companys business, he or she may be paid remuneration fixed by the directors and such remuneration may be either in addition to or substitution for any other remuneration they may be entitled to receive.



Part 21 deals with Indemnification of individuals. The directors must cause the Company to indemnify its officers and directors, and former officers and directors, and alternate directors, and their respective heirs and personal or other legal representatives to the greatest extent permitted by the Business Corporations Act. Each director and officer is deemed to have contracted with the Company on the terms of the indemnity contained in this section. Subject to any restrictions in the Act, the Company may indemnify any other person. The failure of a director or officer of the Company to comply with the Business Corporations Act or these Articles does not invalidate any indemnity to which he or she is entitled under this Part.



The rights, preferences and restrictions attaching to each class of the Companys shares are as follows:





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Common Shares



The authorized shares of common stock of the Company are of the same class and, once issued, rank equally as to dividends, voting powers, and participation in assets. Holders of common stock are entitled to one vote for each share held of record on all matters to be acted upon by the shareholders.  Holders of common stock are entitled to receive such dividends as may be declared from time to time by the Board of Directors, in its discretion, out of funds legally available therefore.



Upon liquidation, dissolution or winding up of the Company, holders of common stock are entitled to receive pro rata the assets of Company, if any, remaining after payments of all debts and liabilities.  No shares have been issued subject to call or assessment.  There are no pre-emptive or conversion rights and no provisions for redemption or purchase for cancellation, surrender, or sinking or purchase funds.



The Company may by special resolution, create, define, and attach special rights or restrictions on any shares and by special resolution and by otherwise complying with any applicable provision of its Memorandum or these Articles to vary or abrogate any special rights and restrictions attached to any shares, but no right or special right attached to any issued shares shall be prejudiced or interfered with unless all members holding shares of each affected class consent thereto in writing, or unless a resolution consenting thereto is passed at a separate class meeting of the holders of the shares of each such class by a majority of three-fourths of the rest of such shares..



An annual general meeting shall be held once every calendar year at such time (not being more than 13 months after holding the last preceding annual meeting) and place as may be determined by the Directors. The Directors may, as they see fit, convene an extraordinary general meeting. An extraordinary general meeting, if requisitioned in accordance with the Company Act, shall be convened by the Directors or, if not convened by the Directors, may be convened by the requisitionists as provided in the Corporations Act.



There are no limitations upon the rights to own securities.



There are no provisions that would have the effect of delaying, deferring, or preventing a change in control of the Company.



There is no special ownership threshold above which an ownership position must be disclosed.



A copy of the Companys Articles has been filed as an exhibit to Portals 20-F Registration Statement.



Material Contracts



1.

Under an agreement dated May 14, 2009, the Company agreed to sell 100% of its wholly-owned subsidiary, Portal del Oro S.A., the holder of all of the Companys Argentina property interests to Omar Pereyra and Guillermo Pereyra. Consideration for the sale was US$85,000 cash. A copy of this agreement has been filed as an exhibit to the Companys 2009 20-F Annual Report.



2.

Under an Assignment Agreement dated May 29, 2009 between the Company and Pengram Corporation, the Company agreed to transfer all the rights on the Nevada claims in exchange for 150,000 Pengram common shares. A copy of this agreement has been filed as an exhibit to the Companys 2009 20-F Annual Report.





- 58 -





EXCHANGE CONTROLS AND OTHER LIMITATIONS AFFECTING SECURITY HOLDERS



Canada has no system of exchange controls.  There are no Canadian restrictions on the repatriation of capital or earnings of a Canadian public company to non-resident investors.  There are no laws in Canada or exchange restrictions affecting the remittance of dividends, profits, interest, royalties and other payments to non-resident holders of Portals securities, except as discussed in ITEM 10, Taxation" below.



Restrictions on Share Ownership by Non-Canadians:  There are no limitations under the laws of Canada or in the organizing documents of Portal on the right of foreigners to hold or vote securities of Portal, except that the Investment Canada Act may require review and approval by the Minister of Industry (Canada) of certain acquisitions of "control" of the Company by a "non-Canadian". The threshold for acquisitions of control is generally defined as being one-third or more of the voting shares of the Company. "Non-Canadian" generally means an individual who is not a Canadian citizen, or a corporation, partnership, trust or joint venture that is ultimately controlled by non-Canadians.



TAXATION



The following summary of the material Canadian federal income tax consequences are stated in general terms and are not intended to be advice to any particular shareholder. Each prospective investor is urged to consult his or her own tax advisor regarding the tax consequences of his or her purchase, ownership and disposition of shares of Common Stock. The tax consequences to any particular holder of common stock will vary according to the status of that holder as an individual, trust, corporation or member of a partnership, the jurisdiction in which that holder is subject to taxation, the place where that holder is resident and, generally, according to that holders particular circumstances.



This summary is applicable only to holders who are resident in the United States, have never been resident in Canada, deal at arms length with the Company, hold their common stock as capital property and who will not use or hold the common stock in carrying on business in Canada.  Special rules, which are not discussed in this summary, may apply to a United States holder that is an issuer that carries on business in Canada and elsewhere.



This summary is based upon the provisions of the Income Tax Act of Canada and the regulations thereunder (collectively, the "Tax Act" or ITA)and the Canada-United States Tax Convention (the Tax Convention) as at the date of the Annual Report and the current administrative practices of Canada Customs and Revenue Agency.  This summary does not take into account provincial income tax consequences.



Management urges each holder to consult his own tax advisor with respect to the income tax consequences applicable to him in his own particular circumstances.



CANADIAN INCOME TAX CONSEQUENCES



Disposition of Common Stock



The summary below is restricted to the case of a holder (a Holder) of one or more common shares (Common Shares) who for the purposes of the Tax Act is a non-resident of Canada, holds his Common Shares as capital property and deals at arms length with the Company.





- 59 -





Dividends



A Holder will be subject to Canadian withholding tax (Part XIII Tax) equal to 25%, or such lower rates as may be available under an applicable tax treaty, of the gross amount of any dividend paid or deemed to be paid on his Common Shares. Under the Tax Convention, the rate of Part XIII Tax applicable to a dividend on Common Shares paid to a Holder who is a resident of the United States is, if the Holder is a company that beneficially owns at least 10% of the voting stock of the Company, 5% and, in any other case, 15% of the gross amount of the dividend. The Company will be required to withhold the applicable amount of Part XIII Tax from each dividend so paid and remit the withheld amount directly to the Receiver General for Canada for the account of the Holder.



Disposition of Common Shares



A Holder who disposes of Common Shares, including by deemed disposition on death, will not be subject to Canadian tax on any capital gain thereby realized unless the common Share constituted taxable Canadian property as defined by the Tax Act. Generally, a common share of a public corporation will not constitute taxable Canadian property of a Holder unless he held the common share as capital property used by him carrying on a business in Canada, or he or persons with whom he did not deal at arms length alone or together held or held options to acquire, at any time within the 60 months preceding the disposition, 25% or more of the issued shares of any class of the capital stock of the Company.



A Holder who is a resident of the United States and realizes a capital gain on disposition of Common Shares that was taxable Canadian property will nevertheless, by virtue of the Treaty, generally be exempt from Canadian tax thereon unless (a) more than 50% of the value of the Common Shares is derived from, or from an interest in, Canadian real estate, including Canadian mineral resources properties, (b) the Common Shares formed part of the business property of a permanent establishment that the Holder has or had in Canada within the 12 months preceding disposition, or (c) the Holder (i) was a resident of Canada at any time within the ten years immediately preceding the disposition, and for a total of 120 months during any period of 20 consecutive years, preceding the disposition, and (ii) owned the Common Shares when he ceased to be resident in Canada.



A Holder who is subject to Canadian tax in respect of a capital gain realized on disposition of Common Shares must include one half of the capital gain (taxable capital gain) in computing his taxable income earned in Canada. The Holder may, subject to certain limitations, deduct one half of any capital loss (allowable capital loss) arising on disposition of taxable Canadian property from taxable capital gains realized in the year of disposition in respect to taxable Canadian property and, to the extent not so deductible, from such taxable capital gains of any of the three preceding years or any subsequent year.



UNITED STATES FEDERAL INCOME TAX CONSEQUENCES



The following is a discussion of material United States Federal income tax consequences, under the law, generally applicable to a U.S. Holder (as defined below) of common shares of the Company. This discussion does not cover any state, local or foreign tax consequences.



The following discussion is based upon the sections of the Internal Revenue Code of 1986, as amended (the Code), Treasury Regulations, published Internal Revenue Service (IRS) rulings, published administrative positions of the IRS and court decisions that are currently applicable, any or all of which could be materially and adversely changed, possible on a retroactive basis, at any time.  In addition, the discussion does not consider the potential effects, both adverse and beneficial, or recently proposed legislation which, if enacted, could be applied, possibly on a retroactive basis, at any time. The discussion is for general information only and it is not intended to be, nor should it be construed to be, legal or tax advice to any holder or prospective holder of common shares of the Company. Each holder and prospective holder of common shares of the Company is advised to consult their own tax advisors about the federal, state, local, and foreign tax consequences of purchasing, owning and disposing of common shares of the Company applicable to their own particular circumstances.





- 60 -





U.S. Holders



As used herein, a (U.S. Holder) includes a holder of common shares of the Company who is a citizen or resident of the United States, a corporation created or organized in or under the laws of the United States or of any political subdivision thereof, an estate whose income is taxable in the United States irrespective of source or a trust subject to the primary supervision of a court within the United States and control of a United States fiduciary as described in Section 7701(a)(30) of the Code. This summary does not address the tax consequences to, and U.S. Holder does not include, persons subject to special provisions of Federal income tax law, such as tax-exempt organizations, qualified retirement plans, financial institutions, insurance companies, real estate investment trusts, regulated investment companies, broker-dealers, non-resident alien individuals, persons or entities that have a functional currency other than the U.S. dollar, shareholders who hold common shares as part of a straddle, hedging or conversion transaction, and shareholders who acquired their common shares through the exercise of employee stock options or otherwise as compensation for services.



This summary is limited to U.S. Holders who own common shares as capital assets. This summary does not address the consequences to a person or entity holding an interest in a shareholder or the consequences to a person of the ownership, exercise or disposition of any options, warrants or other rights to acquire common shares.



Distribution on Common Shares of the Company



U.S. Holders receiving dividend distributions (including constructive dividends) with respect to common shares of the Company are required to include in gross income for United States Federal income tax purposes the gross amount of such distributions equal to the U.S. dollar value of such distributions on the date of receipt (based on the exchange rate on such date), to the extent that the Company has current or accumulated earnings and profits, without reduction for any Canadian income tax withheld from such distributions.  Such Canadian tax withheld may be credited, subject to certain limitations, against the U.S. Holders United States Federal Income tax liability or, alternatively, individuals may be deducted in computing the U.S. Holders United States Federal taxable income by those individuals who itemize deductions.  (See more detailed discussion at Foreign Tax Credit below).  To the extent that distributions exceed current or accumulated earnings and profits of the Company, they will be treated first as a return of capital up to the U.S. Holders adjusted basis in the common shares and thereafter as gain from the sale or exchange of the common shares. Dividend income will be taxed at marginal tax rates applicable to ordinary income while preferential tax rates for long-term capital gains are applicable to a U.S. Holder which is an individual, estate or trust.  There are currently no preferential tax rates for long-term capital gains for a U.S. Holder which is a corporation.



In the case of foreign currency received as a dividend that is not converted by the recipient into U.S. dollars on the date of receipt, a U.S. Holder will have a tax basis in the foreign currency equal to its U.S. dollar value on the date of receipt. Generally any gain or loss recognized upon a subsequent sale of other disposition of the foreign currency, including the exchange for U.S. dollars, will be ordinary income or loss.



Dividends paid on the common shares of the Company will not generally be eligible for the dividends received deduction provided to corporations receiving dividends from certain United States corporations.  A U.S. Holder which is a corporation may, under certain circumstances, be entitled to a 70% deduction of the United States source portion of dividends received from the Company (unless the Company qualifies as a foreign personal holding company or a passive foreign investment company, as defined below) if such U.S. Holder owns shares representing at least 10% of the voting power and value of the Company.  The availability of this deduction is subject to several complex limitations which are beyond the scope of this discussion.





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Under current Treasury Regulations, dividends paid on the Companys common shares, if any, generally will not be subject to information reporting and generally will not be subject to U.S. backup withholding tax. However, dividends and the proceeds from a sale of the Companys common shares paid in the U.S. through a U.S. or U.S. related paying agent (including a broker) will be subject to U.S. information reporting requirements and may also be subject to the 31% U.S. backup withholding tax, unless the paying agent is furnished with a duly completed and signed Form W-9. Any amounts withheld under the U.S. backup withholding tax rules will be allowed as a refund or a credit against the U.S. Holders U.S. federal income tax liability, provided the required information is furnished to the IRS.



Foreign Tax Credit



For individuals whose entire income from sources outside the United States consists of qualified passive income, the total amount of creditable foreign taxes paid or accrued during the taxable year does not exceed $300 ($600 in the case of a joint return) and an election is made under section 904(j), the limitation on credit does not apply.



A U.S. Holder who pays (or has withheld from distributions) Canadian income tax with respect to the ownership of common shares of the Company may be entitled, at the option of the U.S. Holder, to either a deduction or a tax credit for such foreign tax paid or withheld.  Generally, it will be more advantageous to claim a credit because a credit reduces United States Federal income taxes on a dollar-for-dollar basis, while a deduction merely reduces the taxpayers income subject to tax.  This election is made on a year-by-year basis and applies to all foreign income taxes (or taxes in lieu of income tax) paid by (or withheld from) the U.S. Holder during the year.  There are significant and complex limitations which apply to the credit, among which is the general limitation that the credit cannot exceed the proportionate share of the U.S. Holders United States income tax liability that the U.S. Holders foreign source income bears to his/her or its worldwide taxable income in the determination of the application of this limitation. The various items of income and deduction must be classified into foreign and domestic sources. Complex rules govern this classification process.  In addition, this limitation is calculated separately with respect to specific classes of income such as passive income, high withholding tax interest, financial services income, shipping income, and certain other classifications of income. Dividends distributed by the Company will generally constitute passive income or, in the case of certain U.S. Holders, financial services income for these purposes.  The availability of the foreign tax credit and the application of the limitations on the credit are fact specific and management urges holders and prospective holders of common shares of the Company to consult their own tax advisors regarding their individual circumstances.



Disposition of Common Shares of the Company



A U.S. Holder will recognize gain or loss upon the sale of common shares of the Company equal to the difference, if any, between (I) the amount of cash plus the fair market value of any property received, and (ii) the shareholders tax basis in the common shares of the Company.  Preferential tax rates apply to long-term capital gains of U.S. Holders, which are individuals, estates or trusts. This gain or loss will be capital gain or loss if the common shares are capital assets in the hands of the U.S. Holder, which will be a short-term or long-term capital gain or loss depending upon the holding period of the U.S. Holder.  Gains and losses are netted and combined according to special rules in arriving at the overall capital gain or loss for a particular tax year.  Deductions for net capital losses are subject to significant limitations.  For U.S. Holders, which are not corporations, any unused portion of such net capital loss may be carried over to be used in later tax years until such net capital loss is thereby exhausted, but individuals may not carry back capital losses. For U.S. Holders, which are corporations (other than corporations subject to Subchapter S of the Code), an unused net capital loss may be carried back three years from the loss year and carried forward five years from the loss year to be offset against capital gains until such net capital loss is thereby exhausted.





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Other Considerations



In the following circumstances, the above sections of the discussion may not describe the United States Federal income tax consequences resulting from the holding and disposition of common shares of the Company.



Foreign Personal Holding Company



If at any time during a taxable year more than 50% of the total combined voting power or the total value of the Companys outstanding shares is owned, actually or constructively, by five or fewer individuals who are citizens or residents of the United States and 60% (50% after the first tax year) or more of the Companys gross income for such year was derived from certain passive sources (e.g. from interest income received from its subsidiaries), the Company would be treated as a foreign personal holding company.  In that event, U.S. Holders that hold common shares of the Company would be required to include in gross income for such year their allocable portions of such passive income to the extent the Company does not actually distribute such income.



The Company does not believe that it currently has the status of a foreign personal holding company. However, there can be no assurance that the Company will not be considered a foreign personal holding company for the current or any future taxable year.



Foreign Investment Company



If 50% or more of the combined voting power or total value of the Companys outstanding shares are held, actually or constructively, by citizens or residents of the United States, United States domestic partnerships or corporations, or estates or trusts other than foreign estates or trusts (as defined by the Code Section 7701(a)(31), and the Company is found to be engaged primarily in the business of investing, reinvesting, or trading in securities, commodities, or any interest therein, it is possible that the Company might be treated as a foreign investment company as defined in Section 1246 of the Code, causing all or part of any gain realized by a U.S. Holder selling or exchanging common shares of the Company to be treated as ordinary income rather than capital gains.



Passive Foreign Investment Company



As a foreign corporation with U.S. Holders, the Company could potentially be treated as a passive foreign investment company (PFIC), as defined in Section 1297 of the Code, depending upon the percentage of the Companys income which is passive, or the percentage of the Companys assets which is held for the purpose of producing passive income.



Certain United States income tax legislation contains rules governing PFICs, which can have significant tax effects on U.S. shareholders of foreign corporations.  These rules do not apply to non-U.S. shareholders.  Section 1297 (a) of the Code defines a PFIC as a corporation that is not formed in the United States and, for any taxable year, either (I) 75% or more of its gross income is passive income, which includes interest, dividends and certain rents and royalties or (ii) the average percentage, by fair market value (or, if the company is a controlled foreign corporation or makes an election, by adjusted tax basis), of its assets that produce or are held for the production of passive income is 50% or more.  The taxation of a US shareholder who owns stock in a PFIC is extremely complex and is therefore beyond the scope of this discussion.  Management urges US persons to consult with their own tax advisors with regards to the impact of these rules.





- 63 -





Controlled Foreign Corporation



A Controlled Foreign Corporation (CFC) is a foreign corporation more than 50% of whose stock by vote or value is, on any day in the corporations tax year, owned (directly or indirectly) by U.S. Shareholders. If more than 50% of the voting power of all classes of stock entitled to vote is owned, actually or constructively, by citizens or residents of the United States, United States domestic partnerships and corporations or estates or trusts other than foreign estates or trusts, each of whom own actually or constructively 10% or more of the total combined voting power of all classes of stock of the Company could be treated as a controlled foreign corporation under Subpart F of the Code.  This classification would affect many complex results, one of which is the inclusion of certain income of a CFC, which is subject to current U.S. tax. The United States generally taxes United States Shareholders of a CFC currently on their pro rata shares of the Subpart F income of the CFC. Such United States Shareholders are generally treated as having received a current distribution out of the CFCs Subpart F income and are also subject to current U.S. tax on their pro rata shares of the CFCs earnings invested in U.S. property. The foreign tax credit described above may reduce the U.S. tax on these amounts.



In addition, under Section 1248 of the Code, gain from the sale or exchange of shares by a U.S. Holder of common shares of the Corporation which is or was a United States Shareholder at any time during the five-year period ending with the sale or exchange is treated as ordinary income to the extent of earnings and profits of the Company (accumulated in corporate tax years beginning after 1962, but only while the shares were held and while the Company was controlled) attributable to the shares sold or exchanged. If a foreign corporation is both a PFIC and a CFC, the foreign corporation generally will not be treated as a PFIC with respect to the United States Shareholders of the CFC. This rule generally will be effective for taxable years of United States Shareholders beginning after 1997 and for taxable years of foreign corporations ending with or within such taxable years of United States Shareholders. The PFIC provisions continue to apply in the case of PFIC that is also a CFC with respect to the U.S. Holders that are less than 10% shareholders. Because of the complexity of Subpart F, a more detailed review of these rules is outside of the scope of this discussion.



The amount of any backup withholding will not constitute additional tax and will be allowed as a credit against the U.S. Holders federal income tax liability.



Filing of Information Returns.  Under a number of circumstances, United States Investor acquiring shares of the Company may be required to file an information return with the Internal Revenue Service Center where they are required to file their tax returns with a duplicate copy to the Internal Revenue Service Center, Philadelphia, PA 19255. In particular, any United States Investor who becomes the owner, directly or indirectly, of 10% or more of the shares of the Company will be required to file such a return. Other filing requirements may apply, and management urges United States Investors to consult their own tax advisors concerning these requirements.



Statement by Experts



The Companys auditors for its financial statements as at June 30, 2011, 2010, and 2009 was DeVisser Gray LLP, Chartered Accountants. Their audit report is included with the related financial statements in this Annual Report.



Documents on Display



All documents incorporated and referred by reference in this 20-F Annual Report are available on EDGAR at www.sec.gov, or may be viewed at the Companys Executive Office located at Suite 750, 625 Howe Street, Vancouver, British Columbia, Canada.





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Item 11.  Disclosures about Market Risk



The Company competes with other resource companies for exploration properties and possible joint venture agreements.  There is a risk that this competition could increase the difficulty of concluding a negotiation on terms that the Company considers acceptable.



Item 12.  Description of Other Securities



Not Applicable





Part II



Item 13.  Defaults, Dividend Arrearages and Delinquencies



Not Applicable



Item 14.  Modifications of Rights of Securities Holders and Use of Proceeds



Not Applicable



Item 15.  Controls and Procedures



Disclosure Controls and Procedures

The Companys management is responsible for establishing and maintaining disclosure controls and procedures to provide reasonable assurance that material information related to the Company, including its consolidated subsidiaries, is made known to senior management, including Chief Executive Officer (CEO) and the Chief Financial Officer (CFO), by others within those entities on a timely basis so that appropriate decisions can be made regarding public disclosure.



We carried out an evaluation, under the supervision and with the participation of our management, including our Principal Executive Officer and our Principal Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e)) under the Securities and Exchange Act of 1934, as amended) as June 30, 2011. The Chief Executive Officer and Chief Financial Officer concluded that the disclosure controls and procedures as of June 30, 2011, were effective to give reasonable assurance that the information required to be disclosed by the Company in reports that it files or submits under the Exchange Act is (i) recorded, processed, summarized and reported, within the time periods specified in the SECs rules and forms, and (ii) accumulated and communicated to management, including the Chief Executive Office and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.





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Managements Annual Report on Internal Control over Financial Reporting

The Companys management is responsible for designing, establishing and maintaining a system of internal controls over financial reporting (as defined in Exchange Act Rule 13a-15(f))  to provide reasonable assurance that the financial information prepared by the Company for external purposes is reliable and has been recorded, processed and reported in an accurate and timely manner in accordance with GAAP.  The Board of Directors is responsible for ensuring that management fulfills its responsibilities. The Audit Committee fulfills its role of ensuring the integrity of the reported information through its review of the interim and annual financial statements.  Management reviewed the results of their assessment with the Companys Audit Committee.



Because of its inherent limitations, the Companys internal control over financial reporting may not prevent or detect all possible misstatements or frauds.  Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with policies or procedures may deteriorate.



To evaluate the effectiveness of the Companys internal control over financial reporting, Management has used the Internal Control - Integrated Framework, which is a suitable, recognized control framework established by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).  Management has assessed the effectiveness of the Companys internal control over financial reporting and concluded that such internal control over financial reporting is effective as of June 30, 2011.



Limitations on the Effectiveness of Controls

The Company's management, including the CEO and CFO, does not expect that our Disclosure Controls or our Internal Controls will prevent all error and all fraud.  A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met.  Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs.  Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected.  These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the control.  The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed achieving its stated goals under all potential future conditions; over time, control may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.



Attestation Report of the Registered Accounting Firm.

This annual report does not include an attestation report of the Companys registered public accounting firm regarding internal control over financial reporting. Managements report was not subject to attestation by the Companys registered public accounting firm pursuant to the rules of the Securities and Exchange Commission that permit the Company to provide only managements report in this Form 20-F Annual Report.





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Changes in Internal Control over Financial Reporting

There were no changes in the Companys internal control over financial reporting that occurred during the period covered by this report that have materially affected, or are reasonably likely to materially affect, the Companys internal control over financial reporting.



There have been no changes in the Company's internal controls over financial reporting during the period covered by this annual report that have materially affected or are reasonably likely to materially affect the Companys internal control over financial reporting with regard to deficiencies or material weaknesses other than the corrective actions to ensure proper disclosure is included in the Companys filings under the Exchange Act, including the Form 20-F Annual Report.



Item 16.  Reserved



Item 16A.  Audit Committee Financial Expert

The Company has not identified an Audit Committee Financial Expert among the 3 directors currently serving on the audit committee. The current members are David Hottman, Gary Nordin, and Frank Wheatley. All 3 members are financially literate, have extensive experience as officers and directors of public mineral exploration companies, and understanding of internal controls and procedures.



Item 16B.  Code of Ethics

The Company has not adopted a written code of ethics that meets the new United States' Sarbanes-Oxley standards; the Board of Directors believes that the compliance with existing Canadian standards and procedures, including the regulations to which it subject under Canadian securities laws as a reporting issuer as a company listed on the TSX Venture Exchange, are adequate for its immediate purposes. The board is evaluating the adoption of a code of ethics during the 2012 fiscal year.



Item 16C.  Principal Accountant Fees and Services

The audit committee is directly responsible for the appointment, compensation and oversight of auditors; the audit committee has in place procedures for receiving complaints and concerns about accounting and auditing matters; and has the authority and the funding to engage independent counsel and other outside advisors.



The Audit Committee may delegate to one or more designated members of the Audit Committee the authority to grant pre-approvals required by this policy and procedure.  The decisions of any Audit Committee member to whom authority is delegated to pre-approve a service shall be presented to the full Audit Committee at its next scheduled meeting.



In accordance with the requirements of the US Sarbanes-Oxley Act of 2002 and rules issued by the Securities and Exchange Commission, the Companys Audit Committee Charter includes a procedure for the review and pre-approval of any services performed by the Company's auditor, including audit services, audit related services, tax services and other services.  The procedure requires that all proposed engagements of the auditor for audit and permitted non-audit services are submitted to the finance and audit committee for approval prior to the beginning of any such services.





- 67 -





Fees, including reimbursements for expenses, for professional services rendered by DeVisser Gray to the Company for the two most recent fiscal years ended June 30th are included in the following table.



|Table No. 14
Principal Account Fees and Services
|------------------------------------------------
|                                                
|Type of Service                                 
|                                                
|Audit Fees                                      
|Audit Related Fees                              
|Tax Fees                                        
|All Other Fees                                  
|Total                                           



Item 16D.  Exemptions from Listing Standards for Audit Committees



Not Applicable



Item 16E.  Purchase of Equity Securities by the Issuer and Affiliated Purchasers



Not Applicable



Item 16F.  Change in Registrants Certifying Accountant



On November 8, 2011, the Company determined to propose to shareholders at its Annual General and Special Meeting of Shareholders held on December 16, 2011 to appoint MNP LLP, Chartered Accountants, 800, 700  6th Avenue SW, Calgary, Alberta, Canada as the Company's new auditor. There were no disagreements between the Company or the prior auditor, DeVisser Gray LLP, and no reservations or modified opinions contained within the audit reports. The change in auditor was recommended and approved by the Company's audit committee and Board of Directors.



The Notice of the Change of Auditor, Letter from the Predecessor Auditor and Letter from the Successor Auditor have been filed on EDGAR under Form 6-K on November 17, 2011.





Part III



Item 17.  Financial Statements



The Company's financial statements are stated in Canadian Dollars (CDN$) and are prepared in accordance with Canadian GAAP, the application of which, in the case of the Company, conforms in all material respects for the years presented with US GAAP, except as disclosed in Note 14 to the financial statements.



The financial statements as required under ITEM #17 are attached hereto and found immediately following the text of this Annual Report.  The audit report of DeVisser Gray LLP, Chartered Accountant, is included herein immediately preceding the financial statements.





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Item 18.  Financial Statements



The Company has elected to provide financial statements pursuant to ITEM #17.



Item 19.  Exhibits



(A1)  The financial statements thereto as required under ITEM #17 are attached hereto and found immediately following the text of this Annual Report.  The audit report of DeVisser Gray LLP, Chartered Accountants, for the audited financial statements is included herein immediately preceding the audited financial statements.



Audited Financial Statements



Independent Auditors Report, dated October 19, 2011.



Balance Sheets at June 30, 2011 and 2010.



Statements of Operations for the years ended June 30, 2011, 2010, and 2009.



Statements of Cash Flows for the years ended June 30, 2011, 2010, and 2009.



Notes to Financial Statements



(B)  Index to Exhibits:



|1.
Certificate of Incorporation, Certificates of Name Change, Articles of Incorporation, Articles of Amalgamation and By-Laws (Previously Filed)                                                                                                                                                                                        | 
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | 
|                                                                                                                                                                                                                                                                                                                                        | 
|2. Instruments defining the rights of holders of the securities being registered
***See Exhibit Number 1***                                                                                                                                                                                                                             | 
|3. Voting Trust Agreements  N/A                                                                                                                                                                                                                                                                                                        | 
|4. Material Contracts
A)      Copy of the sale agreement between the Company and Omar Pereyra and Guillermo Pereyra for Portal del Oro S.A. dated May 14, 2009. (Previously Filed)
B)   Copy of the assignment agreement between the Company Pengram Corporation for the Companys Nevada claims dated May 29, 2009. (Previously Filed) | 
|5. List of Foreign Patents  N/A                                                                                                                                                                                                                                                                                                        | 
|6. Calculation of earnings per share  N/A                                                                                                                                                                                                                                                                                              | 
|7. Explanation of calculation of ratios  N/A                                                                                                                                                                                                                                                                                           | 
|8. List of Subsidiaries  N/A                                                                                                                                                                                                                                                                                                           | 
|9. Statement pursuant to the instructions to Item 8.A.4, regarding the financial statements filed in registration statements for initial public offerings of securities  N/A                                                                                                                                                           | 
|10.Other documents
Documents incorporated by reference to the Form 6-Ks filed by the Company on EDGAR.                                                                                                                                                                                                                                 | 







- 69 -















PORTAL RESOURCES LTD.

















Consolidated Financial Statements





June 30, 2011

June 30, 2010

June 30, 2009







(An exploration stage company)





















| | Portal Resources Ltd.                       |  | Trading Symbol: PDO      
| | ------------------------------------------- |  | -------------------------
| | Head Office: Suite 750  625 Howe Street    |  | Telephone:  604-629-1929 
| | Vancouver, British Columbia, Canada V6C 2T6 |  | Facsimile:   604-629-1930

















- 70 -











MANAGEMENTS RESPONSIBILITY FOR FINANCIAL REPORTING



The consolidated financial statements and the information contained in the management discussion and analysis have been prepared by the management of the Company.  The consolidated financial statements have been prepared in accordance with Canadian generally accepted accounting principles and, where appropriate, reflect managements best estimates based on currently available information.  A system of internal accounting control is maintained to provide reasonable assurance that financial information is accurate and reliable.



The Companys independent auditors, De Visser Gray LLP, who have been appointed by the shareholders, conduct an audit in accordance with generally accepted auditing standards in Canada to allow them to express an opinion on the financial statements.



The Audit Committee of the Board of Directors meets periodically with management and the independent auditors to review the scope and results of the annual audit and to review the financial statements and related reporting matters prior to submission to the Board.







David Hottman

Mark Brown



David Hottman,

Mark Brown

President and CEO

Chief Financial Officer

Vancouver, Canada

Vancouver, Canada

October 19, 2011

October 19, 2011







- 71 -







[portal20fannual2011001.jpg]



REPORT OF INDEPENDENT REGISTERED CHARTERED ACCOUNTANTS



To the Shareholders of Portal Resources Ltd.



We have audited the accompanying consolidated financial statements of Portal Resources Ltd. and its subsidiaries, which comprise the consolidated balance sheets as at June 30, 2011 and June 30, 2010, and the consolidated statements of operations and comprehensive loss, shareholders equity and cash flows for each of the years in the three-year period ended June 30, 2011, and a summary of significant accounting policies and other explanatory information.



Managements Responsibility for the Consolidated Financial Statements



Management is responsible for the preparation and fair preparation of these consolidated financial statements in accordance with Canadian generally accepted accounting principles, and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.



Auditors Responsibility



Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We conducted our audits in accordance with Canadian generally accepted auditing standards and the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we comply with the ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free from material misstatement. We were not engaged to perform an audit of the Companys internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Companys internal control over financial reporting. Accordingly, we express no such opinion.



An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The procedures selected depend on the auditors judgment, including the assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or error. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.



We believe that the audit evidence we have obtained in our audits is sufficient and appropriate to provide a basis of our audit opinion.



Opinion



In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of Portal Resources Ltd. and its subsidiaries as at June 30, 2011 and June 30, 2010, and the results of their operations and their cash flows for each of the years in the three-year period ended June 30, 2011, in accordance with Canadian generally accepted accounting principles.





De Visser Gray LLP





INDEPENDENT REGISTERED CHARTERED ACCOUNTANTS



Vancouver, Canada

October 19, 2011, except for Note 15 which is December 15, 2011





- 72 -













PORTAL RESOURCES LTD.

CONSOLIDATED BALANCE SHEETS

(stated in Canadian dollars)

As at June 30th





|                                         | 2011             |  | 2010               
|---------------------------------------- | ---------------- |  | -------------------
|                                         |                  |  |                    
|ASSETS                                   |                  |  |                    
|Current                                  |                  |  |                    
|Cash                                     | $     1,000,723  |  | $          137,609 
|Short-term investments (Note 3)          | 26,696           |  | 275,222            
|Marketable securities (Note 4)           | 10,127           |  | 9,581              
|Amounts receivable                       | 70,095           |  | 63,880             
|Prepaid expenses                         | 41,103           |  | 21,552             
|                                         | 1,148,744        |  | 507,844            
|                                         |                  |  |                    
|Oil and gas properties (Note 7)          | 2,304,232        |  | 571,932            
|Equipment (Note 5)                       | 57,066           |  | 21,833             
|                                         | 2,361,298        |  | 593,765            
|                                         |                  |  |                    
|                                         |                  |  |                    
|                                         | $    3,510,042   |  | $       1,101,609  
|                                         |                  |  |                    
|LIABILITIES                              |                  |  |                    
|                                         |                  |  |                    
|Current                                  |                  |  |                    
|Accounts payable and accrued liabilities | $       290,914  |  | $            43,417
|                                         |                  |  |                    
|Asset retirement obligation              | 35,512           |  | -                  
|                                         | 326,426          |  | 43,417             
|                                         |                  |  |                    
|SHAREHOLDERS EQUITY                     |                  |  |                    
|                                         |                  |  |                    
|Share capital (Note 8)                   | 17,999,468       |  | 14,850,161         
|Contributed surplus (Note 8)             | 1,222,407        |  | 1,024,993          
|Deficit                                  | (16,038,259)     |  | (14,816,962)       
|                                         | 3,183,616        |  | 1,058,192          
|                                         |                  |  |                    
|                                         | $      3,510,042 |  | $       1,101,609  





Nature of operations (Note 1)

Commitments (Note 9)

Subsequent events (Note 15)





Approved by the Board of Directors:





|David Hottman        |  | Mark T. Brown     
|---------------------- |  | --------------------
|David Hottman Director |  | Mark Brown, Director





See notes to consolidated financial statements





- 73 -







PORTAL RESOURCES LTD.

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

For the years ended June 30

(stated in Canadian dollars)



|                                                     | 2011              |  | 2010                  |  | 2009               
|---------------------------------------------------- | ----------------- |  | --------------------- |  | -------------------
|                                                     |                   |  |                       |  |                    
|                                                     |                   |  |                       |  |                    
|Revenue                                              | $         47,041  |  | $                   - |  | $                 -
|Oil and gas revenue                                  | (1,481)           |  | -                     |  | -                  
|Royalties                                            | 45,560            |  | -                     |  | -                  
|                                                     |                   |  |                       |  |                    
|Expenses                                             |                   |  |                       |  |                    
|Accounting and audit                                 | 8,600             |  | 27,210                |  | 62,116             
|Amortization                                         | 22,392            |  | 14,370                |  | 27,217             
|Bank charges and interest                            | 2,177             |  | 2,224                 |  | 6,993              
|Consulting and management fees                       | 179,043           |  | 96,901                |  | 130,738            
|Depletion of oil and gas properties                  | 11,565            |  | -                     |  | -                  
|Directors' fees                                      | 27,333            |  | 28,000                |  | 21,500             
|Foreign exchange                                     | 4,467             |  | 9,905                 |  | (624)              
|Investor relations                                   | 140,399           |  | 71,590                |  | 124,780            
|Legal                                                | 30,323            |  | 34,623                |  | 74,420             
|Office and miscellaneous                             | 101,074           |  | 94,203                |  | 137,482            
|Rent                                                 | 107,274           |  | 90,035                |  | 101,395            
|Oil and gas operating expenses                       | 19,672            |  | -                     |  | -                  
|Project investigation                                | 15,175            |  | 158,152               |  | 67,119             
|Salaries and benefits                                | 364,795           |  | 234,187               |  | 533,915            
|Stock-based compensation (Note 8)                    | 173,235           |  | 219,842               |  | 21,811             
|Transfer agent and filing fees                       | 19,217            |  | 19,743                |  | 12,288             
|Travel                                               | 50,012            |  | 26,332                |  | 70,775             
|                                                     |                   |  |                       |  |                    
|                                                     | 1,276,753         |  | 1,127,317             |  | 1,394,172          
|                                                     |                   |  |                       |  |                    
|Other items                                          |                   |  |                       |  |                    
|Gain on sale of equipment                            | (9,026)           |  | (1,509)               |  | (25,167)           
|Interest income                                      | (324)             |  | (5,554)               |  | (65,418)           
|Loss on the sale of mineral properties               | -                 |  | -                     |  | 5,052,205          
|Write-off of unproven mineral rights                 | -                 |  | -                     |  | 4,215              
|Unrealized loss on marketable securities (Note 4)    | (546)             |  | 25,294                |  | 6,229              
|                                                     | (9,896)           |  | 18,231                |  | 4,972,064          
|                                                     |                   |  |                       |  |                    
|Net loss and comprehensive loss for the year         | $ (1,221,297)     |  | $  (1,145,548)        |  | $ (6,366,236)      
|                                                     |                   |  |                       |  |                    
|Loss per share (Note 2)                              | $          (0.04) |  | $           (0.04)    |  | $          (0.21)  
|                                                     |                   |  |                       |  |                    
|Weighted average number of
common shares outstanding | 33,431,664        |  | 29,759,758            |  | 29,651,539         









See notes to consolidated financial statements





- 74 -







PORTAL RESOURCES LTD.

CONSOLIDATED STATEMENTS OF SHAREHOLDERS EQUITY

For the years ended June 30, 2011, 2010 and 2009

(stated in Canadian dollars)



|                                             | Number of
Shares | Amount        | Contributed
Surplus | Deficit         | Total
Shareholders
Equity
|-------------------------------------------- | ---------------- | ------------- | ------------------- | --------------- | -------------------------
|Balance at June 30, 2008                     | 29,651,539       | 14,760,161    | 783,340             | (7,305,178)     | 8,238,323                
|Share issues:                                |                  |               |                     |                 |                          
|Stock based compensation                     | -                | -             | 21,811              | -               | 21,811                   
|Net loss and comprehensive loss              | -                | -             | -                   | (6,366,236)     | (6,366,236)              
|                                             |                  |               |                     |                 |                          
|Balance at June 30, 2009                     | 29,651,539       | $  14,760,161 | $     805,151       | $  (13,671,414) | $    1,893,898           
|Share issues:                                |                  |               |                     |                 |                          
|Issued for purchase of oil & gas interest    | 500,000          | 90,000        | -                   | -               | 90,000                   
|Stock based compensation                     | -                | -             | 219,842             | -               | 219,842                  
|Net loss and comprehensive loss              | -                | -             | -                   | (1,145,548)     | (1,145,548)              
|                                             |                  |               |                     |                 |                          
|Balance at June 30, 2010                     | 30,151,539       | $  14,850,161 | $  1,024,993        | $  (14,816,962) | $    1,058,192           
|Share Issues:                                |                  |               |                     |                 |                          
|Private placements                           | 18,366,500       | 3,282,750     |                     |                 | 3,282,750                
|Exercise of options                          | 227,500          | 27,676        | -                   | -               | 27,676                   
|Fair market value of stock options exercised | -                | 22,170        | (22,170)            | -               | -                        
|Stock based compensation                     | -                | -             | 173,235             | -               | 173,235                  
|Finders fees                                 | -                | (76,790)      | -                   | -               | (76,790)                 
|Share issue costs                            | -                | (60,150)      | -                   | -               | (60,150)                 
|Fair value of finders warrants              | -                | (46,349)      | 46,349              | -               | -                        
|Net loss and comprehensive loss              | -                | -             | -                   | (1,221,297)     | (1,221,297)              
|                                             |                  |               |                     |                 |                          
|Balance at June 30, 2011                     | 48,745,539       | $  17,999,468 | $  1,222,407        | $ (16,038,259)  | $   3,183,616            









See notes to consolidated financial statements







- 75 -







PORTAL RESOURCES LTD.

CONSOLIDATED STATEMENTS OF CASH FLOWS

For the years ended June 30

(stated in Canadian dollars)



|                                                                                                         | 2011               |  | 2010              |  | 2009           
|-------------------------------------------------------------------------------------------------------- | ------------------ |  | ----------------- |  | ---------------
|                                                                                                         |                    |  |                   |  |                
|Cash provided by (used for):                                                                             |                    |  |                   |  |                
|Operating Activities                                                                                     |                    |  |                   |  |                
|Net loss for the year                                                                                    | $   (1,221,297)    |  | $   (1,145,548)   |  | $  (6,366,236) 
|Items not involving cash:                                                                                |                    |  |                   |  |                
|Stock-based compensation                                                                                 | 173,235            |  | 219,842           |  | 21,811         
|Write-off of unproven mineral properties                                                                 | -                  |  | -                 |  | 4,215          
|Loss on sale of mineral properties                                                                       | -                  |  | -                 |  | 5,052,205      
|Amortization                                                                                             | 22,392             |  | 14,370            |  | 27,217         
|Depletion of oil and gas properties                                                                      | 11,565             |  |                   |  |                
|Unrealized (gain) loss on marketable securities                                                          | (546)              |  | 25,294            |  | 6,229          
|Gain on sale of equipment                                                                                | (9,026)            |  | (1,509)           |  | (25,167)       
|                                                                                                         |                    |  |                   |  |                
|                                                                                                         | (1,023,677)        |  | (887,551)         |  | (1,279,726)    
|                                                                                                         |                    |  |                   |  |                
|Changes in non-cash working capital:                                                                     |                    |  |                   |  |                
|Amounts receivable                                                                                       | (6,125)            |  | (59,485)          |  | 99,917         
|Prepaid expenses                                                                                         | (19,551)           |  | 364               |  | 100,402        
|Accounts payable and accrued liabilities                                                                 | 130,951            |  | 9.960             |  | (18,041)       
|                                                                                                         |                    |  |                   |  |                
|                                                                                                         | (918,492)          |  | (936,712)         |  | (1,097,448)    
|                                                                                                         |                    |  |                   |  |                
|Investing Activities                                                                                     |                    |  |                   |  |                
|Purchase of equipment                                                                                    | (64,099)           |  | (855)             |  | (25,896)       
|Proceeds from the sale of equipment                                                                      | 15,500             |  | 5,000             |  | 63,297         
|Short-term investments                                                                                   | 248,526            |  | 980,734           |  | 1,605,797      
|Proceeds on sale of mineral properties                                                                   | -                  |  | -                 |  | 99,127         
|Expenditures on unproven mineral rights                                                                  | -                  |  | -                 |  | (261,054)      
|Expenditures on oil and gas properties                                                                   | (1,591,807)        |  | (159,130)         |  | (322,802)      
|                                                                                                         |                    |  |                   |  |                
|                                                                                                         | (1,391,880)        |  | 825,749           |  | 1,158,469      
|                                                                                                         |                    |  |                   |  |                
|Financing Activities                                                                                     |                    |  |                   |  |                
|Shares issued for cash                                                                                   | 3,282,750          |  | -                 |  | -              
|Stock options exercised                                                                                  | 27,676             |  | -                 |  | -              
|Share issue costs                                                                                        | (136,940)          |  | -                 |  | -              
|                                                                                                         | 3,173,486          |  | -                 |  | -              
|                                                                                                         |                    |  |                   |  |                
|Net increase (decrease) in cash                                                                          | 863,114            |  | (110,963)         |  | 61,021         
|                                                                                                         |                    |  |                   |  |                
|Cash  beginning of year                                                                                 | 137,609            |  | 248,572           |  | 187,551        
|                                                                                                         |                    |  |                   |  |                
|Cash  end of year                                                                                       | $  1,000,723       |  | $    137,609      |  | $       248,572
|                                                                                                         |                    |  |                   |  |                
|Supplementary disclosure of non-cash investing and Financing Activities:                                 |                    |  |                   |  |                
|                                                                                                         |                    |  |                   |  |                
|Marketable securities received on the sale of mineral properties                                         | $                - |  | $               - |  | $        41,104
|                                                                                                         |                    |  |                   |  |                
|Deferred expenditures on unproven mineral rights and oil
and gas properties included in accounts payable | $    152,058       |  | $               - |  | $        38,635





See notes to consolidated financial statements





- 76 -







PORTAL RESOURCES LTD.

CONSOLIDATED STATEMENTS OF DEFERRED EXPENDITURES ON UNPROVEN MINERAL RIGHTS

For the year ended June 30

(stated in Canadian dollars)



|                                         | Arroyo Verde
(Argentina) | San Rafael
(Argentina) | La Pampa Uranium
(Argentina) | Tiger Uranium
(Argentina) | Slick Rock Uranium
(USA) | Golden,
Snow, Fish
and CPG
(USA) | Total      
|---------------------------------------- | ------------------------ | ---------------------- | ---------------------------- | ------------------------- | ------------------------ | -------------------------------- | -----------
|                                         |                          |                        |                              |                           |                          |                                  |            
|Total as at June 30, 2008                | 4,121,827                | 165,486                | 608,733                      | 69,549                    | -                        | -                                | 4,965,595  
|                                         |                          |                        |                              |                           |                          |                                  |            
|Land acquisition & holding costs         | 53,853                   | 2,087                  | 37,481                       | -                         | -                        | 30,677                           | 124,098    
|Environment                              | 123                      | -                      | -                            | -                         | -                        | -                                | 123        
|Geology                                  | 26,034                   | 15,342                 | 32,958                       | 22,934                    | 4,215                    | 4,136                            | 105,619    
|Geophysics                               | -                        | -                      | -                            | -                         | -                        | -                                | -          
|Surface geochemistry                     | -                        | 852                    | 171                          | -                         | -                        | 193                              | 1,216      
|Drilling                                 | -                        | -                      | -                            | -                         | -                        | -                                | -          
|Total expenditures                       | 80,010                   | 18,281                 | 70,610                       | 22,934                    | 4,215                    | 35,006                           | 231,056    
|Proceeds on sale of properties           | (99,127)                 | -                      | -                            | -                         | -                        | (41,104)                         | (140,231)  
|Gain (loss) on sale of properties        | (4,102,710)              | (183,767)              | (679,343)                    | (92,483)                  | -                        | 6,098                            | (5,052,205)
|Property write-offs                      | -                        | -                      | -                            | -                         | (4,215)                  | -                                | (4,215)    
|                                         |                          |                        |                              |                           |                          |                                  |            
|Total as at June 30, 2009, 2010 and 2011 | -                        | -                      | -                            | -                         | -                        | -                                | -          









- 77 -







PORTAL RESOURCES LTD.

Notes to the Consolidated Financial Statements

For the years ended June 30, 2011, 2010 and 2009

(stated in Canadian dollars)



1.

NATURE OF OPERATIONS AND GOING CONCERN



Portal Resources Ltd. was incorporated on August 14, 2000 under the Company Act of the Province of British Columbia.



The Company is a junior oil and gas company, engaged in the production, development and exploration of, oil and gas reserves in Alberta, Canada and Saskatchewan, Canada. To date, the Company has not earned significant revenues and has an accumulated operation deficit of $16,038,259.



Current economic conditions have limited the Companys ability to access financing through equity markets and this has created significant uncertainty as to the Companys ability to fund ongoing operations for the next operating period. See Note 13 for further discussion on the Companys conservation and management of capital.



The consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts and the classification of liabilities that might be necessary should the Company be unable to continue in the normal course of business.



2.

SIGNIFICANT ACCOUNTING POLICIES



Basis of presentation and principles of consolidation

These consolidated financial statements have been prepared in accordance with generally accepted accounting principles in Canada (Canadian GAAP). The differences between those principles and the ones that would be applied under U.S. generally accepted accounting principles (U.S. GAAP) are disclosed in Note 14.



References to the Company are inclusive of the Canadian parent company; its wholly owned U.S. subsidiary, Portal Resources US Inc, and its formerly owned Argentinean subsidiary, Portal del Oro S.A. (Portal S.A.). All significant inter-company transactions and balances have been eliminated.



Foreign Currency Translation

The financial statements are presented in Canadian dollars.  Foreign denominated monetary assets and liabilities are translated to their Canadian dollar equivalent using foreign exchange rates at the balance sheet dates.  Non-monetary items are translated at historical exchange rates.  Revenues and expenses are translated using average rates of exchange during the year.  Exchange gains or losses arising from currency translation are included in the determination of net income.



Use of estimates

The preparation of financial statements in conformity with Canadian generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities as at the date of the financial statements and revenues and expenses during the reporting period.  Actual results could differ from these estimates.



Revenue

Revenue is recognized when it is probable that the economic benefits will flow to the Company and delivery has occurred, the sales price is fixed or determinable, and collectability is reasonably assured. These criteria are generally met at the time the product is shipped and delivered to the customers and, depending on the delivery conditions, title and risk have passed to the customer and acceptance of the product, when contractually required, has been obtained. Revenue is measured based on the price specified in the sales contract.





- 78 -







PORTAL RESOURCES LTD.

Notes to the Consolidated Financial Statements

For the years ended June 30, 2011, 2010 and 2009

(stated in Canadian dollars)



2.

SIGNIFICANT ACCOUNTING POLICIES, (Continued)



Unproven mineral rights

Mineral right acquisition costs and their related exploration costs are deferred until the rights are placed into production or disposed of.  These costs will be amortized over the estimated useful life of the rights following the commencement of production, or written-off if the rights are disposed of.



Cost includes the cash consideration and the fair market value of shares issued on acquisition of mineral rights.  Rights acquired under option agreements or joint ventures, whereby payments are made at the sole discretion of the Company, are recorded in the accounts at such time as the payments are made.  The proceeds from options granted are netted against the cost of the related mineral rights and any excess is applied to operations.



The Company reviews capitalized costs on its mineral rights on a periodic basis and will recognize impairment in value based upon current exploration results and upon managements assessment of the future probability of profitable revenues from the rights or from the sale of the rights.  Managements assessment of the rights estimated current fair market value is also based upon a review of other similar mineral rights transactions that have occurred in the same geographic area as that of the rights under review.



Oil and Gas Properties

Oil and natural gas properties are accounted for using the successful efforts method of accounting. Geological and geophysical costs are expensed in the period in which they are incurred and costs of drilling an unsuccessful well are expensed when it becomes known the well did not result in a discovery of proven reserves or where one year has elapsed since the completion of drilling and efforts to establish proved reserves are not practical. All other costs of exploring and developing proven reserves are capitalized as oil and gas properties.



Oil and gas properties are assessed, at least annually, for impairment to ensure that the carrying value of the property on the balance sheet is recoverable. If a property's carrying value exceeds the sum of undiscounted future cash flows resulting from its use and eventual disposition, its value is impaired. An impairment loss is recognized for the amount by which the carrying value exceeds its recoverable amount. This loss is charged to depletion expense.



Capitalized costs, together with estimated future capital costs associated with proven developed reserves, are depleted and depreciated using the unit-of-production method based on estimated proven developed reserves (before royalties) of petroleum and natural gas. For purposes of this calculation, reserves and production are converted to equivalent units of oil based on relative energy content of six thousand cubic feet of natural gas to one barrel of oil.



Asset retirement obligations

The Company recognizes the fair value of a liability for an asset retirement obligation in the year in which it is incurred and when a reasonable estimate of the fair value can be made based on expected future cash outflows discounted to present value.



The associated asset retirement costs are capitalized as part of the carrying amount of long lived assets. The liability is accreted over the estimated time period until settlement of the obligation and the asset is depreciated over its estimated remaining useful life. Changes in the liability for an asset retirement obligation due to the passage of time will be measured by applying an interest method of allocation.  The amount will be recognized as an increase in the liability and an accretion expense in the statement of operations.  Changes resulting from revisions to the timing or the amount of the original estimate of undiscounted cash flows are recognized as an increase or a decrease in the carrying amount of the liability and the related capitalized asset retirement cost.



Impairment of long-lived assets

Long-lived assets are assessed for impairment when events and circumstances warrant, when the carrying amount of the asset exceeds its estimated undiscounted net cash flow from use or its fair value, at which time the impairment is charged to earnings.





- 79 -





PORTAL RESOURCES LTD.

Notes to the Consolidated Financial Statements

For the years ended June 30, 2011, 2010 and 2009

(stated in Canadian dollars)



2.

SIGNIFICANT ACCOUNTING POLICIES, (Continued)



Environmental expenditures

The operations of the Company have been and may in the future, be affected in varying degrees by changes in environmental regulations, including those for site restoration costs. Both the likelihood of new regulations and their overall effect upon the Company vary greatly from country to country and are not predictable. Environmental expenditures that relate to ongoing environmental and reclamation programs are charged against operations as incurred or capitalized and amortized depending on their expected future economic benefit. Estimated future removal and site restoration costs are recognized when the ultimate liability is reasonably determinable, and are charged against operations over the estimated remaining life of the related business operations, net of expected recoveries.



Equipment

Equipment is recorded at cost net of accumulated amortization. Amortization is provided for using the straight-line method at the following annual rates: Computer equipment  30%; Computer software  50%, Vehicles  30%, Field equipment & Furniture and fixtures  20%.



Share capital

Common shares issued for non-monetary consideration are recorded at their fair market value based upon the trading price of the Companys shares on the TSX Venture Exchange.



Stock-based compensation

The Company accounts for stock options granted to directors, officers, employees and nonemployees using the fair value method of accounting. Accordingly, the fair value of the options at the date of the grant is determined using the Black-Scholes option pricing model and stock-based compensation is accrued and charged to operations, with an offsetting credit to contributed surplus, on a straight-line basis over the vesting periods. The fair value of stock options granted to non-employees is re-measured at the earlier of each financial reporting or vesting date, and any adjustment is charged or credited to operations upon re-measurement. If and when the stock options are exercised, the applicable amounts of contributed surplus are transferred to share capital. The Company has not incorporated an estimated forfeiture rate for stock options that will not vest; rather the Company accounts for actual forfeitures as they occur.



The proceeds received by the Company on the exercise of options are credited to share capital.



Flow-through shares

Share capital includes flow-through shares issued pursuant to certain provisions of the Income Tax Act. Under the Act, where the share proceeds are used for eligible expenditures, the related income tax deductions may be renounced to the flow-through shareholders. As tax deductions are renounced, share capital and future income taxes are adjusted by an amount equal to the estimated future income taxes payable by the Company as a result  of the renunciations.



Loss per share

Loss per share has been calculated using the weighted-average number of common shares outstanding during the period.  Fully diluted loss per share amounts are not presented, as they are anti-dilutive.



Comprehensive loss

Comprehensive loss is the overall change in the net assets of the Company for the period, other than changes attributed to transactions with shareholders. It is made up of net loss and other comprehensive loss. The historical make up of net loss has not changed. Other comprehensive loss includes gains or losses, which GAAP requires to be recognized in a period but excluded from net income for that period. The Company has no items of other comprehensive loss in any period presented. Accordingly, net loss as presented in the Companys statement of operations and comprehensive loss equals comprehensive loss.





- 80 -





PORTAL RESOURCES LTD.

Notes to the Consolidated Financial Statements

For the years ended June 30, 2011, 2010 and 2009

(stated in Canadian dollars)





2.

SIGNIFICANT ACCOUNTING POLICIES, (Continued)



Income taxes

The Company accounts for the tax consequences of future tax assets and liabilities attributable to temporary differences between the financial statement carrying amounts of existing assets and liabilities and their tax bases using tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be settled.  When the future realization of income tax assets does not meet the test of being more likely than not to occur, a valuation allowance in the amount of the potential future benefit is taken and no asset is recognized.  The Company has taken a valuation allowance for the full amount of all potential net tax assets.



Financial instruments

The Company classifies its financial instruments into one of the following categories: held-to-maturity investments, loans and receivables, available-for-sale, held for trading or other financial liabilities. The Company has designated its cash, marketable securities, and short-term investments as held-for-trading, amounts receivable as loans and receivables and accounts payable and accrued liabilities as other financial liabilities.



All financial instruments are measured in the balance sheet at fair value except for loans and receivables, held-to-maturity investments and other liabilities, which are measured at amortized cost. Subsequent measurement and changes in fair value will depend upon initial classification as follows: held-for-trading financial instruments are measured at fair value and changes in fair value are recognized in net income; available-for-sale financial instruments are measured at fair value with changes in fair value in other comprehensive income until the investment is no longer recognized or impaired, at which time the amounts would be recorded in net income.



Transaction costs that are directly attributable to the acquisition or issue of financial instruments and that are classified as other than held-for-trading, are expensed as incurred and included in the initial carrying value of such instruments.



Comparative figures

Certain comparative figures have been reclassified to conform with the presentation adopted in the current year.



Accounting Policies Not Yet Adopted



Convergence to international Financial Reporting Standards (IFRS)



In February 2008, the CICA announced that Canadian GAAP for publicly accountable enterprises will be replaced by International Financial Reporting Standards (IFRS) for fiscal years beginning on or after January 1, 2011. Companies will be required to provide IFRS comparative information for the previous fiscal year. The transition date of July 1, 2011 will require the restatement for comparative purposes, amountsreported by the Company for the year ended June 30, 2012, for which the current and comparative information will be prepared under IFRS.



Business combinations



In January 2009, the CICA issued the new handbook Section 1582, Business Combinations effective for fiscal years beginning on or after January 1, 2011. Earlier adoption of Section 1582 is permitted. This pronouncement further aligns Canadian GAAP with US GAAP and IFRS and changes the accounting for business combinations in a number of areas. It establishes principles and requirements governing how an acquiring company recognizes and measures in its financial statements identifiable assets acquired, liabilities assumed, any non-controlling interest in the acquisition, and goodwill acquired. The section also establishes disclosure requirements that will enable users of the acquiring companys financial statements to evaluate the nature and financial effects of its business combinations. Although the Company is considering the impact of adopting this pronouncement on the consolidated financial statements, it will be limited to any future acquisitions beginning in fiscal 2012.





- 81 -





PORTAL RESOURCES LTD.

Notes to the Consolidated Financial Statements

For the years ended June 30, 2011, 2010 and 2009

(stated in Canadian dollars)





2.

SIGNIFICANT ACCOUNTING POLICIES, (Continued)



Accounting Policies Not Yet Adopted (Continued)



Consolidated financial statement and non-controlling interests



In January 2009, the CICA issued the new handbook Section 1601, Consolidated Financial Statements, and Section 1602, Non-controlling Interests, effective for fiscal years beginning on or after January 1, 2011. Earlier adoption of these recommendations is permitted. These pronouncements further align Canadian GAAP with US GAAP and IFRS. Sections 1601 and 1602 change the accounting and reporting for ownership interest in subsidiaries held by parties other than the parent. Non-controlling interests are to be presented in the consolidated statement of financial position within equity but separate from the parents equity. The amount of consolidated net income attributable to the parent and to the non-controlling interest is to be clearly identified and presented on the face of the consolidated statement of income. In addition, these pronouncements establish standards for a change in a parents ownership interest in a subsidiary and the valuation of retained non-controlling equity investments when a subsidiary is deconsolidated. They also establish reporting requirements for providing sufficient disclosures that clearly identify and distinguish between the interests of the parent and the interests of the non-controlling owners. The Company is currently considering the impact of adopting these pronouncements on its consolidated financial statements in fiscal 2012 in connection with the conversion to IFRS.



3.

SHORT TERM INVESTMENTS



Short term investments consists of highly liquid investments, including guaranteed investment certificates with major financial institutions, having a maturity of 12 months or less at acquisition and that are readily convertible to contracted amounts of cash.



4.

MARKETABLE SECURITIES



On May 29, 2009 Portal Resources Inc. acquired 150,000 shares of Pengram Corporation (Pengram) in return for assigning all of its interest in an option agreement (see Note 6). The shares were recorded at fair value of $41,104. At June 30, 2011, the fair value of the Pengram shares was $10,127 (2010 - $9,581). Consequently, Portal recorded a gain of $546 (2010  loss of $25,294).



5.

EQUIPMENT



| |                      | 2011       |  | 2010                    
| | -------------------- | ---------- |  | ------------------------
| |                      |            |  |                         
| |                      | Cost       |  | Accumulated
amortization
| |                      |            |  |                         
| | Computer equipment   | $   29,388 |  | $     18,508            
| | Computer software    | 73,025     |  | 29,482                  
| | Furniture & fixtures | 5,655      |  | 4,468                   
| | Vehicles             | -          |  | -                       
| | Field equipment      | 10,892     |  | 9,436                   
| |                      | $ 118,960  |  | $     61,894            







- 82 -







PORTAL RESOURCES LTD.

Notes to the Consolidated Financial Statements

For the years ended June 30, 2011, 2010 and 2009

(stated in Canadian dollars)





6.

UNPROVEN MINERAL RIGHTS



Argentina



As at May 14, 2009, the Company held a subsidiary and mineral properties in Argentina. During the fiscal year ended June 30, 2009, the Company after reviewing work done on the properties, concluded that the potential did not justify further work and renounced the mining rights held under the projects. As such, the project expenditures were written off and subsequently Portals Argentinean subsidiary was sold.



United States



On September 2, 2008, the Company announced that it had entered into an option agreement under which it had the right to acquire, from Claremont Nevada Mines, Scoonover Exploration and JR Exploration, three properties located in the Walker Lane Belt and Battle Mountain/Eureka Trend in Nevada, USA.



On May 29, 2009, the Company closed an Assignment Agreement with Pengram Corporation (Pengram) to transfer all the rights on the Nevada claims, in exchange for 150,000 shares of Pengrams common stock. The Company has no further commitments on the Nevada properties (See note 4  Marketable Securities).



7.

OIL AND GAS PROPERTIES



The Companys oil and gas interests are all located in Alberta and Saskatchewan, Canada.



Oil and Gas Joint Ventures



Bigwave Joint Venture



On November 1, 2008, the Company signed a Joint Venture Agreement to participate for a 15% working interest in the exploration, exploitation and production of petroleum and natural gas relating to lands located in central Alberta. In December of 2008 the Agreement was modified to allow the Company to participate up to a 20% interest. During the quarter ended September 30, 2009, the Company increased its interest in the Joint Venture to 22%.



Within the area of interest, the Company has agreed to pay a 5.5% Gross Overriding Royalty (GORR) on all products produced from certain geological formations.



On January 5, 2009, the Company signed an agreement, Participation Agreement, with certain other partners in the Bigwave Joint Venture. Portal agreed to pay 100% of Portals cost per Drill Spacing Unit to earn a 100% interest until pay-out and then, after pay-out, to drop to a 70% interest per Drill Spacing Unit.



On April 22, 2010, the Company agreed to purchase the Participation Agreement related to the Bigwave Oil and Gas Joint Venture (the Joint Venture) for a total of $5,000 in cash and 500,000 common shares in the capital of the Company. The Participation Agreement was therefore terminated with Portal holding a 22% working interest in the Joint Venture.



On September 21, 2010, the Company purchased an additional 6.5% working interest in the Bigwave Oil and Gas Joint Venture in return for granting the seller a non-convertible gross overriding royalty on the acquired 6.5% interest of 1/150 (5%-15%) on all future oil, and 15% on all future gas production as well as assuming all of the sellers future obligations under the Bigwave Joint Venture Agreement dated November 1, 2008, as amended. Portals working interest in the Joint Venture increased from 22% to 28.5% as a result of the acquisition.



As at June 30, 2011 the Company has spent a total of $644,675 (June 30, 2010 - $523,566) on the Bigwave Joint Venture.





- 83 -





PORTAL RESOURCES LTD.

Notes to the Consolidated Financial Statements

For the years ended June 30, 2011, 2010 and 2009

(stated in Canadian dollars)





7.

OIL AND GAS PROPERTIES, (Continued)



Manito Joint Venture



On March 9, 2009 the Company signed the Manito Joint Venture Agreement to participate as to a 33.3% interest for the exploration, exploitation and production of petroleum and natural gas resources from lands located in central Alberta. The Company has agreed to pay a 5.5% GORR on all products produced. The Manito Joint Venture has acquired one section of land to date through Alberta Crown Sale.



As at June 30, 2011 the Company has spent a total of $18,000 (June 30, 2010 - $18,000) on the Manito Joint Venture.



Border Play



On May 13th, 2010, the Company announced that it had acquired a 100% interest in two parcels of land (the Border Play) totaling 560 acres (0.875 square miles) at the April 7, 2010 Alberta Crown Land Sale.



As at June 30, 2011 the Company has spent a total of $31,150 (2010 - $30,366) on the Border Play project.



Birdbear Formation



On March 8, 2011, the Company entered into an agreement to participate in the development of an oil play in central Saskatchewan. Under the terms of the agreement, the Company earned a 25%, non-operating, working interest in a total of four sections of land (2,560 acres). A 25% working interest in the first two sections was earned by participating in, and paying a 50% cost share of, the drilling of one vertical and one horizontal well. An interest in an additional two sections of land was earned with participation on a straight up basis (25% of costs for a 25% working interest). Each of the horizontal wells qualified for the Province of Saskatchewans drilling incentive program, with a minimum 2.5% government tax on the first 100,000 barrels of production.



As at June 30, 2011 the Company has spent a total of $1,610,407 (June 30, 2010 - $Nil) on the Birdbear project.



Oil and gas expenditures



| |                                     | Bigwave       | Manito         | Borderplay        | Birdbear          | Total        
| | ----------------------------------- | ------------- | -------------- | ----------------- | ----------------- | -------------
| |                                     |               |                |                   |                   |              
| | Total as at June 30, 2009           | $     343,437 | $       18,000 | $               - | $               - | $     361,437
| |                                     |               |                |                   |                   |              
| | Crown Lease                         | 12,023        | -              | -                 | -                 | 12,023       
| | Lease costs                         | 108,991       | -              | 30,366            | -                 | 139,357      
| | Drilling (well costs)               | 58,526        | -              | -                 | -                 | 58,526       
| | Geological and engineering          | 589           | -              | -                 | -                 | 589          
| |                                     |               |                |                   |                   |              
| | Total expenditures                  | 180,129       | -              | 30,366            | -                 | 210,495      
| |                                     |               |                |                   |                   |              
| | Total as at June 30, 2010           | 523,566       | 18,000         | 30,366            | -                 | 571,932      
| |                                     |               |                |                   |                   |              
| | Crown Lease                         | 20,712        | -              | -                 | -                 | 20,712       
| | Lease costs                         | 65,023        | -              | 784               | 100,371           | 166,178      
| | Drilling (well costs)               | 9,649         | -              | -                 | 1,485,932         | 1,495,581    
| | Tangible                            | -             | -              | -                 | 7,869             | 7,869        
| | Environmental                       | 7,712         | -              | -                 | 27,800            | 35,512       
| | Engineering                         | 18,013        | -              | -                 | -                 | 18,013       
| |                                     |               |                |                   |                   |              
| | Total expenditures                  | 121,109       | -              | 784               | 1,621,972         | 1,743,865    
| | Depletion of oil and gas
properties | -             | -              | -                 | (11,565)          | (11,565)     
| | Total as at June 30, 2011           | $  644,675    | $     18,000   | $     31,150      | $ 1,610,407       | $  2,304,232 







- 84 -







PORTAL RESOURCES LTD.

Notes to the Consolidated Financial Statements

For the years ended June 30, 2011, 2010 and 2009

(stated in Canadian dollars)





7.       OIL AND GAS PROPERTIES, (Continued)



Asset retirement obligation



| |                                          | June 30, 2011       |  | June 30, 2010         |  | June 30, 2009       
| | ---------------------------------------- | ------------------- |  | --------------------- |  | --------------------
| |                                          |                     |  |                       |  |                     
| | Balance, beginning of the year           | $                 - |  | $                   - |  | $                  -
| | Liabilities incurred in the current year | 27,800              |  | -                     |  | -                   
| | Revisions in estimated cash flows        | 7,712               |  | -                     |  | -                   
| | Balance, end of year                     | $       35,512      |  | $                   - |  | $                  -



The future asset retirement obligation was estimated based on the Companys net ownership in all wells and facilities, the estimated cost to restore and abandon the wells and facilities and the estimated timing of the costs to be incurred in future periods. The Company estimates the undiscounted cash flows related to asset retirement obligations, adjusted for inflation, to be incurred over the estimated reserve life between 1 and 9 years of underlying assets, totals approximately $79,000 (2010 and 2009 - $Nil). The fair value of these obligations were calculated using a discount rate of 8% and an inflation rate of 2%.



8.

SHARE CAPITAL



a.

Authorized



At June 30, 2011, the authorized share capital comprised 100,000,000 common shares without par value and 100,000,000 preferred shares issuable in series. All issued shares are fully paid.



b.

Details of issuance of common shares



On February 17, 2011, the Company completed a non-brokered private placement for $801,250. The offering consisted of 6,410,000 units at a price of $0.125 per unit. Each unit consists of one common share and one common share purchase warrant. Each warrant is exercisable into one common share of the Company at a price of $0.15 until February 17, 2012. A $10,500 finders fee was paid.



On May 20 and May 30, 2011, the Company completed a non-brokered private placement for aggregate proceeds of $2,481,500. The offering consisted of 10,152,500 units at a price of $0.20 per unit and 1,804,000 flow through units at $0.25 per flow-through unit. Each unit consists of one common share of the Company and one-half common share purchase warrant. Each whole warrant is exercisable into one common share of the Company at a price of $0.25. Of these warrants 2,988,750 are exercisable until May 20, 2012 and 2,087,500 until May 30, 2012. Each flow-through unit consists of one common share of the Company on a flow-through basis pursuant to the Income Tax Act (Canada) and one-half of one common share purchase warrant. Each whole warrant is exercisable into one common share of the Company at a price of $0.35. Of these warrants 870,000 are exercisable until May 20, 2012 and 32,000 until May 30, 2012. In connection with the non-brokered private placement, the Company paid finders fees of $66,290 and issued a total of 305,200 non-transferrable finders warrants. Each finders warrant is exercisable into one common share of the Company at a price of $0.20 (200,200 warrants) and $0.25 (105,000 warrants) of these warrants, 278,950 are exercisable until May 20, 2012 and 26,250 are exercisable until May 30, 2012.







- 85 -





PORTAL RESOURCES LTD.

Notes to the Consolidated Financial Statements

For the years ended June 30, 2011, 2010 and 2009

(stated in Canadian dollars)





8.

SHARE CAPITAL, (Continued)



c.

Warrants



A summary of changes to warrants during the period is as follows:



| |                                  | June 30,
2011      | June 30,
2010                   | June 30,
2009     
| | -------------------------------- | ------------------ | ------------------------------- | ------------------
| |                                  | Number of
warrants | Weighted
Average
Exercise
Price | Number of
warrants
| |                                  |                    |                                 |                   
| | Outstanding at beginning of year | -                  | -                               | 3,943,500         
| | Granted                          | 12,693,450         | $0.21                           | -                 
| | Expired                          | -                  | -                               | (3,943,500)       
| | Outstanding at end of year       | 12,693,450         | $0.21                           | -                 



At June 30, 2011, the weighted average remaining life of the outstanding warrants is 0.94 year (2010 - nil)



d.

Stock-based Compensation



The Company has a stock option plan as described in the most recent annual financial statements of the Company.  The maximum aggregate number of common shares reserved and authorized to be issued pursuant to options granted under the Stock Option Plan is 4,447,730 common shares.



The exercise price for options granted under the Stock Option Plan is determined by the Board upon grant provided the price is not less than the closing trading price on the day immediately preceding the date of grant, less any discounts permitted by the TSX Venture Exchange or such other stock exchanges on which the common shares are listed.  Options granted under the Stock Option Plan are subject to a minimum one year vesting schedule whereby 25% of each option will vest on each of the three month anniversaries of the date of grant, up to and including the end of the first year after such grant, or such other more restrictive vesting schedule as the administrator of the Stock Option Plan may determine.  Options are non-assignable and are exercisable for a period of up to five years from the date the option is granted, subject to earlier termination after certain events such as the optionees cessation of service to the Company or death.



The Company accounts for its option grants in accordance with the fair value method of accounting for stock-based compensation.  For the year ended June 30, 2011, the Company recognized $173,235 (2010 - $219,842) in stock-based compensation for employees, directors and consultants.



The fair value of the options has been calculated using the Black-Scholes option-pricing model. For the period ending June 30, 2011, 2010 and 2009 the following assumptions were used:



|                                | 2011             |  | 2010               |  | 2009               
|------------------------------- | ---------------- |  | ------------------ |  | -------------------
|                                |                  |  |                    |  |                    
|Stock based compensation        | $        173,235 |  | $          219,842 |  | $            21,811
|                                |                  |  |                    |  |                    
|Risk-free interest rate         | 2.32%  2.67%    |  | 2.61% - 2.66%      |  | 1.50% - 2.90%      
|Expected stock price volatility | 144% - 146%      |  | 126% - 129%        |  | 121% - 227%        
|Expected option life in years   | 5 years          |  | 5 years            |  | 5 years            
|Expected dividend in yield      | Nil              |  | Nil                |  | Nil                





- 86 -







PORTAL RESOURCES LTD.

Notes to the Consolidated Financial Statements

For the years ended June 30, 2011, 2010 and 2009

(stated in Canadian dollars)





8.

SHARE CAPITAL, (Continued)



d.

Stock-based Compensation, (continued)



Option price models require the input of highly subjective assumptions regarding the expected volatility and expected life. Changes in assumptions can materially affect the fair value estimate, and therefore, the existing models do not necessarily provide the reliable measure of the fair value of the companys stock options at the date of grant.



A summary of changes to stock options outstanding is as follows:

|                                           | 2011             | 2010                            | 2009            
|------------------------------------------ | ---------------- | ------------------------------- | ----------------
|                                           | Number
of shares | Weighted
Average
Exercise
Price | Number
of shares
|Outstanding at beginning of year           | 3,533,600        | $0.20                           | 3,688,600       
|Granted under plan                         | 1,072,000        | $0.16                           | 1,020,000       
|Exercised                                  | (227,500)        | $0.12                           | -               
|Forfeited or cancelled                     | (537,500)        | $0.29                           | (1,175,000)     
|Outstanding at end of year                 | 3,840,600        | $0.22                           | 3,533,600       
|                                           |                  |                                 |                 
|Options vested and
exercisable at year end | 3,430,350        | $0.22                           | 2,868,600       



At June 30, 2011, the weighted average remaining life of the outstanding options is 2.85 years (2010  3.33 years).



On September 10, 2010, the Company granted stock options to directors and consultants of the Company to purchase a total of 750,000 common shares at a price of 14 cents per share, exercisable until September 9, 2015.



During the year, a total of 227,500 options at prices ranging from $0.12 to $0.15 were exercised for proceeds of $27,676. A fair value of $22,170 was recognized on these exercised options.



On February 16, 2011, the Company granted stock options to a consultant of the Company to purchase a total of 150,000 common shares at a price of 20 cents per share, exercisable until February 15, 2016.



On March 28, 2011, the Company granted stock options to employees and consultants of the Company to purchase a total of 147,000 common shares at a price of 21 cents per share, exercisable until March 27, 2016.



Stock options outstanding as at June 30, 2011 are as follows:



|Number    | Exercise Price | Expiry Date
|--------- | -------------- | -----------
|666,400   | $0.52          | 5-Dec-11   
|25,000    | $0.15          | 30-Jun-12  
|810,000   | $0.20          | 7-Oct-13   
|622,200   | $0.12          | 9-Jun-14   
|470,000   | $0.15          | 17-Jan-15  
|200,000   | $0.20          | 18-May-15  
|750,000   | $0.14          | 9-Sep-15   
|150,000   | $0.20          | 15-Feb-16  
|147,000   | $0.21          | 28-Mar-16  
|3,840,600 |                |            







- 87 -





PORTAL RESOURCES LTD.

Notes to the Consolidated Financial Statements

For the years ended June 30, 2011, 2010 and 2009

(stated in Canadian dollars)





9.

COMMITMENTS



The Company has obligations under an operating lease for its corporate office that is in effect until February 28, 2013.  The remaining future minimum lease payments for the non-cancellable lease are:



|2012 | $     94,961
|---- | ------------
|2013 | 65,197      
|     | $   160,158 



10.

RELATED PARTY TRANSACTIONS



Payments to related parties were made in the normal course of operations and were valued at fair value as determined by management.  Amounts due to or from related parties are unsecured, non-interest bearing and due on demand.



During the years ended June 30, 2011, 2010 and 2009



a)

$47,772 (2010 - $8,685; 2009 - $42,374) was charged for rent to a public company with a director in common with the Company. As at June 30, 2011, $Nil (2010 - $Nil; 2009 - $Nil) was receivable from this public company.



b)

$26,418 (2010 - $57,861; 2009 - $18,832) was charged for administrative fees and expenses to a private company with a director in common with the Company. As at June 30, 2011, $17,082 (2010 - $57,861; 2009 - $Nil) was receivable from this private company.



c)

the Company paid or accrued to pay a private company with a director in common with the Company and aggregate of $69,942 (2010  $Nil; 2009 - $Nil). As at June 30, 2011, the Company owed this company an aggregate of $Nil (2010 - $Nil; 2009 - $Nil).



d)

the Company paid or accrued to pay a private company with a director in common with the Company an aggregate of $7,101 (2010 - $11,755; 2009 - $9,707) for fees and expenses. As at June 30, 2011, the Company owed this company an aggregate of $Nil (2010 - $Nil; 2009 - $Nil).



e)

the Company incurred directors fees of $27,333 (2010 - $28,000; 2009 - $21,500) to five directors . As at June 30, 2011, $Nil (2010 - $Nil; 2009 - $Nil) was payable to these directors.



11.

INCOME TAXES



The Company follows the liability method. Under the liability method future income tax assets and liabilities are computed based on differences between the carrying amount of assets and liabilities on the balance sheet and their corresponding tax values, using tax rates anticipated to apply in the periods when the differences between the carrying amounts and tax values are expected to reverse.  Future income tax assets can also result from unused loss carry-forwards and other deductions.  The valuation of future income tax assets is reviewed annually and adjusted, if necessary, by use of a valuation allowance to reflect the estimated realizable amount.



A reconciliation of income taxes at statutory rates with reported taxes is as follow:







- 88 -









PORTAL RESOURCES LTD.

Notes to the Consolidated Financial Statements

For the years ended June 30, 2011, 2010 and 2009

(stated in Canadian dollars)





11.

INCOME TAXES, (Continued)



| |                                            | 2011                  |  | 2010                  |  | 2009                
| | ------------------------------------------ | --------------------- |  | --------------------- |  | --------------------
| | Loss before income taxes                   | $  (1,221,297)        |  | $  (1,145,548)        |  | $ (6,366,236)       
| |                                            |                       |  |                       |  |                     
| | Expected income taxes recovery             | $     (335,857)       |  | $     (335,073)       |  | $ (1,909,871)       
| | Non-deductible expenses for tax purposes   | 42,210                |  | 42,739                |  | 1,510,592           
| | Unrecognized benefit on non-capital losses | 293,647               |  | 292,334               |  | 399,279             
| | Total income taxes                         | $                   - |  | $                   - |  | $                  -



The significant components of the Companys future income tax assets are as follows:



| |                                                     | 2011                       |  | 2010                    
| | --------------------------------------------------- | -------------------------- |  | ------------------------
| | Future income tax assets                            |                            |  |                         
| | Non-capital loss carryforwards                      | $           1,745,750      |  | $         1,484,608     
| | Share issue costs                                   | 37,103                     |  | 20,053                  
| | Equipment                                           | 16,717                     |  | 14,731                  
| | Future income tax assets before valuation allowance | 1,799,570                  |  | 1,519,391               
| | Less: valuation allowance                           | (1,799,570)                |  | (1,519,391)             
| | Net future income tax assets                        | $                        - |  | $                      -



The Company has incurred losses for Canadian income tax purposes of approximately $6.9 million, which can be carried forward to reduce taxable income in future years. The losses expire in the following periods:



| | Year of Origin | Year of Expiry | Non Capital Losses 
| | -------------- | -------------- | -------------------
| |                |                |                    
| | 2004           | 2014           | $           146,935
| | 2005           | 2015           | 567,494            
| | 2006           | 2026           | 816,604            
| | 2007           | 2027           | 894,120            
| | 2008           | 2028           | 1,218,558          
| | 2009           | 2029           | 1,294,962          
| | 2010           | 2030           | 975,784            
| | 2011           | 2031           | 1,067,806          
| |                |                | $        6,982,263 







- 89 -





PORTAL RESOURCES LTD.

Notes to the Consolidated Financial Statements

For the years ended June 30, 2011, 2010 and 2009

(stated in Canadian dollars)





12.

FINANCIAL INSTRUMENTS



The fair values of the Companys cash, marketable securities, short-term investments, amounts receivable and, accounts payables and accrued liabilities approximate their carrying values.



The Companys financial instruments are exposed to certain financial risks, including currency risk, credit risk, liquidity risk and interest risk.



(a)

Currency risk



The Companys formerly owned property interests in the United States made it subject to foreign currency fluctuations and inflationary pressures which may adversely affected the Companys financial position, results of operations and cash flows. The Company was affected by changes in exchange rates between the Canadian Dollar and foreign functional currencies. The Company does not invest in foreign currency contracts to mitigate the risks, and has no foreign currency exposure at the balance sheet date.



(b)

Credit risk



The Companys cash and shortterm investments are held in a Canadian financial institution. The Company does not have any asset-backed commercial paper in its cash or short-term investments. The Companys amounts receivable consists primarily of recovered rent and office expense, and tax due from the federal government of Canada.



(c)

Liquidity risk



Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they fall due. The Company manages liquidity risk through the management of its capital structure. Accounts payable and accrued liabilities are due within the current operating period.



(d)

Interest rate risk



Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The risk that the Company will realize a loss as a result of a decline in the fair value of the short - term investments is limited because they are generally held to maturity.



(e)

Commodity Price Risk



Commodity price risk is the risk that future cash flows will fluctuate as a result of changes in commodity prices, affecting results of operations and cash generated from operating activities. Such prices may also affect the value of exploration and development properties and the level of spending for future activities. Prices received by the Company for its production are largely beyond the Companys control as oil and gas prices are impacted by world economic events that dictate the levels of supply and demand.



The Company did not have any commodity price contracts in place as at or during the year ended June 30, 2011.



CICA Handbook Section 3862 Financial Instruments  Disclosure requires an entity to classify fair value measurements using a fair value hierarchy that reflects the significance of inputs used in making the measurements. The accounting standard establishes a fair value hierarchy based on the level of independent, objecting evidence surrounding the inputs used to measure fair value. A financial instruments categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. CICA Handbook Section 3862 prioritizes the inputs into three levels that may be used to measure fair value:







- 90 -









PORTAL RESOURCES LTD.

Notes to the Consolidated Financial Statements

For the years ended June 30, 2011, 2010 and 2009

(stated in Canadian dollars)





12.

FINANCIAL INSTRUMENTS, (Continued)



a)

Level 1  Applies to assets or liabilities for which there are quoted prices in active markets for identical assets or liabilities.



b)

Level 2  Applies to assets or liabilities for which there are inputs other than quoted prices included in Level 1 that are observable for the assets or liability, either directly such as quoted prices for similar assets or liabilities in active markets or indirectly such as quoted prices for identical assets or liabilities in markets with insufficient volume or infrequent transactions.



c)

Level 3  Applies to assets or liabilities for which there are unobservable market data.



The Companys financial instruments consist principally of cash, short term investments, marketable securities, amounts receivable and accounts payable and accrued liabilities. Pursuant to CICA Handbook 3862, fair value of assets and liabilities measured on a recurring basis include cash, short term investments and marketable securities determined based on Level 1 inputs, which consist of quoted prices in active markets for identical assets. The Company believes that the recorded values of all the other financial instruments approximate their current fair values because of their nature and respective maturity dates or durations.





13.

MANAGEMENT OF CAPITAL RISK



The Company manages its cash, short-term investments, common shares, stock options and warrants as capital. The Companys objectives when managing capital are to safeguard the Companys ability to continue as a going concern in order to pursue the development of its mineral and oil and gas properties and to maintain a flexible capital structure which optimizes the costs of capital at an acceptable risk.



The Company manages the capital structure and makes adjustments to it in light of changes in economic conditions and the risk characteristics of the underlying assets. To maintain or adjust the capital structure, the Company may attempt to issue new shares, issue new debt, acquire or dispose of assets or adjust the amount of cash and short-term investments.



In order to facilitate the management of its capital requirements, the Company prepares expenditure budgets that are updated as necessary depending on various factors, including successful capital deployment and general industry conditions.



In order to maximize ongoing development efforts, the Company does not pay out dividends. The Companys investment policy is to invest its short-term excess cash in highly liquid short-term interest-bearing investments with maturities 90 days or less from the original date of acquisition, selected with regards to the expected timing of expenditures from continuing operations.



The Company expects its current capital resources will be sufficient to carry its exploration plans and operations through its current operating period.







- 91 -







PORTAL RESOURCES LTD.

Notes to the Consolidated Financial Statements

For the years ended June 30, 2011, 2010 and 2009

(stated in Canadian dollars)





14.

DIFFERENCES BETWEEN CANADIAN AND UNITED STATES GENERALLY ACCEPTED ACCOUNTING PRINCIPLES (GAAP)



Unproven Mineral Rights



Under Canadian GAAP for junior mining exploration companies, mineral exploration expenditures can be deferred on prospective mineral rights until such time as it is determined that further exploration work is not warranted, at which time the mineral right costs are written-off. Under U.S. GAAP, all exploration expenditures are expensed until an independent feasibility study has determined that the mineral rights are capable of economic commercial production.



Oil and Gas Properties



With respect to the Companys oil and gas properties, the company uses successful efforts method of accounting. Under this method, oil and gas lease acquisition costs and intangible drilling costs associated with exploration efforts that result in the discovery of proved reserves and costs associated with development drilling, whether or not successful, are capitalized when incurred. If proved commercial reserves are not discovered, such drilling costs are expensed. In some circumstances, it may be uncertain whether proved commercial reserves have been found when drilling has been completed. Under Financial Accounting Standard Board (FASB) Accounting Standards Codification (ASC) Topic 932, Extractive Activities  Oil and Gas (ASC 932), such exploratory well drilling costs may continue to be capitalized if the reserve quantity is sufficient to justify its completion as a producing well and sufficient progress in assessing the reserves and economic and operating viability of the project is being made. We assess our capitalized exploratory wells pending evaluation periodically to determine whether costs should remain capitalized or should be charged to earnings. As at June 30, 2011, there was no difference in the financial statements in applying these methods of accounting.



Flow-through shares



Under Canadian income tax legislation, the Company is permitted to issue shares whereby the Company agrees to incur qualifying expenditures (as defined under the Canadian Income Tax Act) and renounced the related income tax deductions to the investors. Under Canadian GAAP, flow-through shares are accounted for as part of the issuance of share capital at the price paid for the shares, net of any future income tax liability (FIT). Under US GAAP, SFAS 109 ASC Topic 740, Accounting for Income Taxes (SFAS109), the proceeds should be allocated between the offering of the shares and the sale of tax benefits when the shares are offered. The allocation is made based on the difference between the quoted price of the shares and the amount the investor pays for the flow-through shares. A liability is recognized initially for the premium paid by the investors.



The following items (a) to (i) provide a summary of the impact of these financial statements that would result from the application of U.S. accounting principles to the Company.







- 92 -







PORTAL RESOURCES LTD.

Notes to the Consolidated Financial Statements

For the years ended June 30, 2011, 2010 and 2009

(stated in Canadian dollars)



14.

DIFFERENCES BETWEEN CANADIAN AND UNITED STATES GENERALLY ACCEPTED ACCOUNTING PRINCIPLES (GAAP), (Continued),



|                                                         | 2011                   |  | 2010                  |  | 2009                 
|-------------------------------------------------------- | ---------------------- |  | --------------------- |  | ---------------------
|                                                         |                        |  |                       |  |                      
|a)Assets                                                 |                        |  |                       |  |                      
|Unproven Mineral Rights Costs and Oil and Gas Properties |                        |  |                       |  |                      
|Unproven mineral rights costs under Canadian GAAP:       | $                    - |  | $                   - |  | $                   -
|Less unproven mineral rights costs under U.S. GAAP       |                        |  | -                     |  | -                    
|Unproven mineral rights under U.S. GAAP                  | $                    - |  | $                   - |  | $                   -



|b)Liabilities                                           |                        |  |                       |  |                      
|------------------------------------------------------- | ---------------------- |  | --------------------- |  | ---------------------
|Flow-through shares tax liability  Canadian GAAP       | $                    - |  | $                   - |  | $                   -
|Future tax related to premium on flow-through financing | (90,200)               |  | -                     |  | -                    
|Flow-through share tax liability  U.S. GAAP            | $       (90,200)       |  | $                   - |  | $                   -



|c)Share capital                                         |                |  |               |  |              
|------------------------------------------------------- | -------------- |  | ------------- |  | -------------
|Share capital under Canadian GAAP                       | $   17,999,468 |  | $  14,850,161 |  | $  14,760,161
|Future tax related to premium to flow-through financing | (90,200)       |  | -             |  | -            
|Share capital under U.S. GAAP                           | $   17,909,268 |  | $  14,850,161 |  | $  14,760,161



|d)  Operations                                                               |                 |  |                |  |              
|---------------------------------------------------------------------------- | --------------- |  | -------------- |  | -------------
|Net loss under Canadian GAAP                                                 | $   (1,221,297) |  | $  (1,145,548) |  | $ (6,366,236)
|Unproven mineral rights costs expensed under U.S. GAAP                       | -               |  | -              |  | (231,056)    
|Add impairment of unproven mineral rights expended under U.S. GAAP           | -               |  | -              |  | 4,215        
|Add loss on sale of unproven mineral rights already expended under
U.S. GAAP | -               |  | -              |  | 5,052,205    
|Add proceeds on sale if unproven mineral rights                              | -               |  | -              |  | 140,231      
|Net loss under U.S. GAAP                                                     | $   (1,221,297) |  | $ (1,145,548)  |  | $ (1,400,641)
|                                                                             |                 |  |                |  |              
|e)   Deficit                                                                 |                 |  |                |  |              
|Closing deficit under Canadian GAAP                                          | $ (16,038,259)  |  | $ (14,816,962) |  | $(13,671,414)
|Adjustment to deficit for accumulated unproven mineral rights and            |                 |  |                |  |              
|expensed under U.S. GAAP                                                     | -               |  | -              |  | -            
|Closing deficit under U.S. GAAP                                              | $ (16,038,259)  |  | $ (14,816,962) |  | $(13,671,414)



|f)   Cash Flows  Operating Activities                       |                 |  |                  |  |              
|------------------------------------------------------------ | --------------- |  | ---------------- |  | -------------
|Cash applied to operations under Canadian GAAP               | $     (918,492) |  | $      (936,712) |  | $(1,097,448) 
|Less expenditures of unproven mineral rights under U.S. GAAP | -               |  | -                |  | (261,054)    
|Cash applied to operations under U.S. GAAP                   | $     (918,492) |  | $      (936,712) |  | $ (1,358,502)
|                                                             |                 |  |                  |  |              
|g)  Cash Flows  Investing Activities                        |                 |  |                  |  |              
|Cash applied under Canadian GAAP                             | $  (1,391,880)  |  | $        825,749 |  | $   1,158,469
|Add expenditures of unproven mineral rights under U.S. GAAP  | -               |  | -                |  | 261,054      
|Cash applied under U.S. GAAP                                 | $  (1,391,880)  |  | $        825,749 |  | $  1,419,523 





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PORTAL RESOURCES LTD.

Notes to the Consolidated Financial Statements

For the years ended June 30, 2011, 2010 and 2009

(stated in Canadian dollars)



14.

DIFFERENCES BETWEEN CANADIAN AND UNITED STATES GENERALLY ACCEPTED ACCOUNTING PRINCIPLES (GAAP), (Continued)



Other Differences between Canadian and U.S. GAAP



h)

Stockholders Equity

Stock-based compensation

There are no differences between Canadian and U.S. GAAP for the years ended June 30, 2011, 2010 and 2009 with respect to the disclosure of stock-based compensation.



I)

Loss per Share

The following is a reconciliation of the numerators and denominators of the basic and diluted loss per share calculations.  Diluted loss per share is not presented as it is anti-dilutive.



|                                                        | Years ended
June 30,
|------------------------------------------------------- | --------------------
|                                                        | 2011                
|                                                        | $                   
|                                                        |                     
|Numerator: Net loss for the year under U.S. GAAP        | (1,221,297)         
|Denominator: Weighted-average number of shares under    |                     
|Canadian and U.S. GAAP                                  | 33,431,664          
|                                                        |                     
|Weighted-average number of shares under U.S. GAAP       | 33,431,664          
|                                                        |                     
|Basic and fully diluted loss per share under U. S. GAAP | $        (0.04)     



15.

SUBSEQUENT EVENTS



•

On August 12, 2011, the Company granted stock options to a consultant of the Company to purchase a total of 175,000 common shares at a price of 20 cents per share, exercisable until August 11, 2012.



•

On October 7, 2011, Portal entered into a purchase and sale agreement to acquire oil and gas properties located in west central Saskatchewan for $9,100,000 from a third party. The assets include 38 wells and 21 sections of mineral rights.  Portal intends to finance the acquisition through a combination of equity and bank financing. A $500,000 deposit was paid by Portal which is non-refundable unless the transaction is cancelled by the seller or certain land title and environmental default thresholds are exceeded.  Closing was originally scheduled for November 30, 2011 but both parties are currently renegotiating amendments to the acquisition including the new closing date.







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Signature Page



Pursuant to the requirements of Section 12 of the Securities Exchange Act of 1934, the Registrant certifies that it meets all of the requirements for filing on Form 20-F and has duly caused this Annual Report to be signed on its behalf by the undersigned, thereunto duly authorized.





Portal Resources Ltd.

Registrant



|Dated: December 19, 2011 | Signed:  /s/ "David Hottman"              
|------------------------ | ------------------------------------------
|                         | David Hottman,
President, CEO and Chairman













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