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, 2012 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  Galileo Petroleum Ltd. (formerly 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. 9,749,107 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   X 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  X  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 X  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 [  ] by the International Accounting Standards Board [ X ]  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_     Page 2 of 106 Index to Exhibits on Page 71      - 2 -      Galileo Petroleum Ltd. Form 20-F Annual Report  Table of Contents  PART IPageItem 1.Identity of Directors, Senior Management and Advisors4Item 2.Offer Statistics and Expected Timetable4Item 3.Key Information4Item 4.Information on the Company12Item 5.Operating and Financial Review and Prospects22Item 6.Directors, Senior Management and Employees41Item 7.Major Shareholders and Related Party Transactions50Item 8.Financial Information51Item 9.The Offer and Listing52Item 10.Additional Information55Item 11.Quantitative and Qualitative Disclosures about Market Risk66Item 12.Description of Other Securities Other Than Equity Securities66PART IIItem 13.Defaults, Dividend Arrearages and Delinquencies66Item 14.Material Modifications to the Rights of Security Holders and Use of Proceeds66Item 15.Controls and Procedures67Item 16.Reserved68Item 16A.Audit Committee Financial Expert68Item 16B.Code of Ethics68Item 16C.Principal Accountant Fees and Services69Item 16D.Exemptions from Listing Standards for Audit Committees69Item 16E.Purchase of Equity Securities by the Issuer and Affiliated Purchasers69Item 16F.Change in Registrants Certifying Accountant70Item 16G.Corporate Governance70Item 16H.Mine Safety Disclosure70PART IIIItem 17.Financial Statements70Item 18.Financial Statements70Item 19.Exhibits71    - 3 -     Part I  Item 1.  Identity of Directors, Senior Management and Advisors  Table No. 1
Company Officers and DirectorsNamePositionBusiness AddressDavid N. HottmanPresident, CEO and ChairmanSuite 750  625 Howe Street
Vancouver, B.C. V6C 2T6Mark T. BrownCFO and Director325 Howe Street
Suite 410
Vancouver, B.C. V6C 1Z7John KanderkaDirectorSuite 750 - 625 Howe Street
Vancouver, B.C.  V6C 2T6  The Company's auditor for the Company's annual financial statements contained within this annual report is MNP LLP, Chartered Accountants, Suite 1500, 640 5th Ave S.W., Calgary, Alberta, Canada, T2P 3G4.  Item 2.  Offer Statistics and Expected Timetable  Not Applicable  Item 3.  Key Information  As used within this Annual Report, the terms Galileo", Portal, Portal de Oro Resources Ltd., Gateway, the Company, Issuer and Registrant refer collectively to Galileo Petroleum Ltd., its predecessors, subsidiaries and affiliates.  SELECTED FINANCIAL DATA  The selected financial data of the Company for the Fiscal Years Ended June 30, 2012 and 2011 were derived from the financial statements of the Company which have been audited by MNP LLP, Chartered Accountants, also as indicated in its audit reports which are included elsewhere 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 International Financial Reporting Standards ("IFRS"). The Company previously prepared its financial statements under Canadian GAAP.    - 4 -    Table No. 2
Selected Financial Data
(CDN$ in 000, except per share data)Year Ended
June 30,
2012Year Ended
June 30,
2011Revenue$      287$          47Other Income297-Deferred Tax Recovery90-Net Loss and Comprehensive Loss(1,160)(1,195)Net Loss Per Share *(0.12)(0.18)Dividends Per Share--Wtg. Avg. Shares  (000)9,7496,686Working Capital(173)858Oil and Gas Properties1,4631,625Long-Term Debt--Shareholders Equity2,0073,094Total Assets2,4123,528  * Per share amounts have been adjusted to reflect the Company's 1 for 5 share consolidation effective April 2, 2012.  In this Annual Report, unless otherwise specified, all dollar amounts are expressed in Canadian Dollars (CDN$).  Table No. 3 sets forth the rate of exchange for the Canadian Dollar at the end of the five most recent years ended December 31st, the average rates for the period, and the range of high and low rates for the period. Table No. 3 also sets forth the rate of exchange for the Canadian Dollar at the end of the six most recent months, and the range of high and low rates for these periods.  For purposes of this table, the rate of exchange means the noon buying rate in New York City for cable transfers in foreign currencies as certified for customs purposes by the Federal Reserve Bank of New York.  The table sets forth the number of Canadian dollars required under that formula to buy one U.S. Dollar.  The average rate means the average of the exchange rates on the last day of each month during the period.    - 5 -   Table No. 3U.S. Dollar/Canadian DollarPeriodAverageHighLowCloseOctober 2012$   1.00$  0.98$  1.00September 20120.990.970.98August 20121.010.990.99July 20121.021.001.00June 20121.041.021.02May 20121.03.0.981.03Three Months Ended   9/30/12$  0.99$  1.02$  0.97$  0.98Three Months Ended   6/30/121.011.040.981.02Three Months Ended   3/31/121.001.030.981.00Three Months Ended 12/31/111.011.060.991.02Three Months Ended   9/30/110.991.040.941.04Three Months Ended   6/30/110.960.990.950.96Three Months Ended   3/31/110.981.000.970.97Three Months Ended 12/31/101.021.031.001.00Three Months Ended   9/30/101.041.061.021.03Three Months Ended   6/30/101.041.081.001.06Three Months Ended   3/31/101.051.071.011.02Three Months Ended 12/31/091.061.081.031.05Three Months Ended   9/30/091.081.171.061.07Fiscal Year Ended 6/30/2012$  1.00$  1.04$  0.95$  1.02Fiscal Year Ended 6/30/20111.001.060.950.96Fiscal Year Ended 6/30/20101.061.161.001.16Fiscal Year Ended 6/30/20091.171.301.031.11Fiscal Year Ended 6/30/20081.011.080.921.02  The exchange rate was $1.00 on October 31, 2012.  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 natural resource production business.  Statement of Capitalization and Indebtedness  Not Applicable    - 6 -    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 resource 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.  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.    - 7 -    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 Galileo 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.  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.    - 8 -    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.   Risks Relating to the Financing of the Company  The Company's auditor has expressed a "Going Concern" opinion Galileo's auditor has included a going concern opinion as described in Note 2 of the Company's Consolidated Financial Statements. The financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary in the event the Company cannot continue as a going concern. The qualification was included as the Company has not earned significant revenue and has accumulated losses of $3,508,264. The continuation of the Company as a going concern is dependent upon the ability of the Company to obtain necessary equity or other financing to continue operations, and/or to attain sufficient profitable operations. If the Company is unable to meet these requirements, it will not be able to fulfill its business plan and be forced to reduce certain operations or cease operations altogether.  The Company has negative working capital and requires additional financing which could result in substantial dilution to existing shareholders The Company, while engaged in the business of exploration and production of petroleum and gas, is dependent on additional financing to satisfy its current debts, its ongoing business obligations, and for planned exploration programs and expenditures on its petroleum and gas properties 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 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.    - 9 -    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 limited 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.  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 (i.e. oil and gas price fluctuations/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 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.    - 10 -    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.  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.    - 11 -    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.   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@galileopetroleum.ca Website: www.galileopetroleum.ca  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 "GPL".  The authorized share capital of the Company consists of an unlimited number of common shares and an unlimited number of preferred shares. As of June 30, 2012, the end of the most recent fiscal year, there were 9,749,107 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.    - 12 -    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.  At the Special Meeting of Shareholders held on March 23, 2012, shareholders approved an amendment to the Authorized Share Capital from 100,000,000 common shares and 100,000,000 preferred shares to an unlimited number of common and an unlimited number of preferred shares. Shareholders also approved a 1 for 5 consolidation of the issued and outstanding common shares, and a change of name from Portal Resources Ltd. to Galileo Petroleum Ltd.. The common share consolidation and name change became effective on April 2, 2012.  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.  In July 2004, the Company acquired an option to acquire a 100% interest in the San Rafael project located in Mendoza Province, Argentina.  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. In 2008, 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.  In June 2007, the Company entered into an option agreement to earn an initial 60% interest in the Slick Rock Uranium exploration project in San Miguel County, Colorado.  In June 2008, after disappointing drill results, the Company dropped its option to acquire an interest in the property.  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.    - 13 -    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, Galileo 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, Galileo 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". The Company 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 on the project in 2011. and oil production has begun from two of the wells. Through the drilling of the 5 wells, the Company has earned its 25% working interest in 5 sections totaling 3,200 acres.  During calendar 2011, the company acquired a 50% working interest in 2 3/4 sections of land totaling 256 acres in the area of Primate, Saskatchewan. Subsequent to the 2012 fiscal year end, the Company sold its interest at Primate for proceeds of $85,000.    - 14 -    In February 2012, the Company acquired a 50% ownership interest in 3 1/2 sections of Crown Land totaling 928 acres of exploration land in Provost, Alberta. The primary target of the project is medium grade oil and the Sparky formation.  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 included 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. 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. Closing was originally scheduled for November 30, 2011 but was subject to change upon agreement by both parties. In December 2011, the companies revised the agreement to a purchase price of $8,300,000 and closing to occur on January 31, 2012. On January 31, the Company completed the acquisition by paying $8,300,000 cash and immediately disposed of the acquired assets to a non-related company listed on the TSX Venture Exchange for a sale price of $8,800,000. After incurring costs related to the transaction of $202,624, the Company recorded a gain on the sale of $297,376.  In April 2012, the Company completed the consolidation of its common shares on the basis of 1 new share for every 5 old shares, and changed its name from Portal Resources Ltd to Galileo Petroleum Ltd.  Business Overview  The Company currently has an interest in 5 oil and gas projects located in Alberta and Saskatchewan, Canada. Galileo 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.    - 15 -    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%.    - 16 -    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 June 2012, the wells in production were averaging production at a gross rate of approximately 30 bopd (7.4 bopd net to Galileo).  During the first quarter of 2012, the Company participated in the drilling of a third horizontal well (25% working interest to Galileo) 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.  During fiscal 2012, the Company expended $378,739 on the Salt Lake Project. During the year, the Company completed an impairment analysis on the project and realized an impairment of ($415,000).    - 17 -    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, the Company agreed 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, Galileo agreed to purchase the Participation Agreement for $5,000 cash and 500,000 Galileo 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. Galileo 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 2012, the Company contributed $Nil (Fiscal 2011 - $124,237) to the Bigwave Joint-Venture. As at June 30, 2012, the Company has spent a total of $632,557 on the Bigwave project.    - 18 -    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 2012, the Company contributed $Nil (Fiscal 2011 - $Nil) to the Joint-Venture. As of June 30, 2012, the Company has spent a total of $18,000 on the Manito 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 2012, the Company expended $Nil (2011 - $784) on the project. As of June 30, 2012, the Company has spent a total of $31,150 on the project.  Provost  In February 2012, the Company acquired a 50% interest, subject to a 6% gross over-riding royalty and provincial royalties, in 928 acres located in the Provost area of east-central Alberta. The primary target is the Sparky formation for medium grade oil.  As of June 30, 2012, the Company has spent a total of $76,084 on the project.  Primate  The Company acquired a 50% working interest in calendar 2011 in two sections of land near Primate in west-central Saskatchewan. The land position totaled 256 acres (128 net). An evaluation of existing seismic data indicates two potential Mannville oil channel locations with additional offset locations. Subsequent to the end of fiscal 2012, the Company sold its interest at Primate for proceeds of $85,000.    - 19 -    Purchase and Sale Agreement  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 included 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. 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 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. The parties agreed to amend the purchase price to $8,300,000 to close on January 31, 2012. Upon closing of the agreement on January 31, the Company, pursuant to a separate agreement with a third-party, agreed to sell the acquired properties for $8,800,000. The Company incurred costs of $202,624 in costs associated with the transaction. After deduction of the costs, the Company recorded a gain of $297,376 on the transaction.  Production and Reserves  As of June 30, 2012, the Companys had an interest in producing oil wells at the Salt Lake project in Saskatchewan, Canada, and interesting in non-producing oil and gas wells on the Salt Lake project and on a non-producing oil well on the Bigwave property in Alberta. The Companys wells at the end of the fiscal year ended June 30, 2012 were as follows:   OilNatural GasGrossNetGrossNetProducing2.000.5000Non-producing5.001.0010.25TOTAL7.001.528500.25  During the fiscal year ended June 30, 2011, the Company drilled the following wells:  Exploratory WellsDevelopment WellsGrossNetGrossNetOil001.000.25Natural Gas0000Dry Wells0000Service Wells0000Total  Wells001.000.25    - 20 -    The following is the Companys total net oil and gas production for the fiscal years ended June 30, 2012 and 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, 2012Natural Gas
Oil
Natural Gas Liquids0 Mcf
4,093 barrels
0 barrels  Fiscal Year Ended June 30, 2011Natural Gas
Oil
Natural Gas Liquids0 Mcf
723 barrels
0 barrels  The following table includes the average prices the Company received for its production for the fiscal years ended June 30, 2012 and 2011.  Fiscal year
ended June 30,
2012Fiscal year
ended June 30,
2011Oil$70.21 bbl$65.05  bbl  The following table includes the average production costs, including royalties, per unit of production for the fiscal year ended June 30, 2012 and 2011.  Fiscal year
ended June 30,
2012Fiscal year
ended June 30,
2011Production Costs ($/BOE)$ 40.65$ 25.61Royalties ($/BOE)1.712.05  As of the date of this annual report, the Company has not prepared a reserve estimate on its Salt Lake property as defined under the rules and regulations of the Securities and Exchange Commission for the fiscal year ended June 30, 2012.  The following table discloses the Companys landholdings as of June 30, 2012:  UndevelopedDevelopedTotalGrossNetGrossNetGrossNetAlberta6,6902,154640182.57,3302,336.5Saskatchewan1,0333223,8409604,8731,282    - 21 -    Item 5.  Operating and Financial Review and Prospects  Overview  The Company's financial statements are stated in Canadian Dollars (CDN$) and are prepared in accordance with International Financial Reporting Standards. The value of the U.S. Dollar in relationship to the Canadian Dollar was $1.00 on October 31, 2012.  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 timing of such offerings is dependent upon the success of the Companys exploration programs as well as the general economic climate.  TRANSITION TO IFRS  For all periods up to and including June 30, 2011, the Company prepared its financial statements in accordance with Canadian GAAP. The financial statements for the year ended June 30, 2012 are the first annual financial statements the Company has prepared in accordance with IFRS as in effect as at June 30, 2012, as detailed in the accounting policies described in Note 3. In preparing these financial statements, the Company's opening statement of financial position was prepared as at July 1, 2011, the Company's date of transition to IFRS.  IFRS 1 First-time Adoption of International Financial Reporting Standards sets forth guidance for the initial adoption of IFRS. Under IFRS 1 the standards are applied retrospectively at the transitional statement of financial position date, with all adjustments to assets and liabilities taken to deficit unless certain exemptions are applied. Subject to certain transition elections disclosed in Note 4 to the consolidated financial statements, the Company has consistently applied the same accounting policies in its opening IFRS statement of financial position at July 1, 2010, and throughout all periods presented, as if these policies had always been in effect. The policies applied in these consolidated financial statements are based on IFRS issued and outstanding as of October 29, 2012, the date the Board of Directors approved the financial statements.  The following tables detail the principal adjustments made by the Company in restating its Canadian GAAP consolidated statements of financial position as at July 1, 2011, and its previously published Canadian GAAP financial statements for the year ended June 30, 2011. The transition adjustments made to the Statements of Financial Position and Statements of Loss and Comprehensive Loss have resulted in reclassification of various amounts on the Statement of Cash Flows; however, as there have been no changes to the net cash flows, no reconciliations have been prepared for the Statements of Cash Flows.    - 22 -    The July 1, 2010 Canadian GAAP Statement of Financial Position has been reconciled to IFRS as follows:  As at July 1, 2010GAAPEffect of
Transition
to IFRSNotesIFRSASSETSCurrentCash$       137,609$      137,609Short-term investments275,222275,222Marketable securities9,5819,581Amounts receivable63,88063,880Prepaid expenses21,55221,552507,844-507,844Non-currentExploration and evaluation-571,932(c)571,932Petroleum and natural gas properties571,932(571,932)(c)0Equipment21,83321,833593,765-593,765$    1,101,609$                 -$    1,101,609LIABILITIESCurrentAccounts payable and accrued liabilities$         43,417$         43,417SHAREHOLDERS EQUITYShare capital14,850,16114,850,161Contributed surplus1,024,9938,232(b)1,033,225Deficit(14,816,962)(8,232)(b)(14,825,194)1,058,192-1,058,192$    1,101,609$                 -$    1,101,609    - 23 -    The June 30, 2011 Canadian GAAP Statement of Financial Position has been reconciled to IFRS as follows:  As at June 30, 2011GAAPEffect of
Transition
to IFRSNotesIFRSASSETSCurrentCash$    1,000,723$    1,000,723Short-term investments26,69626,696Marketable securities10,12710,127Amounts receivable70,09570,095Prepaid expenses41,10341,1031,148,744-1,148,744Non-currentExploration and evaluation-696,953(c)696,953Petroleum and natural gas properties2,304,232(678,797)(a), (c)(d)1,625,435Equipment57,06657,0662,361,29818,1562,379,454$    3,510,042$       18,156$    3,528,198LIABILITIESCurrentAccounts payable and accrued liabilities$       290,914$                -$       290,914Decommissioning obligations35,51217,875(a)53,387Flow-through share premium liability-90,200(e)90,20035,512108,075143,587SHAREHOLDERS EQUITYShare capital17,999,468(90,200)(e)17,909,268Contributed surplus1,222,407(17,801)(b)1,204,606Deficit(16,038,259)18,082(b), (d )(16,020,177)3,183,616(89,919)3,093,697$    3,510,042$       18,156$    3,528,198    - 24 -    The June 30, 2011 Canadian GAAP Statement of Comprehensive Loss has been reconciled to IFRS as follows:  For the year ended June 30, 2011GAAPEffect of
Transition
to IFRSNotesIFRSRevenuePetroleum and natural gas$         47,041$              -$        47,041Royalties(1,481)-(1,481)45,560-45,560Finance income324-32445,884-45,884ExpensesGeneral and administrative1,223,124(26,033)(b)1,197,091Resource operating expenses19,672-19,672Depletion, depreciation and amortization33,957(281)(d)33,6761,276,753(26,314)1,250,439Other itemsGain on sale of equipment9,026-9,026Unrealized gain on marketable securities546-5469,572-9,572Net loss and comprehensive loss for the year$  (1,221,297)$     26,314$ (1,194,983)  The following explains the significant differences between the Companys Canadian GAAP accounting policies and those applied by the Company under IFRS. IFRS policies have been retrospectively and consistently applied except where specific IFRS 1 optional and mandatory exemptions permitted an alternative treatment upon transition to IFRS for first-time adopters. The note captions below correspond to the adjustments presented in the preceding reconciliations.  In preparing the comparative financial statements in accordance with IFRS 1, the Corporation has applied the following optional exemptions from full retrospective application of IFRS.  IFRS 2  Share-based payments; and  IAS 37  Decommissioning obligations  Hindsight was not used to create or revise estimates and accordingly the estimates previously made by the Company under Canadian GAAP are consistent with their application under IFRS. The remaining IRFS 1 exemptions were not applicable or material to the preparation of the Companys Statement of Financial Position at the date of transition to IFRS on July 1, 2011.    - 25 -    Decommissioning obligations The Company has elected to measure decommissioning obligations (formerly known as asset retirement obligations under Canadian GAAP) on transition to IFRS in accordance with IAS 37, Provisions, Contingent Liabilities and Contingent Assets  and recognize directly in deficit the differences between the amount and the carrying amount of those obligations determined under Canadian GAAP at the transition date. Under Canadian GAAP, accretion on decommissioning obligations was included in depletion and depreciation expense. Under IFRS, accretion expense is included in finance expenses.  Under Canadian GAAP, decommissioning obligations were discounted at a credit-adjusted risk-free rate of 8%. Under IFRS, the estimated cash flow to abandon and remediate both wells and facilities has been risk-adjusted and therefore the provision was discounted at a risk-free rate of 4% based on Government of Canada long-term bonds.  As a decommissioning obligation liability wasnt recorded at the transition date, the application of IAS 37 resulted in no change to the liabilities or deficit at the date of transition. However, the change to IFRS resulted in an increase to the Companys decommissioning obligation and petroleum and natural gas assets of $17,875 for the year ended June 30, 2011 as compared to the decommissioning obligation and petroleum and natural gas assets as previously recorded under Canadian GAAP.  Share Purchase Option Compensation The Company has elected to apply IFRS 2, Share-based Payments to equity instruments granted after November 7, 2002 that have not vested by the transition date. Under Canadian GAAP, share purchase option compensation expense was disclosed as a separate line item in profit or loss. Under IFRS, share purchase option compensation expense is included in administrative expenses.  Under Canadian GAAP, the fair value of stock options was calculated using a Black-Scholes option-pricing model for each option grant and the resulting expense was recognized over the four quarter vesting period. Forfeitures of stock options were recognized as they occurred.  Under IFRS, each vesting tranche of an option grant with different vesting dates was considered a separate grant for the calculation of fair value. This resulted in accelerated expense recognition which attributed higher share-based compensation expense in early years of option grant and less expense in later years. The Company also applied an estimated forfeiture rate at the initial grant date. The forfeiture rate is taken into account by adjusting the number of stock options expected to vest under each vesting tranche and subsequently revising this estimate throughout the vesting period, as necessary. When determining the fair value of each vesting tranche under IFRS, the Company applied an estimated weighted average option life for each respective tranche which reflects historical experiences. Under Canadian GAAP, the option life was equal to the expiry period of five years,  The application of IFRS 2 resulted in a $8,232 increase to contributed surplus with a corresponding increase to the Companys deficit at the date of transition. Share-based payments increased during the year ended June 30, 2011 by $26,033 from the amounts previously recorded under Canadian GAAP. The Company applied a weighted average estimated forfeiture rate of 5.3% during the year ended June 30, 2011.    - 26 -    Exploration and evaluation assets Under IRFS, exploration and evaluation costs are those expenditures for an area where technical feasibility and commercial viability has not yet been determined. Development and production costs include those expenditures for areas where technical feasibility and commercial viability has been determined and are included in the general balance of petroleum and natural gas properties and equipment.  Exploration and evaluation assets at July 1, 2010 were deemed to be a $571,932, representing the unproved properties balance under Canadian GAAP. This resulted in a reclassification of $571,932 from petroleum and natural gas properties to exploration and evaluation assets as July 1, 2010. As at June 30, 2011, the Companys exploration and evaluation assets totaled   $696,953. These exploration activities are pending the determination of economic quantities of commercially producible reserves. During the year ended June 30, 2011, $1,636,719 of exploration and evaluation assets have been reclassified to petroleum and natural gas properties.  The Company performed an impairment test on its exploration and evaluation assets and petroleum and natural gas properties in accordance with the accounting policy stated in Note 4. The recoverable amount of the Companys assets were estimated based on the fair value less cost to sell approach using discounted cash flows from proved plus probable reserves, taking into consideration escalated prices and future development costs, as obtained from the Companys independent reserve report. Based on the above assessment, the Companys exploration and evaluation assets and petroleum and natural gas properties did not have any impairment on transition to IFRS and as at June 30, 2011.  Depletion and depreciation Under Canadian GAAP, the Company depleted its petroleum and natural gas assets on the unit of production method using proved producing reserves for each cost centre. Under IAS 16, Property, Plant & Equipment, the Corporation has elected to deplete its development and production costs on an area basis using the unit of production method over proved plus probable reserves. Exploration and evaluation costs are not amortized under IFRS.  Depleting at an area level over proved plus probable reserves resulted in a decrease to depletion and depreciation of $360 for the year ended June 30, 2011 from amounts previously reported under Canadian GAAP. The change to decommissioning obligations increased the depletion and depreciation expense by $79 at June 30, 2011.  Share capital Under Canadian GAAP, the proceeds from the issuance of flow-through shares are recognized as shareholders equity. The tax basis of assets related to expenditures incurred to satisfy flow-through share obligations is reduced when the renunciation of the related tax pools occurs which then increases the deferred income tax liability and reduces share capital.    - 27 -    Under IFRS, the amount recorded to share capital from the issuance of flow-through shares reflects the fair market value of regular common shares. The difference between the total value of flow -through share issuance and the fair market value of regular common share issuance (premium) is initially accrued as a deferred obligation when the flow-through shares are issued. Pursuant to the terms of the flow-through share agreements, the tax deductions associated with the expenditures are renounced to the subscribers. Accordingly, on renunciation with the Canada Revenue Agency, a deferred tax liability is recorded equal to the estimated amount of deferred income taxes payable by the Company as a result of the renunciations, the obligation on issuance of flow-through shares is reduced and the difference is recognized in profit or loss. There is no impact to share capital on renunciation of flow-through shares.  The above accounting policy difference resulted in no change to share capital at the transition date. For the year ended June 30, 2011, the change to IFRS resulted in a decrease to Share Capital and a corresponding increase in the Flow-through Share Premium Liability of $90,200.  Results of Operations  Year Ended 6/30/12 vs. Year Ended 6/30/11  During the fiscal year ended June 30, 2012, the Company completed the acquisition and subsequent sale of a package of oil and gas properties located in west-central Saskatchewan. The Company recorded a gain on the sale of $297,376. During fiscal 2011, 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 and comprehensive for fiscal 2012 was ($1,159,501), or ($0.12) per share, compared to a net loss of ($1,194,983), or ($0.18) per share in the fiscal year ended June 30, 2011. Higher petroleum and natural gas revenues were offset by higher expenses and impairment of petroleum and natural gas properties.  Petroleum and natural gas revenue, net of royalties, rose to $280,366 from $45,560 due to a full year of production from the Salt Lake project. General and administrative expenses declined slightly to $1,069,871 from $1,197,091 recorded in fiscal 2011. The decline was due to lower salaries and benefits expenses as well as lower investor relation expenses, which were partially offset by an increase in accounting fees and the cost of engineering reports. Resource operating expenses rose to $166,380 from $19,672 and depletion, depreciation and amortization rose to $167,831 from $33,676 due to a full year of operations on the Salt Lake project. Finance expense was $1,915 compared to $Nil in 2011.  Other items included the impairment of petroleum and natural gas properties of $415,000 due to the Companys impairment analysis of the Salt Lake project. Other income included a gain of $297,376 related to the purchase and sale transaction of the West Saskatchewan properties on January 31, 2012. There were no property impairment or other income recorded in fiscal 2011. In fiscal 2011, the Company did record a gain on sale of equipment of $9,026. During fiscal 2012, the Company recorded an unrealized loss on marketable securities of $7,073 compared to a gain of $546 in fiscal 2011.  These changes are related to changes in market value of the Companys 150,000 common shares of Pengram Corporation received from the sale of its Nevada mineral exploration properties.    - 28 -    Liquidity and Capital Resources  The Companys working capital position at June 30, 2012 was negative ($172,564), including cash of $599, short-term investments of $40,821 and marketable securities of $3,054. The Company will require additional funding in order to meet its current and ongoing financial obligations, as well as any property expenditures on its petroleum and natural gas properties. The Company estimates that it will require approximately $400,000 for General and Administrative expenses for fiscal 2013. No money has been budgeted for exploration and development for fiscal 2013. The Companys auditor has included a going concern opinion as described in Note 2 of the Company's Consolidated Financial Statements. The continuation of the Company as a going concern is dependent upon the ability of the Company to obtain necessary equity or other financing to continue operations, and/or to attain sufficient profitable operations. If the Company is unable to meet these requirements, it will not be able to fulfill its business plan and be forced to reduce certain operations or cease operations altogether.  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 IssuancesFiscal Year
Ended June 30Type of Share IssuanceNumber of Common Shares IssuedPriceTotal Proceeds2008Private Placement7,887,000$0.65$ 5,126,550Exercise of Options5,000$0.52$        2,6002009None2010Purchase of Oil & Gas Interest500,000$0.18$      90,0002011Private Placement6,410,000$0.125$    801,250Private Placement10,152,500$0.20$ 2,030,500Private Placement1,804,000$0.25$    451,000Exercise of Options227,500Various$      27,6762012Reduction in share capital and
accumulated deficit (1)(13,671,414)N/AN/A (1)  The Company completed the consolidation of its common shares on the basis of 1 post-consolidation share for every 5 pre-consolidation shares. The consolidation was completed on April 3, 2012.    - 29 -    Fiscal Year Ended June 30, 2012  The Companys working capital position at June 30, 2012 was negative ($172,564), including cash of $599, short-term investments of $40,821 and marketable securities of $3,054. Operating Activities used cash of ($870,055), which included the net loss for the year of ($1,159,501). Items not involving cash included depletion and amortization related to petroleum production of $167,831; Share-based payments related to the vesting of stock options of $73,187; Accretion of $1,915; Unrealized loss on marketable securities related to the change in value of the Companys 150,000 common shares of Pengram Corporation of $7,073; Deferred tax recovery of ($90,200); Gain on sale of petroleum and natural gas properties related to the purchase and sale agreement on the West Saskatchewan properties of ($297,736); Impairment on petroleum and natural gas properties for the write-down of the Salt Lake project of $415,000; and Changes in non-cash working capital relating to operating activities of $12,376. Investing Activities used cash of ($135,015). Additions to exploration and evaluation assets used cash of ($60,838); Additions to petroleum and natural gas properties used cash of ($1,059,423) as the Company reclassified the capitalized expenditures for its properties now in production; Proceeds from the sale of petroleum and natural gas properties provided cash of $1,000,000; Additions to equipment used cash of ($629); and an increase in short-term investments used cash of ($14,125). Financing Activities provided cash of $4,946, with the entire amount due to an increase in bank indebtedness.  Cash totaled $599 at June 30, 2012 compared to $1,000,723 at June 30, 2011, a decrease of $1,000,124.  There were no share issuances during the year. The Company did complete a 1 for 5 share consolidation of its common stock effective April 3, 2012.  Fiscal Year Ended 6/30/2011  The Company's working capital position at June 30, 2011 was $822,318, including cash of $1,000,723. During the year, Operating Activities used cash of ($917,492), which included the net loss for the year of ($1,194,983). Items not involving cash included stock-based Compensation of $147,202, depletion and amortization of $33,957, unrealized gain on marketable securities of ($546), gain on sale of equipment of ($9,026). Changes in non-cash working capital related to operating activities provided cash of $105,904.  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).  Cash totaled $1,000,723 at June 30, 2011.    - 30 -    During the year, 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.  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 measurement The consolidated financial statements have been prepared under the historical cost method except for cash, short term investments, marketable securities and share-based transactions which are measured at fair value.  Functional and presentation currency The consolidated financial statements are presented in Canadian dollars, which is the Companys functional currency. The functional currency of the Companys subsidiaries is Canadian dollars.  Reporting entity The consolidated financial statements as at and for the years ended June 30, 2012, June 30, 2011 and July 1, 2010 include the accounts of the Company and its wholly owned 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.  Significant accounting judgments and estimates The timely preparation of the consolidated financial statements requires management to make judgments, estimates and assumptions that affect the application of accounting policies and reported amounts of assets, liabilities, income and expenses. Accordingly, actual amounts may differ from these estimates. Estimates and underlying assumptions are viewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimates are revised and in any future periods affected. Significant estimates and judgments made by management in the preparation of these consolidated financial statements are outlined below.    - 31 -    Reserves Estimation of reported recoverable quantities of proved and probable reserves include judgmental assumptions regarding production profile, commodity prices, exchange rates, remediation costs, timing and amount of future development costs, and production, transportation and marketing costs for future cash flows. It also requires interpretation of geological and geophysical models in order to make an assessment of the size, shape, depth and quality of reservoirs, and their anticipated recoveries. The economical, geological and technical factors used to estimate reserves may change from period to period. Changes in reported reserves can impact the carrying values of the Company`s petroleum and natural gas properties, the calculation of depletion and depreciation, the provision for decommissioning obligations, and the recognition of deferred tax assets due to changes in expected future cash flows. The recoverable quantities of reserves and estimated cash flows from the Company`s petroleum and natural gas interests are independently evaluated by reserve engineers at least annually.  The Companys petroleum and natural gas reserves represent the estimated quantities of petroleum, natural gas and natural gas liquids which geological, geophysical and engineering data demonstrate with a specific degree of certainty to be economically recoverable in future years from known reservoirs and which are considered commercially producible. Such reserves may be considered commercially producible if management has the intention of developing and producing them and such intention is based upon (i) a reasonable assessment of the future economics of such production; (ii) a reasonable expectation that there is a market for all or substantially all the expected petroleum and natural gas production; and (iii) evidence that the necessary production, transmission and transportation facilities are available or can be made available. Reserves may only be considered proved and probable if producibility is supported by either production or conclusive formation tests. The Company`s petroleum and natural gas reserves are determined pursuant to National Instrument 51-101, Standard of Disclosures for Oil and Gas Activities.  Identification of cash-generating units The Company`s assets are aggregated into cash-generating units, for the purpose of calculating impairment, based on their ability to generate largely independent cash flows. By their nature, these estimates and assumptions are subject to measurement uncertainty and may impact the carrying value of the Company`s assets in future periods.  Share based payments All equity-settled, share-based awards issued by the Company are fair valued using the Black-Scholes option-pricing model. In assessing the fair value of equity based compensation, estimates have to be made regarding the expected volatility in share price, option life, dividend yield, risk-free rate and estimated forfeitures at the initial grant date.  Decommissioning obligations The Company estimates future remediation costs of production facilities, wells and pipelines at different stages of development and construction of assets or facilities. In most instances, removal of assets occurs many years into the future. This requires judgment regarding abandonment date, future environmental and regulatory legislation, the extent of reclamation activities, the engineering methodology for estimating cost, future removal technologies in determining the removal cost and liability-specific discount rates to determine the present value of these cash flows.    - 32 -    Impairment of petroleum and natural gas assets For the purposes of determining whether impairment of petroleum and natural gas assets has occurred, and the extent of any impairment or its reversal, the key assumptions the Company uses in estimating future cash flows are future petroleum and natural gas prices, expected production volumes and anticipated recoverable quantities of proved and probable reserves. These assumptions are subject to change as new information becomes available. Changes in economic conditions can also affect the rate used to discount future cash flow estimates. Changes in the aforementioned assumptions could affect the carrying amounts of assets, and impairment charges and reversal will affect profit or loss.  Income taxes Tax provisions are based on enacted or substantively enacted laws. Changes in those laws could affect amounts recognized in profit or loss both in the period of change, which would include any impact on cumulative provisions, and in future periods.  Deferred tax assets are recognized only to the extent it is considered probable that those assets will be recoverable. This involves an assessment of when those deferred tax assets are likely to reverse and a judgment as to whether or not there will be sufficient taxable profits available to offset the tax assets when they do reverse. This requires assumptions regarding future profitability and is therefore inherently uncertain. To the extent that assumptions regarding future profitability change, there can be an increase or decrease in the amounts recognized in respect of deferred tax assets as well as the amounts recognized in the statement of comprehensive loss in the period in which the change occurs.  SIGNIFICANT ACCOUNTING POLICIES  Revenue Revenue from the sale of oil and natural gas is recorded when the significant risks and rewards of ownership of the product is transferred to the buyer which is usually when legal title passes to the external party and collection is reasonably assured. Revenue is presented both before and after royalties payable to the Crown and others.  Finance income Interest income is recognized as it accrues in the statement of comprehensive loss, using the effective interest rate method.  Joint controlled operations and assets Certain activities of the Company are conducted jointly with others where the participants have a direct ownership interest in, and jointly control, the related assets. Accordingly, the accounts of the Company reflect only its working interest share of revenues, expenses and capital expenditures.    - 33 -    Exploration and evaluation Pre-exploration costs are recognized as an expense in the period incurred. Pre-exploration activities are expenditures incurred prior to obtaining the legal rights or licenses to explore a mineral resource.  Intangible exploration and evaluation expenditures are capitalized and may include costs of license acquisition, geological and geophysical evaluations, technical studies, exploration drilling and testing and other directly attributable costs. Tangible assets acquired which are consumed in developing an intangible exploration asset are recorded as part of the cost of the exploration asset. The costs are accumulated in cost centers by exploration area pending determination of technical feasibility and commercial viability.  The technical feasibility and commercial viability of extracting a mineral resource in an exploration area is considered to be determinable when economical quantities of reserves are determined to exist. A review of each exploration project by area is carried out at each reporting date to ascertain whether reserves have been discovered. Upon determination of commercial reserves, associated exploration costs are transferred from exploration and evaluation to petroleum and natural gas properties as reported on the statement of financial position. Exploration and evaluation assets are reviewed for impairment prior to any such transfer.  Assets classified as exploration and evaluation are not amortized. If technical feasibility and commercial viability has determined not to be achieved, the capitalized exploration costs and relevant dry hole costs are charged to the statement of comprehensive loss as an impairment expense.  Petroleum and natural gas properties  Recognition and measurement Petroleum and natural gas properties are measured at cost less accumulated depletion and depreciation and accumulated impairment losses if any.  Petroleum and natural gas properties consists of the purchase price and costs directly attributable to bringing the asset to the location and condition necessary for its intended use. Petroleum and natural gas assets include developing and producing interests such as land acquisitions, geological and geophysical costs, facility and production equipment and associated turnarounds, other directly attributable costs and the initial estimate of the costs of dismantling and removing an asset and restoring the site on which it was located.  Subsequent costs Costs incurred subsequent to the determination of technical feasibility and commercial viability are recognized as petroleum and natural gas properties when they increase the future economic benefits embodied in the specific asset to which they relate. Such capitalized petroleum and natural gas properties generally represent costs incurred in developing proved and/or probable reserves and bringing in or enhancing production from such reserves, and are accumulated on a geographic or geotechnical area basis. The cost of day-to-day servicing of an item of petroleum and natural gas properties is expensed in the statement of comprehensive loss as incurred.  Petroleum and natural gas properties are derecognized upon disposal or when no future economic benefits are expected to arise from the continued use of the asset. Any gain or loss arising from the disposal of petroleum and natural gas properties is recognized in the statement of comprehensive loss.    - 34 -    Depletion and depreciation The net carrying value of petroleum and natural gas assets, net of estimated residual value, is depleted on a geographic or geotechnical area basis using the unit of production method. This depletion calculation includes actual production in the period and total estimated proved and probable reserves attributed to the petroleum and natural gas assets being depreciated, taking into account total capitalized costs plus estimated future development costs necessary to bring those reserves into production. Relative volumes of reserves and production (before royalties) are converted at the energy equivalent conversion ratio of six thousand cubic feet of natural gas to one barrel of oil. These estimates are reviewed by independent reserves evaluators at least annually.  Impairment The Company assesses at each reporting date whether there are indications of impairment of the CGU's it has identified. If indications of impairment exist, or at least annually, the Company estimates the assets recoverable amount, which is the higher of an assets or CGUs fair value less costs to sell and its value-in-use.  Fair value less costs to sell represents the value for which an asset could be sold in an arms length transaction, and is presented as a function of the future cash flows of the proved and probable reserves. Value in use is estimated as the discounted present value of the future cash flows expected to arise from the continued use of the asset or CGU. Where the carrying amount of an asset or CGU exceeds its recoverable amount, the asset is considered impaired and the impairment loss is charged to the statement of comprehensive loss.  For impairment losses recognized in prior periods, an assessment is made at each reporting date as to whether there is any indication that previously recognized impairment losses may no longer exist or may have decreased. Previously recognized impairment loss reversals are limited to the carrying amount that would have been determined, net of depreciation, had no impairment loss been recognized for the asset in prior periods. Impairment reversals are recognized as an impairment recovery in the statement of comprehensive loss.  Equipment Equipment is recorded at cost less accumulated amortizations. Equipment which includes vehicles, furniture and fixtures and field equipment, computer software and computer equipment are depreciated on a straight-line basis over the estimated useful lives of the assets at rates of 20 percent to 50 percent per annum.  Provisions and decommissioning obligations Provisions are recognized when the Company has a present obligation (legal or constructive), as a result of a past event, if it is probable that the Company will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation.  The amount recognized as a provision is the best estimate of the consideration required to settle the present obligation at the end of the reporting period, taking into account the risks and uncertainties surrounding the obligation. When a provision is measured using the cash flows estimated to settle the present obligation, its carrying amount is the present value of those cash flows (where the effect of the time value of money is material).    - 35 -    When some or all of the economic benefits required to settle a provision are expected to be recovered from a third party, a receivable is recognized as an asset if it is virtually certain that reimbursement will be received and the amount of the receivable can be measured reliably.  The Companys activities give rise to dismantling, restoration and site disturbance remediation activities. Costs related to abandonment activities are estimated by management in consultation with the Companys engineers based on risk-adjusted current costs which take into consideration current technology in accordance with existing legislation and industry practices.  Decommissioning obligations are measured at the present value of the best estimate of expenditures required to settle the present obligations at the reporting date. When the fair value of the liability is initially measured, the estimated cost, discounted using a risk-free discount rate, is capitalized by increasing the carrying amount of the related petroleum and natural gas properties. The increase in the provision due to the passage of time (accretion) is recognized as a finance expense whereas increases and decreases due to revisions in the estimated future cash flows are recorded as adjustments to the carrying amount of the related petroleum and natural gas properties. Actual costs incurred upon settlement of the liability are charged against the obligation to the extent that the obligation was previously established. The carrying amount capitalized in petroleum and natural gas properties is depleted in accordance with the Companys depletion and depreciation policy. The Company reviews the obligation at each reporting date and revisions to the estimated timing of cash flows, discount rates and estimated costs will result in an increase or decrease to the obligations. Any difference between the actual costs incurred upon settlement of the obligation and recorded liability is recognized as a gain or loss in the statement of comprehensive loss.  Share capital Proceeds from the issuance of common shares are classified as equity on the statement of financial position. Incremental costs directly attributable to the issuance of shares are recognized as a deduction from equity.  Foreign Currency Translation Foreign denominated monetary assets and liabilities are translated to their Canadian dollar equivalent using foreign exchange rates at the statement of financial position 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.  Share based payment transactions The share option plan allows the Companys employees and consultants to acquire shares of the Company. The fair value of options granted is recognized as a share-based payment expense with a corresponding increase in contributed surplus. An individual is classified as an employee when the individual is an employee for legal or tax purposes (direct employee) or provides services similar to those performed by a direct employee.  The fair value is measured at grant date and each tranche is recognized on a graded-vesting basis over the period during which the options vest. The fair value of the options granted is measured using the Black-Scholes option pricing model taking into account the terms and conditions upon which the options were granted. At each financial position reporting date, the amount recognized as an expense is adjusted to reflect the actual number of share options that are expected to vest.    - 36 -    Financial instruments Non-derivative financial instruments are recognized when the Company becomes a party to the contractual provisions of the instrument. Financial assets are derecognized when the rights to receive cash flows from the assets have expired or have been transferred and the Company has transferred substantially all risks and rewards of ownership. Non-derivative financial instruments are recognized initially at fair value plus, for instruments not at fair value through profit or loss, any directly attributable transaction costs.  At initial recognition, all financial instruments are classified in one of the following categories depending on the purpose for which the instruments were acquired:  Financial assets at fair value through profit or loss Financial assets at fair value through profit or loss (FVTPL) are financial assets held for trading or that are designated as such by management. Such assets are held for trading if it is acquired principally for the purpose of selling in the short-term. These assets are initially recognized, and subsequently carried, at fair value, with changes recognized in the statement of comprehensive loss. Transaction costs are expensed. Assets in this category include cash, bank indebtedness, short term investments and marketable securities.  Loans and receivables Loans and receivables are initially measured at fair value, net of transaction costs, and are subsequently measured at amortized cost using the effective interest method, less any impairment losses, with interest expense recognized on an effective yield basis. Assets in this category include amounts receivable.  Other financial liabilities Other financial liabilities are initially measured at fair value, net of transaction costs, and are subsequently measured at amortized cost using the effective interest method, with interest expense recognized on an effective yield basis. Liabilities in this category include accounts payables and accrued liabilities.  Equity instruments An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities. Equity instruments issued by the Company are recorded at the proceeds received, net of direct issue costs.  Flow-through shares The Company may issue flow-through shares to finance a portion of its capital expenditure program. Pursuant to the terms of the flow-through share agreements, the tax deductions associated with the expenditures are renounced to the subscribers. The difference to the value ascribed to flow-through shares issued and the value that would have been received for common shares at the date of issuance of the flow-through shares is initially recognized as a liability on the statement of financial position. When the expenditures are renounced, the liability is drawn down, a deferred tax liability is recorded equal to the estimated amount of deferred income tax payable by the Company as a result of the renunciation and the difference is recognized as a deferred tax expense.    - 37 -    Income tax Income tax expense comprises current and deferred tax. Income tax expense is recognized in profit or loss except to the extent that it relates to items recognized directly in equity, in which case it is recognized in equity.  Current tax is the expected tax payable on the taxable income for the period, using tax rates enacted or substantively enacted at the reporting date, and any adjustment to tax payable in respect of previous years.  Deferred tax is recognized using the liability method, providing for temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred tax is not recognized on the initial recognition of assets or liabilities in a transaction that is not a business combination. In addition, deferred tax is not recognized for taxable temporary differences arising on the initial recognition of goodwill. Deferred tax is measured at the tax rates that are expected to be applied to temporary differences when they reverse, based on the laws that have been enacted or substantively enacted by the reporting date. Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset, and they relate to income taxes levied by the same tax authority on the same taxable entity, or on different tax entities, but they intend to settle current tax liabilities and assets on a net basis or their tax assets and liabilities will be realized simultaneously.  A deferred tax asset is recognized to the extent that it is probable that future taxable profits will be available against which the temporary difference can be utilized. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will be realized.  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.  Recent Accounting Policies Not Yet Adopted  IFRS 9 - Financial Instruments was issued in November 2009 as the first step in its project to replace IAS 39 Financial Instruments: Recognition and Measurement. IFRS 9 introduces new requirements for classifying and measuring financial assets that must be applied starting January 1, 2013, with early adoption permitted. The IASB intends to expand IFRS 9 during the intervening period to add new requirements for classifying and measuring financial liabilities, de-recognition of financial instruments, impairment and hedge accounting. The Company is currently assessing the impact of this standard.  IFRS 10 Consolidated Financial Statements was issued in May 2011 and will supersede the consolidation requirements in SIC-12 Consolidation  Special Purpose Entities and IAS 27 Consolidated and Separate Financial Statements effective for annual periods beginning on or after January 1, 2013, with early application permitted. IFRS 10 builds on existing principles by identifying the concept of control as the determining factor in whether an entity should be included within the consolidated financial statements of the parent company. The standard also provides additional guidance to assist in the determination of control where this is difficult to assess. The Company is currently assessing the impact of this standard.    - 38 -    IFRS 11 - Joint Arrangements was issued May 2011 and will supersede IAS 31, Joint Ventures effective for annual periods beginning on or after January 1, 2013, with early application permitted. IFRS 11 provides for the accounting of joint arrangements by focusing on the rights and obligations of the arrangement rather than its legal form. The standard also eliminates the option to account for jointly controlled entities using the proportionate consolidation method. The Company is currently assessing the impact of this standard.  IFRS 12 Disclosure of Interests in Other Entities was issued on May 2011 and is a new and comprehensive standard on disclosure requirements for all forms of interests in other entities, included subsidiaries, joint arrangements, associated and unconsolidated structured entities. IFRS 12 is effective for annual periods beginning on or after January 1, 2013. The Company is currently assessing the impact of this standard.  IFRS 13 Fair Value Measurement was issued in May 2011 and sets out in a single IFRS a framework for measuring fair value. IFRS 13 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. This definition of fair value emphasizes that fair value is a market-based measurement, not an entity specific measurement. In addition, IFRS 13 also requires specific disclosures about fair value measurement. IFRS 13 is effective for annual periods beginning on or after January 1, 2013, with early application permitted. The Company is currently assessing the impact of this standard.  IAS 1  Presentation of financial statements was amended by the IASB in June 2011 in order to align the presentation of items in other comprehensive income with US GAAP standards. Items in other comprehensive income will be required to be presented in two categories: items that will be reclassified into profit or loss and those that will not be reclassified. The flexibility to present a statement of comprehensive income as one statement or two separate statements of profit and loss and other comprehensive income remains unchanged. The amendments to IAS 1 are effective for annual period beginning on or after July 1, 2012. The Company is currently assessing the impact of this standard.  IAS 12  Income Taxes was amended in December 2010 to remove subjectivity in determining on which basis an entity measures the deferred tax relating to an asset. The amendment introduces a presumption that an entity will assess whether the carrying value of an asset will be recovered through the sale of the asset. The amendment to IAS 12 is effective for reporting periods beginning on or after January 1, 2012. The Company is currently assessing the impact of this standard.  IAS 27 replaced the existing IAS 27 Consolidated and Separate Financial Statements. IAS 27 contains accounting and disclosure requirements for investments in subsidiaries, joint ventures and associates when an entity prepares separate financial statements. IAS 27 requires an entity preparing separate financial statements to account for those investments at cost or in accordance with IFRS 9 Financial Instruments. IAS 27 is effective for annual periods beginning on or after January 1, 2013. Earlier application is permitted. The Company is currently assessing the impact of this standard.  IAS 28 was amended in 2011 which prescribes the accounting for investments in associates and sets out the requirements for the application of the equity method when accounting for investments in associates and joint ventures. IAS 28 is effective for annual periods beginning on or after January 1, 2013. Earlier application is permitted. The Company is currently assessing the impact of this standard.    - 39 -    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 industry related professionals.  Decisions to abandon, reduce or expand exploration efforts and specific properties is based upon many factors including general and specific assessments of exploration and production potential, land costs, estimates of future commodity 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.  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, 2012TotalLess than 1
year1-3
years3-5
yearsMore than
5 yearsOperating Lease Commitments$65,197$65,197NilNilNil  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.    - 40 -    Item 6.  Directors, Senior Management and Employees  Table No. 6 lists as of October 31, 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 2012 Annual General Meeting.  Table No. 6
DirectorsNameAgeDate First Elected/AppointedMark T. Brown44August 14, 2000David Hottman (1)51August 14, 2000John Kanderka (1) (2)59March 8, 2012 (1) Member of Audit Committee. (2) Member of the Corporate Governance 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.  Table No. 7 lists, as of October 31, 2012, 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 OfficersNamePositionAgeDate of AppointmentDavid HottmanPresident and CEO51August 1, 2008Mark T. BrownCFO and Corporate Secretary44February 29, 2008    - 41 -    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.  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 and a Director of Pitchstone Exploration Ltd., a mineral exploration company traded on the TSX Venture Exchange; 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.  John Kanderka has more than 35 years of experience as a Landman in the oil and gas industry and has held many surface, mineral, gas marketing and administrative positions with Poco Petroleums Ltd., Wellore Energy Inc. and Voyager Energy Inc. among others. Mr. Kanderka was a Co-Founder and the Landman for Trimox Energy Inc. and Terraquest Energy Corporation, both successful oil and gas production companies built from the ground up and later bought out by Canext Energy Ltd. and Masters Energy Inc. respectively. Mr. Kanderka was Vice President, Land at Richland Petroleum Corporation when it merged with Provident Energy Trust. Mr. Kanderka became Vice President of Land at Baytex Energy as the result of a merger with Dorset Exploration Ltd., a corporation with over one million undeveloped acres of land. Mr. Kanderka has been a Member of the Canadian Association of Petroleum Landmen (CAPL) since 1977 and has held the Certification as a Professional Landman since 1991  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.    - 42 -    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 $2,000 per year.  To assist the Company in compensating, attracting, retaining and motivating personnel, the Companys shareholders approved a formal stock option plan for the granting of incentive stock options during the most recently completed fiscal year. An amendment to the formal stock option plan was approved by shareholders at the Annual General Meeting held on December 14, 2007. An amended and restated stock option plan was approved by the Board of Directors on November 8, 2011 and by the shareholders at the 2011 Annual General and Special Meeting of Shareholders held on December 16, 2011. Refer to ITEM #10, "Stock Options".  Table No. 8 sets forth the compensation paid to the Companys executive officers and members of its administrative body during the last three fiscal years.  Table No. 8
Summary Compensation Table
All Figures in Canadian Dollars unless otherwise notedNameFiscal
YearSalaryDirectors
FeesOptions GrantedOther
CompensationDavid Hottman,
President and CEO (from 8/1/2008)
Chairman & Director (1)2012
2011
2010$ 140,000
139,500
120,000Nil
Nil
NilNil
Nil
NilNil
4.745Barry Reid,
Former Chief Operating Officer
& Former Director (2)2012
2011
2010$   82,308
104,500
NilNil
Nil
NilNil
300,000
100,000Nil
Nil
NilMark T. Brown,
CFO (from 2/29/08)
and Director (3)2012
2011
2010Nil
Nil
NilNil
Nil
NilNil
Nil
Nil$   8,044
6,340
11,195John Kanderka,
Director2012NilNilNilNilJohn MacRae,
Former Director (4)2012
2011
2010Nil
Nil
Nil$   4,000
6,667
NilNil
100,000
100,000$   28,527
62,450
NilGary Nordin,
Former Director (5)2012
2011
2010Nil
Nil
Nil$   4,000
8,000
2,000Nil
Nil
NilNil
Nil
$     5,040Frank Wheatley,
Former Director (6)2012
2011
2010Nil
Nil
Nil$   5,000
10,000
9,167Nil
Nil
NilNil
Nil
NilJoe Tai,
Former Director (7)2011
2010Nil
Nil$   1,334
$   8,000Nil
50,000Nil
NilWinnie Wong,
Former Director (8)2011
2010Nil
Nil$   1,334
$   4,667Nil
50,000Nil
Nil    - 43 -    (1) Other Compensation for David Hottman includes insurance benefit obligations paid by the Company. (2) Barry Reid resigned as an officer and director effective March 8, 2012. (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.. Mr. MacRae resigned as a director effective April 17, 2012. (5) Gary Nordins Other Compensation is consulting fees paid to Discovery Resource, a private company owned by Mr. Nordin. Mr. Nordin resigned as a director effective March 1, 2012. (6) Frank Wheatley resigned as a director effective March 5, 2012. (7) Joe Tai resigned as a director effective September 9, 2010. (8) Winnie Wong resigned as a director effective September 9, 2010.  No funds were set aside or accrued by the Company during Fiscal 2012 to provide pension, retirement or similar benefits for Directors or Executive Officers.  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.  The Board of Directors met twice during fiscal 2012.    - 44 -    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; · 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.    - 45 -    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 director John Kanderka.  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 and John Kanderka.  A copy of the current Audit Committee Charter was included in the Companys Management Information Circular dated November 18, 2011.  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.    - 46 -    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; (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;    - 47 -    (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 (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;    - 48 -    (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 1 employee and 2 executive officers. The employee is an accountant 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 Galileo. Galileo charges these companies for Rent, Human Resources, and Office Expenses. In fiscal 2011 ended June 30, 2012, the companies that sublet space from Galileo were Goldbar Resources (formerly Nanika Resources), Hi Ho Silver Resources Inc., Cambrian Capital Corp., and Changyu MedTech. In fiscal 2011 ended June 30, 2011, the companies that sublet office space from Galileo were Goldbar Resources and Changyu MedTech.  The Companies to which Galileo provided office services and human resources in Fiscal 2012 and 2011 were Canasil Minerals, Galileo Minerals Ltd., and Orestone Mining. The fiscal 2012 chargers to these companies were $140,794 (fiscal 2011 - $54,428; fiscal 2010 - $67,566).  Oil and Gas exploration is currently conducted by the Company and the Companys joint-venture partners as operator. Galileo 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.  Table No. 9 lists, as of October 31, 2012, 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.    - 49 -    Table No. 9
Shareholdings of Directors and Executive OfficersTitle
of
ClassName of Beneficial OwnerAmount and Nature
of Beneficial
OwnershipPercent
of
ClassCommonDavid Hottman (1)425,6984.31%CommonMark T. Brown (2)141,2201.44%CommonJohn Kanderka (3)20,0000.20%Total Directors/Officers5,869,1805.91%  (1) Of these shares, 105,720 represent exercisable share purchase options. (2) Of these shares, 95,500 are owned by Pacific Opportunity Capital, a private company controlled by Mark T. Brown; and 45,720 represent exercisable share purchase options. (3) Of these shares, 20,000 represent exercisable share purchase options.  Based upon 9,749,107 shares outstanding as of October 31, 2012, 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 September 30, 2012 the shareholders' list for the Company's common shares showed 10 registered shareholders, including depositories, and 9,749,107 shares issued and outstanding. Of the total registered non-depository shareholders, 5 are resident in Canada holding 9,031,488 common shares, or 92.6% of the total issued and outstanding; 5 shareholders are resident in the United States holding 717,619 common shares, or 7.4% of the issued and outstanding, and no shareholders are resident in other nations.  The Company is aware of no persons/companies who beneficially own 5% or more of the Registrant's voting securities.  Table No. 10
5% or Greater ShareholdersTitle of
ClassName of OwnerAmount and Nature
of Beneficial
OwnershipPercent
of ClassCommonNoneN/AN/A  No shareholders of the Company have different voting rights from any other shareholder.    - 50 -    RELATED PARTY TRANSACTIONS  During Fiscal 2012, the Company paid Pacific Opportunity Capital, a private company with Mark T. Brown as an officer and director in common, an aggregate of $8,044 (2011 - $7,101; 2010 - $11,755) for fees and expense reimbursements.  During Fiscal 2012, the Company paid XWUP XWUP Energy, a private energy consulting company with former Galileo director John MacRae as President, $28,527 (2011 - $69,942; 2010 - $Nil) for consulting services.  During Fiscal 2012, the Company received $6,720 (2011 - $26,418; 2010 - $57,861) from Galileo Minerals Ltd, a private mineral exploration company with David Hottman as directors in common, for administrative expenses and expenses reimbursements. During 2012, the Company also received a loan of $90,000 from Galileo Minerals in exchange for a Promissory Note.  During Fiscal 2012, the Company received $48,445 (2011 - $47,772; 2010 - $8,685) from Canasil Resources Inc., a public mineral exploration company for which Gary Nordin, former director of Galileo, serves as a Director, for rent, parking, and office expenses.  During Fiscal 2012, the Company received $Nil (2011 - $Nil; 2010 - $1,050) from Discovery Resource Corp., a private mineral exploration company or which Gary Nordin, former director of Galileo, serves as a Director, for rent expense. The Company also paid $Nil (2011 - $Nil; 2010 - $5,040) to Discovery Resource for consulting services. During 2012, the Company also received a loan of $101,825 from Discovery as a short-term loan. Subsequent to the fiscal year end, the Company repaid the loan from Discovery.   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 MNP LLP, Chartered Accountants, is included herein immediately preceding the financial statements and schedules.  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.    - 51 -    Item 9.  Offer and Listing of Securities  As of June 30, 2012 the authorized capital of the Company consisted of an unlimited number Common Shares without par value and an unlimited number of Preferred Shares without par value.  There were 9,749,107 Common Shares and no Preferred Shares issued and outstanding as of June 30, 2012 and October 31, 2012.  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 36354R106. 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 October 31, 2012;  · each of the last twelve fiscal quarters ending the three months ended September 30, 2012; and  · each of the last five fiscal years ending June 30, 2012.  All of the prices have been adjusted to reflect the Companys 1 for 5 common share consolidation effective April 2, 2012.    - 52 -    Table No. 11
TSX Venture Exchange
Common Shares Trading Activity- Sales-Canadian DollarsPeriodHighLowCloseOctober 20120.060.0450.05September 20120.060.0450.05August 20120.0650.050.05July 20120.060.050.055June 20120.090.060.06May 20120.1350.080.085Three Months Ended   9/30/120.0650.0450.05Three Months Ended   6/30/120.250.060.06Three Months Ended   3/31/120.5250.1250.175Three Months Ended 12/31/110.800.400.425Three Months Ended   9/30/111.450.951.20Three Months Ended   6/30/111.100.651.10Three Months Ended   3/31/111.400.800.90Three Months Ended 12/31/101.050.400.90Three Months Ended   9/30/101.050.400.80Three Months Ended   6/30/101.050.500.50Three Months Ended   3/31/101.350.600.80Three Months Ended 12/31/090.600.250.60Fiscal Year Ended 6/30/121.450.060.06Fiscal Year Ended 6/30/111.400.401.20Fiscal Year Ended 6/30/101.350.250.50Fiscal Year Ended 6/30/091.100.150.45Fiscal Year Ended 6/30/083.900.851.15   Table No. 12 lists, as of October 31, 2012, share purchase warrants outstanding, the exercise price, and the expiration date of the share purchase warrants.  Table No. 12
Share Purchase Warrants OutstandingNumber of Share Purchase WarrantsOutstandingExercise Price/shareExpiration DateNoneN/AN/A    - 53 -    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.    - 54 -    United States Market  Galileo 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.   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, 2012, the Company issued no common shares. On April 2, 2012, the Company completed the consolidation of its common shares on the basis of 1 new share for every 5 old shares, and changed its name to Galileo Minerals Ltd.  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.  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.    - 55 -    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 the Companys Board of Directors on November 8, 2011 by shareholder vote at the Company's 2011 Annual General and Special Meeting held on December 16, 2011.  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 the Company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 held on December 16, 2011 which was filed in Form 6-K on EDGAR on December 1, 2011.    - 56 -    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 October 31, 2012, as well as the number of options granted to Directors and all employees as a group. The number of common shares underlying the options as well as the exercise price were all adjusted to reflect the 1 for 5 common share consolidation effective April 2, 2012.  Table No. 13
Stock Options OutstandingNameNumber of
Shares of
Common
StockNumber of
Options
Currently
VestedCDN$
Exercise
PriceExpiration
DateDavid Hottman,
President,
Chairman and Director60,000
45,72060,000
45,720$1.00
0.60October 7, 2013
June 8, 2014Mark T. Brown,
CFO, Secretary and
Director30,000
15,72030,000
15,7201.00
0.60October 7, 2013
June 8, 2014John Kanderka,
Director20,00020,0000.70September 9, 2015Employees/Consultants7,000
3,000
4,000
50,000
20,0007,000
470,000
4,000
50,000
20,0001.00
0.60
0.60
0.70
1.05August 11, 2012
June 14, 2014
January 17,2015
September 9, 2015
March 27, 2016Total Officers and Directors171,440171,440Total Employees/
Consultants84,00084,000Total Officers/Directors/
Employees and Consultants255,440255,440   Resolutions/Authorization/Approvals  -No Disclosure Necessary-    - 57 -    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. At the Special Meeting of Shareholders held on March 23, 2012, shareholders approved an amendment to the Authorized Share Capital from 100,000,000 common shares and 100,000,000 preferred shares to an unlimited number of common and an unlimited number of preferred shares. Shareholders also approved a 1 for 5 consolidation of the issued and outstanding common shares, and a change of name from Portal Resources Ltd. to Galileo Petroleum Ltd..  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.    - 58 -    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:  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 the Companys 20-F Registration Statement.    - 59 -    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.  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 Galileo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 Galileo on the right of foreigners to hold or vote securities of Galileo, 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.    - 60 -    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.  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.    - 61 -    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.  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.    - 62 -    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.  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.    - 63 -    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.  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.    - 64 -    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.  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.    - 65 -    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, 2012, June 30, 2011 and July 1, 2010, MNP 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.  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    - 66 -    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, 2012. The Chief Executive Officer and Chief Financial Officer concluded that the disclosure controls and procedures as of June 30, 2012, 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.  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 IFRS.  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, 2012.    - 67 -    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.  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.  Item 16.  Reserved  Item 16A.  Audit Committee Financial Expert The Company has not identified an Audit Committee Financial Expert among the 2 directors currently serving on the audit committee. The current members are David Hottman and John Kanderka. Both members are financially literate, have extensive experience as officers and directors of public 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 2013 fiscal year.    - 68 -    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.  Fees, including reimbursements for expenses, for professional services rendered by MNP LLP to the Company for the fiscal year ended June 30, 2012 and by prior auditor DeVisser Gray LLP for the fiscal year ended June 30, 2011 are included in the following table.  Table No. 14
Principal Account Fees and ServicesType of ServiceFiscal Year
2012Fiscal Year
2011Audit Fees$  32,400$ 23,000Audit Related Fees--Tax Fees2,5001,500All Other Fees--Total$  34,900$ 24,500  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    - 69 -    Item 16F.  Change in Registrants Certifying Accountant  On November 8, 2011, the Company proposed to shareholders at its Annual General and Special Meeting of Shareholders held on December 16, 2011 to appoint MNP LLP, Chartered Accountants, 1500, 640  5th 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.  Item 16G.  Corporate Governance  Not Applicable  Item 16H.  Mine Safety Disclosure  Not Applicable   Part III  Item 17.  Financial Statements  The Company's financial statements are stated in Canadian Dollars (CDN$) and are prepared in accordance with International Financial Reporting Standards. 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 MNP LLP, Chartered Accountant, is included herein immediately preceding the financial statements.  Item 18.  Financial Statements  The Company has elected to provide financial statements pursuant to ITEM #17.    - 70 -    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 MNP 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 29, 2012.  Balance Sheets at June 30, 2012, June 30, 2011 and July 1, 2010.  Statements of Operations for the years ended June 30, 2012 and 2011.  Statements of Cash Flows for the years ended June 30, 2012 and 2011.  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/A4. 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/A6. Calculation of earnings per share  N/A7. Explanation of calculation of ratios  N/A8. List of Subsidiaries  N/A9. 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/A10.Other documents
Documents incorporated by reference to the Form 6-Ks filed by the Company on EDGAR.    - 71 -          GALILEO PETROLEUM LTD. (Formerly Portal Resources Ltd.)  Consolidated Financial Statements (Audited)  For the year ended June 30, 2012  (Expressed in Canadian Dollars)            Galileo Petroleum Ltd.Trading Symbol: GPLHead Office: Suite 750  625 Howe StreetTelephone:  604-629-1929Vancouver, British Columbia, Canada V6C 2T6Facsimile:   604-629-1930      - 72 -       MANAGEMENTS RESPONSIBILITY FOR FINANCIAL REPORTING To the Shareholders of Galileo Petroleum Ltd. (Formerly Portal Resources Ltd.): Management is responsible for the preparation and presentation of the accompanying consolidated financial statements, including responsibility for significant accounting judgments and estimates in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board and ensuring that all information in the annual report is consistent with the financial statements. This responsibility includes selecting appropriate accounting principles and methods, and making decisions affecting the measurement of transactions in which objective judgment is required. In discharging its responsibilities for the integrity and fairness of the financial statements, management designs and maintains the necessary accounting systems and related internal controls to provide reasonable assurance that transactions are authorized, assets are safeguarded and financial records are properly maintained to provide reliable information for the preparation of consolidated financial statements. The Board of Directors exercises its responsibilities for financial controls through an Audit Committee. The Audit Committee is responsible for overseeing management in the performance of its financial reporting responsibilities, and for approving the financial information included in the annual report. The Committee has the responsibility of meeting with management and external auditors to discuss the internal controls over the financial reporting process, auditing matters and financial reporting issues. The Committee is also responsible for recommending the appointment of the Company's external auditors. MNP LLP, an independent firm of Chartered Accountants, is appointed by the shareholders to audit the financial statements and report directly to them; their report follows. The external auditors have full and free access to, and meet periodically and separately with, both the Audit Committee and management to discuss their audit findings. October 29, 2012  David Hottman Mark Brown  David Hottman, Mark Brown President and CEO Chief Financial Officer      - 73 -       INDEPENDENT AUDITORS REPORT  To the Shareholders of Galileo Petroleum Ltd. (Formerly Portal Resources Ltd.):  We have audited the accompanying consolidated financial statements of Galileo Petroleum Ltd. (Formerly Portal Resources Ltd.) and its subsidiaries which comprise the consolidated statements of financial position as at June 30, 2012 and June 30, 2011 and July 1, 2010, and the consolidated statements of comprehensive loss, changes in shareholders equity and cash flows for the years ended June 30, 2012 and 2011, and a summary of significant accounting policies and other explanatory information.  Managements Responsibility for Consolidated Financial Statements Management is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with International Financial Reporting Standards, 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.  Auditors 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. Those standards require that we comply with ethical requirements and plan and perform an audit to obtain reasonable assurance whether the consolidated financial statements are free of material misstatement.  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 auditors judgment, including the assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entitys preparation and fair presentation of the consolidated financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entitys internal control. An audit also includes assessing 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 the audit evidence obtained in our audits is sufficient and appropriate to provide a basis for our audit opinion. OpinionIn our opinion, the financial statements present fairly, in all material respects, the financial position of Galileo Petroleum Ltd. (Formerly Portal Resources Ltd.) and its subsidiaries as at June 30, 2012, June 30, 2011 and July 1, 2010, and their financial performance and their cash flows for the years ended June 30, 2012 and June 30, 2011 in accordance with International Financial Reporting Standards.  Emphasis of Matter - Going Concern Without qualifying our opinion, we draw attention to Note 2 in the consolidated financial statements which indicates that Galileo Petroleum Ltd. (Formerly Portal Resources Ltd.) has a net loss and comprehensive loss for the year of $1,159,501 and accumulated losses of $3,508,264. These conditions indicate the existence of a material uncertainty which may cast significant doubt about Galileo Petroleum Ltd.s (Formerly Portal Resources Ltd.) ability to continue as a going concern. October 29, 2012 Calgary, Canada Chartered Accountants  [galileo2012_20fannual001.jpg]   - 74 -     GALILEO PETROLEUM LTD.  (Formerly Portal Resources Ltd.) CONSOLIDATED STATEMENTS OF FINANCIAL POSITION  NoteJune 30,
2012June 30,
2011July 1,
2010(Note 21)(Note 21)ASSETSCurrentCash$               599$     1,000,723$       137,609Short-term investments540,82126,696275,222Marketable securities63,05410,1279,581Amounts receivable79,90370,09563,880Prepaid expenses and deposits30,48541,10321,552154,8621,148,744507,844Non-currentPrepaid expenses and deposits20,000--Exploration and evaluation assets7757,791696,953571,932Petroleum and natural gas properties81,463,2781,625,435-Equipment915,76057,06621,8332,256,8292,379,454593,765$     2,411,691$    3,528,198$    1,101,609LIABILITIESCurrentBank indebtedness$            4,946$                   -$                   -Accounts payable and accrued liabilities322,480290,91443,417327,426290,91443,417Non-currentDecommissioning obligation1076,88253,387-Flow-through share premium liability-90,200-76,882143,587-SHAREHOLDERS EQUITYShare capital114,237,85417,909,26814,850,161Contributed surplus111,277,7931,204,6061,033,225Deficit(3,508,264)(16,020,177)(14,825,194)2,007,3833,093,6971,058,192$    2,411,691$     3,528,198$     1,101,609  Going concern (Note 2) Commitments (Note 14) Subsequent Event (Note 20)   Approved by the Board of Directors:   David HottmanMark T. BrownDavid Hottman, DirectorMark Brown, Director  The accompanying notes are an integral part of these consolidated financial statements.    - 75 -   GALILEO PETROLEUM LTD. (Formerly Portal Resources Ltd.) CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS  For the years ended
June 30,Note20122011(Note 21)RevenuePetroleum and natural gas$     287,370$       47,041Royalties(7,004)(1,481)280,36645,560Finance income627324280,99345,884ExpensesGeneral and administrative121,069,8711,197,091Resource operating expenses166,38019,672Depletion, depreciation and amortization8,9167,83133,676Finance expense101,915-1,405,9971,250,439Other itemsGain on sale of equipment9-9,026Impairment on petroleum and natural gas properties8(415,000)-Other income19297,376-Unrealized gain (loss) on marketable securities6(7,073)546(124,697)9,572Net loss before income taxes(1,249,701)(1,194,983)Deferred tax recovery1390,200-Net loss and comprehensive loss for the year$  (1,159,501)$  (1,194,983)Loss per share$           (0.12)$           (0.18)Weighted average number of common
shares outstanding9,749,1076,686,333   The accompanying notes are an integral part of these consolidated financial statements    - 76 -     GALILEO PETROLEUM LTD. (Formerly Portal Resources Ltd.) CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS EQUITY  NoteShare CapitalContributed
SurplusDeficitTotal
Shareholders
EquityBalance at July 1, 2010$  14,850,161$  1,033,225$  (14,825,194)$    1,058,192Share issues:Private placements3,282,750--3,282,750Finders fees(76,790)--(76,790)Exercise of options27,676--27,676Fair market value of stock options22,170(22,170)--Deferred flow-through share liability(90,200)--(90,200)Share issue costs(60,150)--(60,150)Fair value of finders warrants(46,349)46,349--Share-based payments-147,202-147,202Net loss and comprehensive loss--(1,194,983)(1,194,983)Balance at June 30, 201117,909,2681,204,606(16,020,177)3,093,697Reduction in share capital and
accumulated deficit18(13,671,414)-13,671,414-Stock-based payments-73,187-73,187Net loss and comprehensive loss--(1,159,501)(1,159,501)Balance at June 30, 2012$   4,237,854$  1,277,793$  (3,508,264)$  2,007,383   The accompanying notes are an integral part of these consolidated financial statements    - 77 -      GALILEO PETROLEUM LTD. (Formerly Portal Resources Ltd.) CONSOLIDATED STATEMENTS OF CASH FLOWS       For the years ended June 30,Cash provided by (used for):20122011Operating ActivitiesNet loss$  (1,159,501)$   (1,194,983)Items not involving cash:Depletion and amortization167,83133,957Share-based payments73,187147,202Accretion1,915-Unrealized loss (gain) on marketable securities7,073(546)Deferred tax recovery(90,200)-Gain on sale of petroleum and natural gas properties(297,736)-Impairment on petroleum and natural gas properties415,000-Gain on sale of equipment-(9,026)Changes in non-cash working capital
relating to operating activities12,376105,904(870,055)(917,492)Investing ActivitiesAdditions to exploration and evaluation assets(60,838)(1,591,807)Additions to petroleum and natural gas properties(1,059,423)-Proceeds on sale of petroleum and natural gas properties1,000,000-Additions to equipment(629)(64,099)Proceeds from the sale of equipment-15,500Short-term investments(14,125)248,526(135,015)(1,391,880)Financing ActivitiesIncrease in bank indebtedness4,946-Shares issued for cash-3,282,750Stock options exercised-27,676Share issue costs-(136,940)4,9463,173,486Net increase (decrease) in cash(1,000,124)864,114Cash  beginning of year1,000,723137,609Cash  end of year$              599$    1,001,723    The accompanying notes are an integral part of these consolidated financial statements    - 78 -      GALILEO PETROLEUM LTD.(Formerly Portal Resources Ltd.) Notes to the Consolidated Financial Statements June 30, 2012    1. NATURE OF OPERATIONS  Galileo Petroleum Ltd. (Formerly Portal Resources Ltd.) (the Company or Galileo) was incorporated on August 14, 2000 under the Business Corporations Act of the Province of British Columbia and trades under the symbol GPL on the TSX Venture Exchange. Its registered office is 19th Floor, 885 West Georgia Street, Vancouver, BC V6C 3H4. During the year, the Company completed a five for one share consolidation (see Note 11). All references to number of shares and per share amounts have been retroactively restated to reflect the consolidation.  The Company is a junior oil and gas company, engaged in the production, development and exploration of crude oil and natural gas reserves in Alberta, Canada and Saskatchewan, Canada.  2. GOING CONCERN  These consolidated financial statements have been prepared on a going concern basis, which implies the Company will continue to realize its assets and discharge its liabilities in the normal course of business.  The Company incurred net loss of $1,159,501 for the year ended June 30, 2012 (2011  $1,194,893). To date, the Company has not earned significant revenues and has accumulated losses of $3,508,264. The continuation of the Company as a going concern is dependent upon the ability of the Company to obtain necessary equity or other financing to continue operations, and/or to attain sufficient profitable operations.  The outcome of these matters cannot be predicted at the present time. These consolidated financial statements do not include any adjustments to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.  3. BASIS OF PRESENTATION  (a) Statement of compliance  These audited consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) and IFRS 1 First-time Adoption of IFRS.  The disclosures regarding the transition to IFRS are included in note 21, which includes the impact on the Companys reported financial position, financial performance and cash flows, including the nature and effect of significant changes in accounting policies from those used in the Companys consolidated financial statements for the year ended June 30, 2011.  Subject to certain transition elections taken and disclosed in note 21, the Company has consistently applied the same accounting policies in its opening IFRS consolidated statement of financial position at July 1, 2010 and throughout all periods presented, as if these policies had always been in effect.  The Company previously prepared its annual financial statements under Canadian GAAP.  In these consolidated financial statements, the Canadian GAAP refers to Canadian GAAP before the adoption of IFRS.  These consolidated financial statements, and the policies applied herein, were authorized for issue by the Board of Directors on October 29, 2012.  (b) Basis of measurement  The consolidated financial statements have been prepared under the historical cost method except for cash, short term investments, marketable securities and share-based transactions which are measured at fair value.  (c) Functional and presentation currency  The consolidated financial statements are presented in Canadian dollars, which is the Companys functional currency. The functional currency of the Companys subsidiaries is Canadian dollars.    - 79 -    GALILEO PETROLEUM LTD.(Formerly Portal Resources Ltd.) Notes to the Consolidated Financial Statements June 30, 2012  3. Basis of Presentation(continued)  (d) Reporting entity  The consolidated financial statements as at and for the years ended June 30, 2012, June 30, 2011 and July 1, 2010 include the accounts of the Company and its wholly owned 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.  (e) Significant accounting judgments and estimates  The timely preparation of the consolidated financial statements requires management to make judgments, estimates and assumptions that affect the application of accounting policies and reported amounts of assets, liabilities, income and expenses. Accordingly, actual amounts may differ from these estimates. Estimates and underlying assumptions are viewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimates are revised and in any future periods affected. Significant estimates and judgments made by management in the preparation of these consolidated financial statements are outlined below.  Reserves  Estimation of reported recoverable quantities of proved and probable reserves include judgmental assumptions regarding production profile, commodity prices, exchange rates, remediation costs, timing and amount of future development costs, and production, transportation and marketing costs for future cash flows. It also requires interpretation of geological and geophysical models in order to make an assessment of the size, shape, depth and quality of reservoirs, and their anticipated recoveries. The economical, geological and technical factors used to estimate reserves may change from period to period. Changes in reported reserves can impact the carrying values of the Company`s petroleum and natural gas properties, the calculation of depletion and depreciation, the provision for decommissioning obligations, and the recognition of deferred tax assets due to changes in expected future cash flows. The recoverable quantities of reserves and estimated cash flows from the Company`s petroleum and natural gas interests are independently evaluated by reserve engineers at least annually.  The Companys petroleum and natural gas reserves represent the estimated quantities of petroleum, natural gas and natural gas liquids which geological, geophysical and engineering data demonstrate with a specific degree of certainty to be economically recoverable in future years from known reservoirs and which are considered commercially producible. Such reserves may be considered commercially producible if management has the intention of developing and producing them and such intention is based upon (i) a reasonable assessment of the future economics of such production; (ii) a reasonable expectation that there is a market for all or substantially all the expected petroleum and natural gas production; and (iii) evidence that the necessary production, transmission and transportation facilities are available or can be made available. Reserves may only be considered proved and probable if producibility is supported by either production or conclusive formation tests. The Company`s petroleum and natural gas reserves are determined pursuant to National Instrument 51-101, Standard of Disclosures for Oil and Gas Activities.  Identification of cash-generating units  The Company`s assets are aggregated into cash-generating units, for the purpose of calculating impairment, based on their ability to generate largely independent cash flows. By their nature, these estimates and assumptions are subject to measurement uncertainty and may impact the carrying value of the Company`s assets in future periods.  Share based payments  All equity-settled, share-based awards issued by the Company are fair valued using the Black-Scholes option-pricing model. In assessing the fair value of equity based compensation, estimates have to be made regarding the expected volatility in share price, option life, dividend yield, risk-free rate and estimated forfeitures at the initial grant date.    - 80 -    GALILEO PETROLEUM LTD.(Formerly Portal Resources Ltd.) Notes to the Consolidated Financial Statements June 30, 2012   3. Basis of Presentation(continued)  (e) Significant accounting judgments and estimates(continued)  Decommissioning obligations  The Company estimates future remediation costs of production facilities, wells and pipelines at different stages of development and construction of assets or facilities. In most instances, removal of assets occurs many years into the future. This requires judgment regarding abandonment date, future environmental and regulatory legislation, the extent of reclamation activities, the engineering methodology for estimating cost, future removal technologies in determining the removal cost and liability-specific discount rates to determine the present value of these cash flows.  Impairment of petroleum and natural gas assets  For the purposes of determining whether impairment of petroleum and natural gas assets has occurred, and the extent of any impairment or its reversal, the key assumptions the Company uses in estimating future cash flows are future petroleum and natural gas prices, expected production volumes and anticipated recoverable quantities of proved and probable reserves. These assumptions are subject to change as new information becomes available. Changes in economic conditions can also affect the rate used to discount future cash flow estimates. Changes in the aforementioned assumptions could affect the carrying amounts of assets, and impairment charges and reversal will affect profit or loss.  Income taxes  Tax provisions are based on enacted or substantively enacted laws. Changes in those laws could affect amounts recognized in profit or loss both in the period of change, which would include any impact on cumulative provisions, and in future periods.  Deferred tax assets are recognized only to the extent it is considered probable that those assets will be recoverable. This involves an assessment of when those deferred tax assets are likely to reverse and a judgment as to whether or not there will be sufficient taxable profits available to offset the tax assets when they do reverse. This requires assumptions regarding future profitability and is therefore inherently uncertain. To the extent that assumptions regarding future profitability change, there can be an increase or decrease in the amounts recognized in respect of deferred tax assets as well as the amounts recognized in the statement of comprehensive loss in the period in which the change occurs.  4. SIGNIFICANT ACCOUNTING POLICIES  Revenue  Revenue from the sale of oil and natural gas is recorded when the significant risks and rewards of ownership of the product is transferred to the buyer which is usually when legal title passes to the external party and collection is reasonably assured. Revenue is presented both before and after royalties payable to the Crown and others.  Finance income  Interest income is recognized as it accrues in the statement of comprehensive loss, using the effective interest rate method.  Joint controlled operations and assets  Certain activities of the Company are conducted jointly with others where the participants have a direct ownership interest in, and jointly control, the related assets. Accordingly, the accounts of the Company reflect only its working interest share of revenues, expenses and capital expenditures.    - 81 -   GALILEO PETROLEUM LTD.(Formerly Portal Resources Ltd.) Notes to the Consolidated Financial Statements June 30, 2012  4. SIGNIFICANT ACCOUNTING POLICIES (continued)  Exploration and evaluation  Pre-exploration costs are recognized as an expense in the period incurred. Pre-exploration activities are expenditures incurred prior to obtaining the legal rights or licenses to explore a mineral resource.  Intangible exploration and evaluation expenditures are capitalized and may include costs of license acquisition, geological and geophysical evaluations, technical studies, exploration drilling and testing and other directly attributable costs. Tangible assets acquired which are consumed in developing an intangible exploration asset are recorded as part of the cost of the exploration asset. The costs are accumulated in cost centers by exploration area pending determination of technical feasibility and commercial viability.  The technical feasibility and commercial viability of extracting a mineral resource in an exploration area is considered to be determinable when economical quantities of reserves are determined to exist. A review of each exploration project by area is carried out at each reporting date to ascertain whether reserves have been discovered. Upon determination of commercial reserves, associated exploration costs are transferred from exploration and evaluation to petroleum and natural gas properties as reported on the statement of financial position. Exploration and evaluation assets are reviewed for impairment prior to any such transfer.  Assets classified as exploration and evaluation are not amortized. If technical feasibility and commercial viability has determined not to be achieved, the capitalized exploration costs and relevant dry hole costs are charged to the statement of comprehensive loss as an impairment expense.  Petroleum and natural gas properties  Recognition and measurement  Petroleum and natural gas properties are measured at cost less accumulated depletion and depreciation and accumulated impairment losses if any.  Petroleum and natural gas properties consists of the purchase price and costs directly attributable to bringing the asset to the location and condition necessary for its intended use. Petroleum and natural gas assets include developing and producing interests such as land acquisitions, geological and geophysical costs, facility and production equipment and associated turnarounds, other directly attributable costs and the initial estimate of the costs of dismantling and removing an asset and restoring the site on which it was located.  Subsequent costs  Costs incurred subsequent to the determination of technical feasibility and commercial viability are recognized as petroleum and natural gas properties when they increase the future economic benefits embodied in the specific asset to which they relate. Such capitalized petroleum and natural gas properties generally represent costs incurred in developing proved and/or probable reserves and bringing in or enhancing production from such reserves, and are accumulated on a geographic or geotechnical area basis. The cost of day-to-day servicing of an item of petroleum and natural gas properties is expensed in the statement of comprehensive loss as incurred.  Petroleum and natural gas properties are derecognized upon disposal or when no future economic benefits are expected to arise from the continued use of the asset. Any gain or loss arising from the disposal of petroleum and natural gas properties is recognized in the statement of comprehensive loss.    - 82 -    GALILEO PETROLEUM LTD.(Formerly Portal Resources Ltd.) Notes to the Consolidated Financial Statements June 30, 2012  4. SIGNIFICANT ACCOUNTING POLICIES (continued)  Petroleum and natural gas properties (continued)  Depletion and depreciation  The net carrying value of petroleum and natural gas assets, net of estimated residual value, is depleted on a geographic or geotechnical area basis using the unit of production method. This depletion calculation includes actual production in the period and total estimated proved and probable reserves attributed to the petroleum and natural gas assets being depreciated, taking into account total capitalized costs plus estimated future development costs necessary to bring those reserves into production. Relative volumes of reserves and production (before royalties) are converted at the energy equivalent conversion ratio of six thousand cubic feet of natural gas to one barrel of oil. These estimates are reviewed by independent reserves evaluators at least annually.  Impairment  The Company assesses at each reporting date whether there are indications of impairment of the CGU's it has identified. If indications of impairment exist, or at least annually, the Company estimates the assets recoverable amount, which is the higher of an assets or CGUs fair value less costs to sell and its value-in-use.  Fair value less costs to sell represents the value for which an asset could be sold in an arms length transaction, and is presented as a function of the future cash flows of the proved and probable reserves. Value in use is estimated as the discounted present value of the future cash flows expected to arise from the continued use of the asset or CGU. Where the carrying amount of an asset or CGU exceeds its recoverable amount, the asset is considered impaired and the impairment loss is charged to the statement of comprehensive loss.  For impairment losses recognized in prior periods, an assessment is made at each reporting date as to whether there is any indication that previously recognized impairment losses may no longer exist or may have decreased. Previously recognized impairment loss reversals are limited to the carrying amount that would have been determined, net of depreciation, had no impairment loss been recognized for the asset in prior periods. Impairment reversals are recognized as an impairment recovery in the statement of comprehensive loss.  Equipment  Equipment is recorded at cost less accumulated amortizations. Equipment which includes vehicles, furniture and fixtures and field equipment, computer software and computer equipment are depreciated on a straight-line basis over the estimated useful lives of the assets at rates of 20 percent to 50 percent per annum.  Provisions and decommissioning obligations  Provisions are recognized when the Company has a present obligation (legal or constructive), as a result of a past event, if it is probable that the Company will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation.  The amount recognized as a provision is the best estimate of the consideration required to settle the present obligation at the end of the reporting period, taking into account the risks and uncertainties surrounding the obligation. When a provision is measured using the cash flows estimated to settle the present obligation, its carrying amount is the present value of those cash flows (where the effect of the time value of money is material).  When some or all of the economic benefits required to settle a provision are expected to be recovered from a third party, a receivable is recognized as an asset if it is virtually certain that reimbursement will be received and the amount of the receivable can be measured reliably.  The Companys activities give rise to dismantling, restoration and site disturbance remediation activities. Costs related to abandonment activities are estimated by management in consultation with the Companys engineers based on risk-adjusted current costs which take into consideration current technology in accordance with existing legislation and industry practices.    - 83 -    GALILEO PETROLEUM LTD.(Formerly Portal Resources Ltd.) Notes to the Consolidated Financial Statements June 30, 2012  4. SIGNIFICANT ACCOUNTING POLICIES (continued)  Provisions and decommissioning obligations (continued)  Decommissioning obligations are measured at the present value of the best estimate of expenditures required to settle the present obligations at the reporting date. When the fair value of the liability is initially measured, the estimated cost, discounted using a risk-free discount rate, is capitalized by increasing the carrying amount of the related petroleum and natural gas properties. The increase in the provision due to the passage of time (accretion) is recognized as a finance expense whereas increases and decreases due to revisions in the estimated future cash flows are recorded as adjustments to the carrying amount of the related petroleum and natural gas properties. Actual costs incurred upon settlement of the liability are charged against the obligation to the extent that the obligation was previously established. The carrying amount capitalized in petroleum and natural gas properties is depleted in accordance with the Companys depletion and depreciation policy. The Company reviews the obligation at each reporting date and revisions to the estimated timing of cash flows, discount rates and estimated costs will result in an increase or decrease to the obligations. Any difference between the actual costs incurred upon settlement of the obligation and recorded liability is recognized as a gain or loss in the statement of comprehensive loss.  Share capital  Proceeds from the issuance of common shares are classified as equity on the statement of financial position. Incremental costs directly attributable to the issuance of shares are recognized as a deduction from equity.  Foreign Currency Translation  Foreign denominated monetary assets and liabilities are translated to their Canadian dollar equivalent using foreign exchange rates at the statement of financial position 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.  Share based payment transactions  The share option plan allows the Companys employees and consultants to acquire shares of the Company. The fair value of options granted is recognized as a share-based payment expense with a corresponding increase in contributed surplus. An individual is classified as an employee when the individual is an employee for legal or tax purposes (direct employee) or provides services similar to those performed by a direct employee.  The fair value is measured at grant date and each tranche is recognized on a graded-vesting basis over the period during which the options vest. The fair value of the options granted is measured using the Black-Scholes option pricing model taking into account the terms and conditions upon which the options were granted. At each financial position reporting date, the amount recognized as an expense is adjusted to reflect the actual number of share options that are expected to vest.   - 84 -    GALILEO PETROLEUM LTD.(Formerly Portal Resources Ltd.) Notes to the Consolidated Financial Statements June 30, 2012  4. SIGNIFICANT ACCOUNTING POLICIES (continued)  Financial instruments  Non-derivative financial instruments are recognized when the Company becomes a party to the contractual provisions of the instrument. Financial assets are derecognized when the rights to receive cash flows from the assets have expired or have been transferred and the Company has transferred substantially all risks and rewards of ownership. Non-derivative financial instruments are recognized initially at fair value plus, for instruments not at fair value through profit or loss, any directly attributable transaction costs.  At initial recognition, all financial instruments are classified in one of the following categories depending on the purpose for which the instruments were acquired:  Financial assets at fair value through profit or loss  Financial assets at fair value through profit or loss (FVTPL) are financial assets held for trading or that are designated as such by management. Such assets are held for trading if it is acquired principally for the purpose of selling in the short-term. These assets are initially recognized, and subsequently carried, at fair value, with changes recognized in the statement of comprehensive loss. Transaction costs are expensed. Assets in this category include cash, bank indebtedness, short term investments and marketable securities.  Loans and receivables Loans and receivables are initially measured at fair value, net of transaction costs, and are subsequently measured at amortized cost using the effective interest method, less any impairment losses, with interest expense recognized on an effective yield basis. Assets in this category include amounts receivable.  Other financial liabilities Other financial liabilities are initially measured at fair value, net of transaction costs, and are subsequently measured at amortized cost using the effective interest method, with interest expense recognized on an effective yield basis. Liabilities in this category include accounts payables and accrued liabilities.  Equity instruments An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities. Equity instruments issued by the Company are recorded at the proceeds received, net of direct issue costs.  Flow-through shares  The Company may issue flow-through shares to finance a portion of its capital expenditure program. Pursuant to the terms of the flow-through share agreements, the tax deductions associated with the expenditures are renounced to the subscribers. The difference to the value ascribed to flow-through shares issued and the value that would have been received for common shares at the date of issuance of the flow-through shares is initially recognized as a liability on the statement of financial position. When the expenditures are renounced, the liability is drawn down, a deferred tax liability is recorded equal to the estimated amount of deferred income tax payable by the Company as a result of the renunciation and the difference is recognized as a deferred tax expense.    - 85 -    GALILEO PETROLEUM LTD.(Formerly Portal Resources Ltd.) Notes to the Consolidated Financial Statements June 30, 2012  4. SIGNIFICANT ACCOUNTING POLICIES (continued)  Income tax  Income tax expense comprises current and deferred tax. Income tax expense is recognized in profit or loss except to the extent that it relates to items recognized directly in equity, in which case it is recognized in equity.  Current tax is the expected tax payable on the taxable income for the period, using tax rates enacted or substantively enacted at the reporting date, and any adjustment to tax payable in respect of previous years.  Deferred tax is recognized using the liability method, providing for temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred tax is not recognized on the initial recognition of assets or liabilities in a transaction that is not a business combination. In addition, deferred tax is not recognized for taxable temporary differences arising on the initial recognition of goodwill. Deferred tax is measured at the tax rates that are expected to be applied to temporary differences when they reverse, based on the laws that have been enacted or substantively enacted by the reporting date. Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset, and they relate to income taxes levied by the same tax authority on the same taxable entity, or on different tax entities, but they intend to settle current tax liabilities and assets on a net basis or their tax assets and liabilities will be realized simultaneously.  A deferred tax asset is recognized to the extent that it is probable that future taxable profits will be available against which the temporary difference can be utilized. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will be realized.  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.  Accounting standards issued but not yet applied  IFRS 9 - Financial Instruments was issued in November 2009 as the first step in its project to replace IAS 39 Financial Instruments: Recognition and Measurement. IFRS 9 introduces new requirements for classifying and measuring financial assets that must be applied starting January 1, 2013, with early adoption permitted. The IASB intends to expand IFRS 9 during the intervening period to add new requirements for classifying and measuring financial liabilities, de-recognition of financial instruments, impairment and hedge accounting. The Company is currently assessing the impact of this standard.  IFRS 10  Consolidated Financial Statements was issued in May 2011 and will supersede the consolidation requirements in SIC-12 Consolidation  Special Purpose Entities and IAS 27 Consolidated and Separate Financial Statements effective for annual periods beginning on or after January 1, 2013, with early application permitted. IFRS 10 builds on existing principles by identifying the concept of control as the determining factor in whether an entity should be included within the consolidated financial statements of the parent company. The standard also provides additional guidance to assist in the determination of control where this is difficult to assess. The Company is currently assessing the impact of this standard.  IFRS 11 - Joint Arrangements was issued May 2011 and will supersede IAS 31, Joint Ventures effective for annual periods beginning on or after January 1, 2013, with early application permitted. IFRS 11 provides for the accounting of joint arrangements by focusing on the rights and obligations of the arrangement rather than its legal form. The standard also eliminates the option to account for jointly controlled entities using the proportionate consolidation method. The Company is currently assessing the impact of this standard.  IFRS 12  Disclosure of Interests in Other Entities was issued on May 2011 and is a new and comprehensive standard on disclosure requirements for all forms of interests in other entities, included subsidiaries, joint arrangements, associated and unconsolidated structured entities. IFRS 12 is effective for annual periods beginning on or after January 1, 2013. The Company is currently assessing the impact of this standard.    - 86 -    GALILEO PETROLEUM LTD.(Formerly Portal Resources Ltd.) Notes to the Consolidated Financial Statements June 30, 2012  4. SIGNIFICANT ACCOUNTING POLICIES (continued)  Accounting standards issued but not yet applied (continued)  IFRS 13  Fair Value Measurement was issued in May 2011 and sets out in a single IFRS a framework for measuring fair value. IFRS 13 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. This definition of fair value emphasizes that fair value is a market-based measurement, not an entity specific measurement. In addition, IFRS 13 also requires specific disclosures about fair value measurement. IFRS 13 is effective for annual periods beginning on or after January 1, 2013, with early application permitted. The Company is currently assessing the impact of this standard.  IAS 1  Presentation of financial statements was amended by the IASB in June 2011 in order to align the presentation of items in other comprehensive income with US GAAP standards. Items in other comprehensive income will be required to be presented in two categories: items that will be reclassified into profit or loss and those that will not be reclassified. The flexibility to present a statement of comprehensive income as one statement or two separate statements of profit and loss and other comprehensive income remains unchanged. The amendments to IAS 1 are effective for annual period beginning on or after July 1, 2012. The Company is currently assessing the impact of this standard.  IAS 12  Income Taxes was amended in December 2010 to remove subjectivity in determining on which basis an entity measures the deferred tax relating to an asset. The amendment introduces a presumption that an entity will assess whether the carrying value of an asset will be recovered through the sale of the asset. The amendment to IAS 12 is effective for reporting periods beginning on or after January 1, 2012. The Company is currently assessing the impact of this standard.  IAS 27 replaced the existing IAS 27 Consolidated and Separate Financial Statements. IAS 27 contains accounting and disclosure requirements for investments in subsidiaries, joint ventures and associates when an entity prepares separate financial statements. IAS 27 requires an entity preparing separate financial statements to account for those investments at cost or in accordance with IFRS 9 Financial Instruments. IAS 27 is effective for annual periods beginning on or after January 1, 2013. Earlier application is permitted. The Company is currently assessing the impact of this standard.  IAS 28 was amended in 2011 which prescribes the accounting for investments in associates and sets out the requirements for the application of the equity method when accounting for investments in associates and joint ventures. IAS 28 is effective for annual periods beginning on or after January 1, 2013. Earlier application is permitted. The Company is currently assessing the impact of this standard.  5. 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.  6. MARKETABLE SECURITIES  The Company owns 150,000 shares of Pengram Corporation (Pengram). At June 30, 2012, the fair value of the Pengram shares was $3,054 (June 30, 2011 - $10,127, July 1, 2010 - $9,581). During the year ended June 30, 2012, the Company recorded an unrealized loss of $7,073 with respect to these shares (2011  unrealized gain of $546).    - 87 -    GALILEO PETROLEUM LTD.(Formerly Portal Resources Ltd.) Notes to the Consolidated Financial Statements June 30, 2012  7. EXPLORATION AND EVALUATION ASSETS            Balance July 1, 2010$        571,932Additions1,761,740Reclassification to petroleum and natural gas properties(1,636,719)Balance June 30, 2011696,953Additions60,838Balance June 30, 2012$        757,791   Provost  In February, 2012, the Company acquired a 50% ownership in 928 acres (1.5 square miles) of exploratory land at Provost, Alberta.  As at June 30, 2012, the Company has spent a total of $76,084 (June 30, 2011 - $Nil) on the Provost project.  Bigwave Joint Venture  As at June 30, 2012 the Company has spent a total of $632,557 (June 30, 2011 - $647,803) on the Bigwave Joint Venture.  Border Play  As at June 30, 2012 the Company has spent a total of $31,150 (June 30, 2011 - $31,150) on the Border Play project.  Manito Joint Venture  As at June 30, 2012 the Company has spent a total of $18,000 (June 30, 2011 - $18,000) on the Manito Joint Venture.    - 88 -    GALILEO PETROLEUM LTD.(Formerly Portal Resources Ltd.) Notes to the Consolidated Financial Statements June 30, 2012  8. PETROLEUM AND NATURAL GAS PROPERTIES  Cost:Balance, July 1, 2010$-Reclassification from exploration and evaluation assets1,636,719Balance, June 30, 2011$1,636,719Additions$378,739Balance, June 30, 2012$2,015,458  Accumulated depletion and depreciation and impairment
losses:Balance, July 1, 2010$-Depletion and depreciation expense(11,284)Balance, June 30, 2011$(11,284)Depletion and depreciation expense$(125,896)Impairment loss(415,000)Balance, June 30, 2012$(552,180)  Net book value:July 1, 2010$-June 30, 2011$1,625,435June 30, 2012$1,463,278  The depletion and depreciation of petroleum and natural gas properties are recognized in depletion, depreciation and amortization in the statement of comprehensive loss. Future development costs of $981,600 (2011 - $988,000) are included in the depletion calculation. The impairment of petroleum and natural gas properties, and any eventual reversal thereof, are recognized in impairment on petroleum and natural gas properties in the statement of comprehensive loss.  During the year, the Company capitalized $21,580 (June 30, 2011 - $53,387, July 1, 2010 - $nil) related to the decommissioning liability of petroleum and natural gas properties.  The Company performed impairment test calculations at June 30, 2012 to assess whether the carrying value of the petroleum and natural gas properties were recoverable at a discount rate of 10%. The impairment loss during the year ended June 30, 2012 was $415,000 (2011 - $nil). The following represent the prices that were used in the June 30, 2012 impairment tests.  YearAverage
price
forecast201366.54201468.59201572.44201673.19201775.24201876.80201978.39202080.02202181.67   - 89 -    GALILEO PETROLEUM LTD.(Formerly Portal Resources Ltd.) Notes to the Consolidated Financial Statements June 30, 2012  8. PETROLEUM AND NATURAL GAS PROPERTIES (continued)  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 50% of the costs of drilling 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, 2012 the Company has spent a total of $2,015,458 (June 30, 2011 - $1,636,719) on the Birdbear project.  9. EQUIPMENT  Cost:Balance, July 1, 2010$80,758Additions64,099Dispositions(25,897)Balance, June 30, 2011$118,960Additions629Balance, June 30, 2012$119,589  Accumulated depletion and depreciation:Balance, July 1, 2010$(58,925)Depreciation expense(22,392)Dispositions19,423Balance, June 30, 2011$(61,894)Depreciation expense(41,935)Balance, June 30, 2012$(103,829)  Net book value:June 30, 2010$21,833June 30, 2011$57,066June 30, 2012$15,760    - 90 -      GALILEO PETROLEUM LTD.(Formerly Portal Resources Ltd.) Notes to the Consolidated Financial Statements June 30, 2012  10. DECOMMISSIONING OBLIGATIONS  Balance July 1, 2010$-Additions53,387Balance June 30, 201153,387Additions10,892Accretion1,915Change in estimate10,688Balance June 30, 2012$76,882  The decommissioning obligations are 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 its decommissioning liabilities is approximately $93,000 (June 30, 2011 - $79,000). The fair values of these obligations were calculated using a risk free rate of 1.46% to 2.33% (June 30, 2011  2.69% to 3.55%), an inflation rate of 2% (June 30, 2011  2%) and an expected abandonment date of 2017 to 2022.  11. SHARE CAPITAL  a. Authorized  On March 23, 2012, the shareholders of the Company approved an amendment to the Companys authorized share capital to eliminate the maximum number of shares that the Company is authorized to issue. As at June 30, 2012, the Company has an authorized unlimited number of common shares without par value. All issued shares are fully paid.  On March 23, 2012, the shareholders of the Company approved a common share consolidation on the basis of five pre-consolidation common shares for one post-consolidation common share of the Company. The consolidation was made effective on April 2, 2012. All references to the number of shares and per share amounts have been retroactively restated to reflect the consolidation.    - 91 -    GALILEO PETROLEUM LTD.(Formerly Portal Resources Ltd.) Notes to the Consolidated Financial Statements June 30, 2012  11. SHARE CAPITAL (continued)  b. Details of issuance of common shares  Number of
Shares (post
consolidation)AmountBalance at July 1, 20106,030,307$14,850,161Share Issues:Private placements3,673,3003,282,750Finders fees-(76,790)Exercise of stock options45,50027,676Fair market value of stock options-22,170Deferred flow-through share liability-(90,200)Share issue costs-(60,150)Fair value of finders warrants-(46,349)Balance at June 30, 20119,749,10717,909,268Reduction in share capital and
accumulated deficit (Note 18)-(13,671,414)Balance at June 30, 20129,749,107$4,237,854  On February 17, 2011, the Company completed a non-brokered private placement for $801,250. The offering consisted of 1,282,000 units at a price of $0.625 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 $0.75 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 2,030,500 units at a price of $1 per unit and 360,800 flow through units at $1.25 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 $1.25. Of these warrants 597,750 are exercisable until May 20, 2012 and 417,500 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 $1.75. Of these warrants 174,000 are exercisable until May 20, 2012 and 6,400 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 61,040 non-transferrable finders warrants. Each finders warrant is exercisable into one common share of the Company at a price of $1.00 (40,040 warrants) and $1.25 (21,000 warrants) of these warrants, 55,790 are exercisable until May 20, 2012 and 5,250 are exercisable until May 30, 2012.  c. Warrants  A summary of changes to warrants during the year is as follows:  Number of
WarrantsWeighted Average
Exercise PriceBalance at July 1, 2010-$-Granted2,499,2901.05Balance at June 30, 20112,499,2901.05Expired(2,499,290)1.05Balance at June 30, 2012-$-    - 92 -    GALILEO PETROLEUM LTD.(Formerly Portal Resources Ltd.) Notes to the Consolidated Financial Statements June 30, 2012  11. SHARE CAPITAL (continued)  d. Share Purchase Option Compensation Plan  The Company established a 10% rolling stock option plan whereby the Board of Directors may from time to time grant options to individual eligible directors, officers, employees or consultants. The maximum term of any option is five years. The exercise price of an option is not less than the closing price on the last trading day preceding the grant date, less allowable discounts in accordance with the policies of the Exchange. In connection with the foregoing, the number of common shares reserved for issuance to any individual director or officer will not exceed 5% of the issued and outstanding common shares and the number of common shares reserved for issuance to all technical consultants will not exceed 2% of the issued and outstanding common shares. 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.  The weighted average assumptions used to estimate the fair value of options for the periods ending June 30, 2012 and June 30, 2011 were:  Year ended
June 30, 2012Year ended
June 30, 2011Risk-free interest rate0.84%2.32%  2.67%Expected stock price volatility139%144% - 146%Expected option life in years1 year5 yearsExpected dividend in yieldNilNilForfeiture rate5.32%5.32%  Based on these variables, share-based payments for the options vested during the year ended June 30, 2012 was $73,187 (year ended June 30, 2011 - $147,202) which is recorded in general and administrative expense.  Option price models require the input of highly subjective assumptions regarding the expected volatility and expected life. Changes in assumptions can materially affect the fair value estimate, and therefore, the existing models do not necessarily provide the reliable measure of the fair value of the companys stock options at the date of grant.    -93 -    GALILEO PETROLEUM LTD.(Formerly Portal Resources Ltd.) Notes to the Consolidated Financial Statements June 30, 2012  11. SHARE CAPITAL(continued)  d. Share Purchase Option Compensation Plan(continued)  The continuity of stock options for the year ended June 30, 2012 is as follows:    Expiry dateExercise
Price ($)June 30,
2011GrantedExercisedExpired/
cancelledJune 30,
2012December 5, 20112.60133,280--(133,280)-June 30, 20120.755,000--(5,000)-October 7, 20131.00162,000--(65,000)97,000June 9, 20140.60124,440--(60,000)64,440January 17, 20150.7594,000--(90,000)4,000March 6, 20151,0040,000--(40,000)-September 9, 20150.70150,000--(80,000)70,000February 16, 20161,0030,000--(30,000)-March 28, 20161,0529,400--(9,400)20,000August 11, 20121.00-35,000--35,000Options outstanding768,12035,000-(512,680)290,440Options vested and exercisable693,570---517,640Weighted average
exercise price ($)1.151.00-1.700.84     e. Contributed Surplus  AmountBalance at July 1, 2010$1,033,225Share-based payments147,202Fair market value of stock options exercised(22,170)Fair value of finder warrants46,349Balance at June 30, 20111,204,606Share-based payments73,187Balance at June 30, 2012$1,277,793          12. GENERAL AND ADMINISTRATIVE EXPENSES  The components of general and administrative expenses are as follows:  June 30, 2012June 30, 2011Consulting$         192,795$       179,043Investor relaions91,456140,399Rent111,490107,274Salaries and benefits319,314392,128Share-based compensation73,186147,202Other281,630231,045$      1,069,871$    1,197,091     - 94 -    GALILEO PETROLEUM LTD.(Formerly Portal Resources Ltd.) Notes to the Consolidated Financial Statements June 30, 2012  13. INCOME TAXES  June 30, 2012June 30, 2011Loss before income taxes$(1,249,701)$(1,194,983)Expected income tax recovery(321,798)(328,620)Non-deductible expenses for tax and other3,44835,051Flow-through shares22,550-Deferred tax asset not recognized205,600293,569Deferred tax recovery$(90,200)$-  The significant components of the Companys deferred tax assets are as follows:  June 30, 2012June 30, 2011July 1, 2010Deferred tax assets (liabilities)Non-capital loss carryforwards$2,004,865$1,745,750$1,484,608Share issue costs27,49337,10320,053Equipment9,46016,64714,731Petroleum and natural gas properties(36,718)--Deferred tax assets not recognized$2,005,100$1,799,500$1,519,392  The Company has incurred losses for Canadian income tax purposes of approximately $8,019,460, which can be carried forward to reduce taxable income in future years. The losses expire in the following periods:  Year of OriginYear of ExpiryNon-Capital losses20042014$     146,93520052015567,49420062026816,60420072027894,120200820281,218,558200920291,294,96220102030975,784201120311,145,95620122032959,047$  8,019,460   14. 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 due in 2013 is $65,197.    - 95 -    GALILEO PETROLEUM LTD.(Formerly Portal Resources Ltd.) Notes to the Consolidated Financial Statements June 30, 2012  15. RELATED PARTY TRANSACTIONS  Payments to related parties were made in the normal course of operations and were valued at fair value as determined by management.  Amounts due to or from related parties are unsecured, non-interest bearing and due on demand. All outstanding balances are unsecured, and there are no commitments or guarantees associated with the outstanding balances.  Year ended June 30, 2012Year ended June 30, 2011Amounts due to:Services forTotal chargesBalance
OutstandingTotal chargesBalance
OutstandingA private company controlled by a director of the CompanyConsulting$       28,527$      28,527$      69,942$              -A private company controlled by a director of the CompanyPromissory note101,8251,825--A private company with a director in common with the CompanyPromissory note90,000---A public company with directors in common with the CompanyAdministrative
fees, advances----A private company with a director in common with the CompanyAccounting, finance8,0445,0987,101-Directors feesDirector services13,00013,00027,333-Amounts due from:A public company with directors in common with the CompanyAdministrative fees,
advances95,780---A public company with a director in common with the CompanyOffice rent48,445-47,772-A private company with a director in common with the CompanyAdministrative fees,
expenses6,72010,06026,41817,082  Key management personnel compensation includes all compensation paid to executive management and members of the board of directors of the Company.  June 30, 2012June 30, 2011Short-term employee benefits$235,308$261,335Share-based payments12,58037,740Total$247,888$299,075    - 96 -                                            GALILEO PETROLEUM LTD.(Formerly Portal Resources Ltd.) Notes to the Consolidated Financial Statements June 30, 2012      16. FINANCIAL INSTRUMENTS  The fair value of the Companys cash, short-term investments, marketable securities, amounts receivable, bank indebtedness and accounts payables and accrued liabilities approximate their carrying values.  The Companys financial instruments recorded at fair value require disclosure about how the fair value was determined based on significant levels of inputs described in the following hierarchy:  Level 1  Quoted prices are available in active markets for identical assets or liabilities as of the reporting date. Active markets are those in which transactions occur in sufficient frequency and value to provide pricing information on an ongoing basis.  Level 2  Pricing inputs are other than quoted prices in active markets included in Level 1. Prices in Level 2 are either directly or indirectly observable as of the reporting date. Level 2 valuations are based on inputs including quoted forward prices for commodities, time value and volatility factors, which can be substantially observed or corroborated in the market place.  Level 3  Valuations in this level are those with inputs for the asset or liability that are not based on observable market data.  Cash, bank indebtedness, short-term investments and marketable securities are measured using level 1 inputs.  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 have 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 year.  (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.    - 97 -    GALILEO PETROLEUM LTD.(Formerly Portal Resources Ltd.) Notes to the Consolidated Financial Statements June 30, 2012  16. FINANCIAL INSTRUMENTS (continued)  (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, 2012, June 30, 2011 and July 1, 2010.  17. MANAGEMENT OF CAPITAL RISK  The Company manages its shareholders equity 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. There are no externally imposed requirements.  The Company expects its current capital resources will not be sufficient to carry its exploration plans and operations through its current operating period and that further equity financing will be required.  18. REDUCTION IN SHARE CAPITAL AND ACCUMULATED DEFICIT  At a meeting of shareholders of the Company held on December 16, 2011, a special resolution was passed to reduce the Companys paid-up share capital and the accumulated deficit by $13,671,414. This reduction is reflected in the shareholders equity on the consolidated statement of financial position as at June 30, 2012.  19. CRUDE OIL PROPERTY ACQUISITION AND DISPOSITION  On October 7, 2011, the Company 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. A $500,000 deposit was paid by the Company 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 the parties amended the agreement to reflect a new closing date of January 31, 2012, and a new purchase price of $8,300,000. Upon closing, pursuant to an agreement with another third party, the Company transferred its rights to purchase the acquired oil and gas properties for a total price of $8,800,000. The Company incurred $202,624 in costs associated with the transaction. These costs have been charged to the proceeds from the transaction, resulting in a recorded gain of $297,376.    - 98 -    GALILEO PETROLEUM LTD.(Formerly Portal Resources Ltd.) Notes to the Consolidated Financial Statements June 30, 2012  20. SUBSEQUENT EVENT  Subsequent to year end, the Company sold land having a net book value of $85,000 for proceeds of $85,000.  21. TRANSITION TO INTERNATIONAL FINANCIAL REPORTING STANDARDS  The IFRS accounting policies set forth in Note 4 have been applied in preparing the consolidated financial statements as at and for the year ended June 30, 2011 and an opening consolidated statement of financial position as at July 1, 2010 (the transition date). In preparing the June 30, 2011 and July 1, 2010 consolidated financial statements, the Company adjusted amounts reported previously in the consolidated financial statements prepared in accordance with Canadian GAAP.  IFRS 1, First-time Adoption of IFRS, requires the presentation of comparative information as at the transition date and subsequent quarterly comparative periods as well as the consistent and retrospective application of IFRS accounting policies. To assist with the transition, the provisions of IFRS 1 allow for mandatory and optional exemptions for first-time adopters to alleviate the retrospective application of certain IFRSs as discussed below.  An explanation of how the transition from Canadian GAAP to IFRS has affected the Companys financial position and financial performance is illustrated in the following reconciliations. Certain amounts in these financial statement reconciliations have been reclassified, where applicable, to conform to IAS 1, Presentation of Financial Statements.  The transition from Canadian GAAP to IFRS had no significant impact on cash flows generated by the Company.    - 99 -    GALILEO PETROLEUM LTD.(Formerly Portal Resources Ltd.) Notes to the Consolidated Financial Statements June 30, 2012  21. TRANSITION TO INTERNATIONAL FINANCIAL REPORTING STANDARDS (continued)  Reconciliation of the Statement of Financial Position from Canadian GAAP to IFRS:  As at July 1, 2010GAAPEffect of
Transition
to IFRSNotesIFRSASSETSCurrentCash$       137,609$      137,609Short-term investments275,222275,222Marketable securities9,5819,581Amounts receivable63,88063,880Prepaid expenses21,55221,552507,844-507,844Non-currentExploration and evaluation-571,932(c)571,932Petroleum and natural gas properties571,932(571,932)(c)-Equipment21,83321,833593,765-593,765$    1,101,609$                 -$    1,101,609LIABILITIESCurrentAccounts payable and accrued liabilities$         43,417$         43,417SHAREHOLDERS EQUITYShare capital14,850,16114,850,161Contributed surplus1,024,9938,232(b)1,033,225Deficit(14,816,962)(8,232)(b)(14,825,194)1,058,192-1,058,192$    1,101,609$                 -$    1,101,609    - 100 -    GALILEO PETROLEUM LTD.(Formerly Portal Resources Ltd.) Notes to the Consolidated Financial Statements June 30, 2012  21. TRANSITION TO INTERNATIONAL FINANCIAL REPORTING STANDARDS(continued)  Reconciliation of the Statement of Financial Position from Canadian GAAP to IFRS:  As at June 30, 2011GAAPEffect of
Transition
to IFRSNotesIFRSASSETSCurrentCash$    1,000,723$    1,000,723Short-term investments26,69626,696Marketable securities10,12710,127Amounts receivable70,09570,095Prepaid expenses41,10341,1031,148,744-1,148,744Non-currentExploration and evaluation-696,953(c)696,953Petroleum and natural gas properties2,304,232(678,797)(a), (c)(d)1,625,435Equipment57,06657,0662,361,29818,1562,379,454$    3,510,042$       18,156$    3,528,198LIABILITIESCurrentAccounts payable and accrued liabilities$       290,914$                -$       290,914Decommissioning obligations35,51217,875(a)53,387Flow-through share premium liability-90,200(e)90,20035,512108,075143,587SHAREHOLDERS EQUITYShare capital17,999,468(90,200)(e)17,909,268Contributed surplus1,222,407(17,801)(b)1,204,606Deficit(16,038,259)18,082(b), (d )(16,020,177)3,183,616(89,919)3,093,697$    3,510,042$       18,156$    3,528,198               - 101 -    GALILEO PETROLEUM LTD.(Formerly Portal Resources Ltd.) Notes to the Consolidated Financial Statements June 30, 2012  21. TRANSITION TO INTERNATIONAL FINANCIAL REPORTING STANDARDS(continued)  Reconciliation of the Statement of Comprehensive Loss from GAAP to IFRS:  For the year ended June 30, 2011GAAPEffect of
Transition
to IFRSNotesIFRSRevenuePetroleum and natural gas$         47,041$              -$        47,041Royalties(1,481)-(1,481)45,560-45,560Finance income324-32445,884-45,884ExpensesGeneral and administrative1,223,124(26,033)(b)1,197,091Resource operating expenses19,672-19,672Depletion, depreciation and amortization33,957(281)(d)33,6761,276,753(26,314)1,250,439Other itemsGain on sale of equipment9,026-9,026Unrealized gain on marketable securities546-5469,572-9,572Net loss and comprehensive loss for the year$  (1,221,297)$     26,314$ (1,194,983)   - 102 -                    GALILEO PETROLEUM LTD.(Formerly Portal Resources Ltd.) Notes to the Consolidated Financial Statements June 30, 2012  21. TRANSITION TO INTERNATIONAL FINANCIAL REPORTING STANDARDS (continued)  Notes to reconciliations:  The following discussion explains the significant differences between the Companys Canadian GAAP accounting policies and those applied by the Company under IFRS. IFRS policies have been retrospectively and consistently applied except where specific IFRS 1 optional and mandatory exemptions permitted an alternative treatment upon transition to IFRS for first-time adopters. The note captions below correspond to the adjustments presented in the preceding reconciliations.  In preparing the comparative financial statements in accordance with IFRS 1, the Corporation has applied the following optional exemptions from full retrospective application of IFRS.  IFRS 2  Share-based payments; and  IAS 37  Decommissioning obligations  Hindsight was not used to create or revise estimates and accordingly the estimates previously made by the Company under Canadian GAAP are consistent with their application under IFRS. The remaining IRFS 1 exemptions were not applicable or material to the preparation of the Companys Statement of Financial Position at the date of transition to IFRS on July 1, 2011.  (a) Decommissioning obligations  The Company has elected to measure decommissioning obligations (formerly known as asset retirement obligations under Canadian GAAP) on transition to IFRS in accordance with IAS 37, Provisions, Contingent Liabilities and Contingent Assets  and recognize directly in deficit the differences between the amount and the carrying amount of those obligations determined under Canadian GAAP at the transition date. Under Canadian GAAP, accretion on decommissioning obligations was included in depletion and depreciation expense. Under IFRS, accretion expense is included in finance expenses.  Under Canadian GAAP, decommissioning obligations were discounted at a credit-adjusted risk-free rate of 8%. Under IFRS, the estimated cash flow to abandon and remediate both wells and facilities has been risk-adjusted and therefore the provision was discounted at a risk-free rate of 4% based on Government of Canada long-term bonds.  As a decommissioning obligation liability wasnt recorded at the transition date, the application of IAS 37 resulted in no change to the liabilities or deficit at the date of transition. However, the change to IFRS resulted in an increase to the Companys decommissioning obligation and petroleum and natural gas assets of $17,875 for the year ended June 30, 2011 as compared to the decommissioning obligation and petroleum and natural gas assets as previously recorded under Canadian GAAP.    - 103 -    GALILEO PETROLEUM LTD.(Formerly Portal Resources Ltd.) Notes to the Consolidated Financial Statements June 30, 2012  21. TRANSITION TO INTERNATIONAL FINANCIAL REPORTING STANDARDS (continued)  (b) Share Purchase Option Compensation  The Company has elected to apply IFRS 2, Share-based Payments to equity instruments granted after November 7, 2002 that have not vested by the transition date. Under Canadian GAAP, share purchase option compensation expense was disclosed as a separate line item in profit or loss. Under IFRS, share purchase option compensation expense is included in administrative expenses.  Under Canadian GAAP, the fair value of stock options was calculated using a Black-Scholes option-pricing model for each option grant and the resulting expense was recognized over the four quarter vesting period. Forfeitures of stock options were recognized as they occurred. Under IFRS, each vesting tranche of an option grant with different vesting dates was considered a separate grant for the calculation of fair value. This resulted in accelerated expense recognition which attributed higher share-based compensation expense in early years of option grant and less expense in later years. The Company also applied an estimated forfeiture rate at the initial grant date. The forfeiture rate is taken into account by adjusting the number of stock options expected to vest under each vesting tranche and subsequently revising this estimate throughout the vesting period, as necessary. When determining the fair value of each vesting tranche under IFRS, the Company applied an estimated weighted average option life for each respective tranche which reflects historical experiences. Under Canadian GAAP, the option life was equal to the expiry period of five years,  The application of IFRS 2 resulted in a $8,232 increase to contributed surplus with a corresponding increase to the Companys deficit at the date of transition. Share-based payments increased during the year ended June 30, 2011 by $26,033 from the amounts previously recorded under Canadian GAAP. The Company applied a weighted average estimated forfeiture rate of 5.3% during the year ended June 30, 2011.  (c) Exploration and evaluation assets  Under IRFS, exploration and evaluation costs are those expenditures for an area where technical feasibility and commercial viability has not yet been determined. Development and production costs include those expenditures for areas where technical feasibility and commercial viability has been determined and are included in the general balance of petroleum and natural gas properties and equipment.  Exploration and evaluation assets at July 1, 2010 were deemed to be a $571,932, representing the unproved properties balance under Canadian GAAP. This resulted in a reclassification of $571,932 from petroleum and natural gas properties to exploration and evaluation assets as July 1, 2010. As at June 30, 2011, the Companys exploration and evaluation assets totaled   $696,953. These exploration activities are pending the determination of economic quantities of commercially producible reserves. During the year ended June 30, 2011, $1,636,719 of exploration and evaluation assets have been reclassified to petroleum and natural gas properties.  The Company performed an impairment test on its exploration and evaluation assets and petroleum and natural gas properties in accordance with the accounting policy stated in Note 4. The recoverable amount of the Companys assets were estimated based on the fair value less cost to sell approach using discounted cash flows from proved plus probable reserves, taking into consideration escalated prices and future development costs, as obtained from the Companys independent reserve report. Based on the above assessment, the Companys exploration and evaluation assets and petroleum and natural gas properties did not have any impairment on transition to IFRS and as at June 30, 2011.    - 104 -    GALILEO PETROLEUM LTD.(Formerly Portal Resources Ltd.) Notes to the Consolidated Financial Statements June 30, 2012  21. TRANSITION TO INTERNATIONAL FINANCIAL REPORTING STANDARDS (continued)  (d) Depletion and depreciation  Under Canadian GAAP, the Company depleted its petroleum and natural gas assets on the unit of production method using proved producing reserves for each cost centre. Under IAS 16, Property, Plant & Equipment, the Corporation has elected to deplete its development and production costs on an area basis using the unit of production method over proved plus probable reserves. Exploration and evaluation costs are not amortized under IFRS.  Depleting at an area level over proved plus probable reserves resulted in a decrease to depletion and depreciation of $360 for the year ended June 30, 2011 from amounts previously reported under Canadian GAAP.  The change to decommissioning obligations in (a) above increased the depletion and depreciation expense by $79 at June 30, 2011.  (e) Share capital  Under Canadian GAAP, the proceeds from the issuance of flow-through shares are recognized as shareholders equity. The tax basis of assets related to expenditures incurred to satisfy flow-through share obligations is reduced when the renunciation of the related tax pools occurs which then increases the deferred income tax liability and reduces share capital.  Under IFRS, the amount recorded to share capital from the issuance of flow-through shares reflects the fair market value of regular common shares. The difference between the total value of flow -through share issuance and the fair market value of regular common share issuance (premium) is initially accrued as a deferred obligation when the flow-through shares are issued. Pursuant to the terms of the flow-through share agreements, the tax deductions associated with the expenditures are renounced to the subscribers. Accordingly, on renunciation with the Canada Revenue Agency, a deferred tax liability is recorded equal to the estimated amount of deferred income taxes payable by the Company as a result of the renunciations, the obligation on issuance of flow-through shares is reduced and the difference is recognized in profit or loss. There is no impact to share capital on renunciation of flow-through shares.  The above accounting policy difference resulted in no change to share capital at the transition date. For the year ended June 30, 2011, the change to IFRS resulted in a decrease to Share Capital and a corresponding increase in the Flow-through Share Premium Liability of $90,200.    - 105 -      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.   Galileo Petroleum Ltd. Registrant  Dated:   December 6, 2012Signed:  /s/ "David Hottman"David Hottman,
President, CEO and Chairman        - 106 -