CONSOLIDATED FINANCIAL STATEMENTS

THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2006

(Expressed in Canadian Dollars)

(Unaudited)

These financial statements have not been reviewed by the Company's auditors

NORTHERN DYNASTY MINERALS LTD.
Consolidated Balance Sheets
(Expressed in Canadian Dollars)

		September 30			December 31
		2006			2005
		(unaudited)
ASSETS
Current assets
Cash and equivalents	$	106,731,520		$	12,948,640
Marketable securities (note 2)		–			363,906
Amounts receivable and prepaids		638,494			416,971
Due from related parties (note 5)		595,585			448,360
		107,965,599			14,177,877
Equipment		512,457			411,205
Mineral property interests (note 3)		152,177,861			16,706,930
Total Assets	$	260,655,917		$	31,296,012
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable and accrued liabilities	$	6,391,200		$	3,161,012
Future income tax liability (note 3)		46,194,605			–
		52,585,805			3,161,012
Shareholders' equity
Share capital (note 4 (b))		349,801,771			132,361,949
Contributed surplus (note 4(e))		10,999,298			7,289,377
Deficit		(152,730,957	)		(111,516,326	)
		208,070,112			28,135,000
Commitments (note 6)
Total Liabilities and Shareholders' Equity	$	260,655,917		$	31,296,012

The accompanying notes are an integral part of these consolidated financial statements.

Approved by the Board of Directors

/s/ Ronald W. Thiessen	/s/ Jeffrey R. Mason
Ronald W. Thiessen	Jeffrey R. Mason
Director	Director

NORTHERN DYNASTY MINERALS LTD.
Consolidated Statements of Operations
(Unaudited - Expressed in Canadian Dollars)

		Three months ended September 30						Nine months ended September 30
		2006			2005			2006			2005
Expenses
Amortization	$	26,372		$	24,204		$	63,348		$	68,973
Conference and travel		199,000			146,855			561,031			491,007
Exploration (see schedule of exploration expenses)		16,115,273			15,334,997			34,047,091			32,583,523
Foreign exchange gain		(230,016	)		(199,393	)		(26,931	)		(226,737	)
Interest income		(943,467	)		(151,973	)		(1,253,315	)		(471,296	)
Legal, accounting and audit		239,834			61,658			607,750			184,903
Office and administration		695,979			695,102			2,309,703			1,892,781
Shareholder communication		68,782			116,347			246,658			290,403
Stock-based compensation - exploration (note 4(d))		203,360			755,470			1,447,998			1,650,088
Stock-based compensation - administration (note 4(d))		845,313			741,983			3,258,116			1,997,289
Trust and filing		29,357			37,850			147,563			133,512
Net loss before the following		17,249,787			17,563,100			41,409,012			38,594,446
Fair value adjustment on price protection guarantee		–			634,128			–			634,128
Gain on sale of marketable securities		–			–			(194,381	)		–
Loss for the period	$	17,249,787		$	18,197,228		$	41,214,631		$	39,228,574
Basic and diluted loss per common share	$	0.20		$	0.32		$	0.52		$	0.72
Weighted average number of
common shares outstanding		86,598,916			57,189,058			79,893,925			54,675,954

The accompanying notes are an integral part of these consolidated financial statements.

Consolidated Statements of Deficit
(Unaudited - Expressed in Canadian Dollars)

		Nine months ended September 30
		2006		2005
Deficit, beginning of period	$	111,516,326	$	61,198,495
Loss for the period		41,214,631		39,228,574
Deficit, end of period	$	152,730,957	$	100,427,069

The accompanying notes are an integral part of these consolidated financial statements.

NORTHERN DYNASTY MINERALS LTD.
Consolidated Statements of Cash Flows
(Unaudited - Expressed in Canadian Dollars)

		Three months ended September 30						Nine months ended September 30
		2006			2005			2006			2005
Operating activities
Loss for the period	$	(17,249,787	)	$	(18,197,228	)	$	(41,214,631	)	$	(39,228,574	)
Items not involving cash
Amortization		26,372			24,204			63,348			68,973
Gain on sale of marketable securities		–			–			(194,381	)		–
Stock-based compensation		1,048,673			1,497,453			4,706,114			3,647,378
Changes in non-cash working capital items
Amounts receivable and prepaids		51,523			(101,860	)		(221,523	)		(178,574	)
Accounts payable and accrued liabilities		2,225,549			(729,189	)		3,230,188			1,058,190
Balances receivable from and payable to related parties		3,448			104,781			(147,225	)		(141,589	)
Fair value adjustment of price protection guarantee		–			634,128			–			634,128
Cash and equivalents used for operating activities		(13,894,222	)		(16,767,711	)		(33,778,110	)		(34,140,068	)
Investing activities
Purchase of equipment		(147,101	)		(5,576	)		(164,600	)		(102,229	)
Acquisition costs		–			–			(81,879	)		–
Proceeds on sale of marketable securities		–			–			558,287			–
Cash and equivalents provided by (used for) investing activities		(147,101	)		(5,576	)		311,808			(102,229	)
Financing activities
Common shares issued for cash, net of issue costs		99,546,189			7,156,535			127,249,182			39,313,488
Increase (decrease) in cash and equivalents		85,504,866			(9,616,752	)		93,782,880			5,071,191
Cash and equivalents, beginning of period		21,226,654			27,163,990			12,948,640			12,476,047
Cash and equivalents, end of period	$	106,731,520		$	17,547,238		$	106,731,520		$	17,547,238
Supplementary information
Taxes paid	$	–		$	–		$	–		$	–
Interest paid	$	–		$	–		$	–		$	–
Non-cash investing activities
Common shares issued for acquisition (note 3)	$	–		$	–		$	89,194,447		$	4,918,309
Fair value of stock options allocated to shares issued upon
exercise	$	318,967		$	–		$	2,768,969		$	–

The accompanying notes are an integral part of these consolidated financial statements.

NORTHERN DYNASTY MINERALS LTD.
Consolidated Schedules of Exploration Expenses
(Unaudited - Expressed in Canadian Dollars)

		Three months ended September 30				Nine months ended September 30
		2006		2005		2006		2005
Assays and analysis	$	246,399	$	101,861	$	346,081	$	240,398
Drilling		3,037,880		2,515,265		4,621,348		4,436,847
Engineering		332,172		3,465,057		3,622,795		6,357,652
Environmental		3,864,624		3,473,523		9,855,058		10,055,510
Equipment rental		11,166		12,926		38,411		34,594
Freight		455,018		133,460		820,130		447,283
Geological		389,006		336,638		827,128		819,920
Graphics		6,509		13,340		17,966		62,534
Helicopter		2,377,008		2,186,220		3,904,080		3,997,748
Property fees and assessments		44,317		43,880		122,626		132,665
Site activities		3,756,909		2,306,680		5,847,764		3,716,650
Socioeconomic		1,265,548		528,498		3,422,927		1,861,823
Travel and accommodation		328,717		217,649		600,777		419,899
Incurred during the period		16,115,273		15,334,997		34,047,091		32,583,523
Cumulative expenditures, beginning of period		104,953,194		60,843,485		86,661,376		43,594,959
Cumulative expenditures, end of period	$	121,068,467	$	76,178,482	$	120,708,467	$	76,178,482

The accompanying notes are an integral part of these consolidated financial statements.

NORTHERN DYNASTY MINERALS LTD.

Notes to Consolidated Financial Statements

Three and nine months ended September 30, 2006

(Unaudited – Expressed in Canadian Dollars unless otherwise stated)

1.	BASIS OF PRESENTATION AND PRINCIPLES OF CONSOLIDATION
	These interim consolidated financial statements have been prepared in accordance with Canadian generally accepted accounting principles. They do not include all the disclosures as required for annual financial statements under generally accepted accounting principles. However, these interim consolidated financial statements follow the same accounting policies and methods of application as the Company’s most recent annual financial statements. These interim consolidated financial statements should be read in conjunction with the Company’s annual consolidated financial statements, which are available at www.sedar.com.
	Operating results for the three and nine months ended September 30, 2006 are not necessarily indicative of the results that may be expected for the full year ending December 31, 2006.
2.	MARKETABLE SECURITIES

	Number						Carrying
	of shares		Cost		Market value		value
September 30, 2006
Taseko Mines Limited common shares	nil	$	–	$	–	$	–
December 31, 2005
Taseko Mines Limited common shares	256,272	$	715,000	$	533,046	$	363,906

The Company’s investment in 256,272 common shares of Taseko Mines Limited was sold during the nine months ended September 30, 2006 for proceeds of $558,287.

3. MINERAL PROPERTY INTERESTS

Pebble Property
Balance, December 31, 2005	$	16,706,930
Changes during the period
Acquistion of 20% carried contractual interests held by HDGI		135,389,052
Acquisition costs		81,879
Mineral Property Interests, September 30, 2006	$	152,177,861

On May 31, 2006, the Company acquired 100% of the outstanding common shares of Hunter Dickinson Group Inc. (”HDGI”) for purchase price of 14,002,268 common shares of the Company. HDGI held the 20% carried contractual interests in the Pebble Property and is a related party by virtue of (i) having certain directors in common with the Company, and (ii) its shareholders or their associates being significant shareholders of the Company. The agreed number of shares was based on negotiations between the Company, represented by a Special Committee of the Board of Directors, and HDGI with reference to an independent valuation of the carried interests performed by Ross Glanville & Associates Ltd in March 2005. Both parties agreed to a valuation of $6.37 per share, based upon the issuance of 14,002,268 common shares, as representing the fair value of the 20% carried contractual interest. The valuation report was publicly filed at www.sedar.com. The TSX Venture Exchange and the American Stock Exchange has accepted the acquisition transaction.

NORTHERN DYNASTY MINERALS LTD.

Notes to Consolidated Financial Statements

Three and nine months ended September 30, 2006

(Unaudited – Expressed in Canadian Dollars unless otherwise stated)

The results of HDGI’s operations have been included in the consolidated financial statements since the date of acquisition. The following table summarizes the assets acquired and liabilities assumed on the date of acquisition:

Mineral property interest	$	135,389,052
Future income tax liability		(46,194,605	)
Purchase price	$	89,194,447
Consideration – 14,002,268 common shares	$	89,194,447

In June 2006, having completed the acquisition of HDGI and being discharged of Teck Cominco’s share resale guarantees, Northern Dynasty, together with one or more 100% owned subsidiaries, owns a 100% right, title and interest in the entire Pebble Property (subject only to the Teck Cominco net profits interest in the Exploration Lands portion of the property).

4. SHARE CAPITAL

(a)	Authorized share capital
	The Company's authorized share capital consists of an unlimited number of common shares, without par value.
(b)	Issued and outstanding common shares

	Number of
	Shares			Amount
Balance at December 31, 2005	60,092,607		$	132,361,949
Issued during fiscal 2006
Options exercised	1,153,731			5,800,602
Warrants exercised, net of issue costs of $922,550	6,985,344			34,004,170
Common shares issued upon acquisition	14,002,268			89,194,447
Common shares issued pursuant to share purchase agreement, net of issue costs
of $14,040 (1)	8,745,845			87,444,410
Common shares returned to treasury (note 6)	(345,340	)		(1,772,776	)
Fair value of stock-options allocated to shares issued on exercise	–			2,768,969
Balance at September 30, 2006	90,634,455		$	349,801,771

(1) On July 28, 2006 the Company issued 8,745,845 common shares in connection with a share purchase agreement with Kennecott Canada Exploration Inc. (“Kennecott”) for $10.00 per share. Kennecott has a right of first refusal to participate in up to 50% of future share placements by the Company, subject to customary exceptions, until Kennecott reaches 19.9% of the Company’s outstanding share capital. The right thereafter continues as a 19.9% right until Kennecott either fails to take up any offered allotment or the fifth anniversary of the agreement, whichever occurs first.

NORTHERN DYNASTY MINERALS LTD.

Notes to Consolidated Financial Statements

Three and nine months ended September 30, 2006

(Unaudited – Expressed in Canadian Dollars unless otherwise stated)

(c)	Share purchase warrants
	The continuity of share purchase warrants (each warrant exercisable for one common share) for the period ended September 30, 2006 is:

		Exercise		Dec 31							Expired/		Sept 30
Expiry date		price		2005		Issued		Exercised			cancelled		2006
Sept. 18, 2006	$	5.00		6,985,344		–		(6,985,344	)		–		–
Weighted average exercise price			$	5.00	$	–	$	5.00		$	–	$	–

(d)	Share purchase options
	The Company has a share option plan approved by the shareholders that allows it to grant options, subject to regulatory terms and approval, to its directors, employees, officers, and consultants.
	A new share option plan was approved by the Board and by the shareholders in June 2006. The new share option plan (the "2006 Rolling Option Plan") is based on the maximum number of eligible shares equaling a rolling percentage of up to 10% of the Company's outstanding common shares, calculated from time to time. Pursuant to the 2006 Rolling Option Plan, if outstanding options are exercised, or expire, and/or the number of issued and outstanding common shares of the Company increases, then the options available to grant under the plan increase proportionately. The exercise price of each option is set by the Board of Directors at the time of grant but cannot be less than the market price (less permissible discounts). Options can have a maximum term of ten years and typically terminate 90 days following the termination of the optionee’s employment or engagement, except in the case of retirement or death. Vesting of options is at the discretion of the Board of Directors at the time the options are granted.
	The continuity of share purchase options for the period ended September 30, 2006 is:

		Exercise		Dec 31							Expired /			Sept 30
Expiry date		price		2005		Granted		Exercised			cancelled			2006
November 30, 2006	$	4.65		100,000		–		–			–			100,000
November 30, 2006	$	5.00		1,897,500		–		(1,022,200	)		–			875,300
September 28, 2007	$	5.40		150,000		–		(21,600	)		–			128,400
November 30, 2007	$	4.50		170,000		–		(13,299	)		–			156,701
November 30, 2007	$	5.31		641,666		–		(96,632	)		(26,668	)		518,366
December 14, 2007	$	5.37		15,000		–		–			–			15,000
April 30, 2009	$	7.25		–		471,500		–			–			471,500
April 30, 2009	$	9.81		–		62,500		–			–			62,500
April 30, 2011	$	7.25		–		1,125,000		–			–			1,125,000
				2,974,166		1,659,000		(1,153,731	)		(26,668	)		3,452,767
Weighted average exercise price			$	5.05	$	7.35	$	5.03		$	5.31		$	6.16

At September 30, 2006, there were 1,677,079 options exercisble, with a weighted average price of $5.06 per share.

NORTHERN DYNASTY MINERALS LTD.

Notes to Consolidated Financial Statements

Three and nine months ended September 30, 2006

(Unaudited – Expressed in Canadian Dollars unless otherwise stated)

The exercise prices of all share purchase options granted during the year were equal to the market price at the grant date. Using an option pricing model with the assumptions noted below, the estimated fair value of all options granted during 2006 and 2005 have been reflected in the statement of operations as follows:

		Three months ended				Nine months ended
		September 30				September 30
		2006		2005		2006		2005
Exploration
Engineering	$	12,034	$	279,600	$	521,185	$	577,746
Environmental, socioeconomic and land		6,201		125,910		154,789		233,171
Geological		185,125		349,960		772,024		839,171
Exploration		203,360		755,470		1,447,998		1,650,088
Operations and administration		845,313		741,983		3,258,116		1,997,289
Total compensation cost recognized in
operations, credited to contributed surplus	$	1,048,673	$	1,497,453	$	4,706,114	$	3,647,377

The weighted average assumptions used to estimate the fair value of options granted during 2006 and 2005 were:

	Three months ended		Nine months ended
		September 30	September 30
	2006	2005	2006	2005
Risk-free interest rate	4%	3%	4%	3%
Expected life	2.8 years	2.2 years	4.4 years	2.2 years
Vesting period	0 – 24 months	0 – 18 months	0 – 24 months	0 – 18 months
Expected volatility	53%	76%	53%	76%
Expected dividend yield	nil	nil	nil	nil

Option pricing models require the input of highly subjective assumptions including the expected price volatility. Changes in the subjective input assumptions can materially affect the fair value estimate, and therefore the existing models do not necessarily provide a reliable measure of the fair value of the Company's share purchase options.

(e) Contributed surplus

Contributed surplus, December 31, 2005	$	7,289,377
Changes during the period
Non-cash stock-based compensation		4,706,114
Common shares returned to treasury (note 6)		1,772,776
Fair-value of stock options allocated to shares issued on exercise		(2,768,969	)
Contributed surplus, September 30, 2006	$	10,999,298

NORTHERN DYNASTY MINERALS LTD.

Notes to Consolidated Financial Statements

Three and nine months ended September 30, 2006

(Unaudited – Expressed in Canadian Dollars unless otherwise stated)

5. RELATED PARTY BALANCES AND TRANSACTIONS

		Three months ended				Nine months ended
		September 30				September 30
Transactions		2006		2005		2006		2005
Services rendered and expenses reimbursed
Hunter Dickinson Inc.	$	791,501	$	660,722	$	2,453,649	$	1,932,948
Hunter Dickinson Group Inc.		–		3,200		–		9,600
Sidev Holdings Ltd.		28,799		51,625		140,140		155,187
Galahad Gold plc		–		–		–		151,658
Beattie Consulting Ltd.		–		7,655		1,950		7,655

Balances receivable (payable)		At September 30, 2006		At December 31, 2005
Hunter Dickinson Inc.	$	595,585	$	451,560
Hunter Dickinson Group Inc.		–		(3,200	)
	$	595,585	$	448,360

6. COMMITMENTS

The Company was previously committed to guarantee the resale of 1,772,775 common shares of the Company (“NDM Resource Land shares”) issued to Teck Cominco American Incorporated (“Teck Cominco”) pursuant to an agreement to acquire the Resource Lands of the Pebble copper-gold-molybdenum property, for proceeds of US$9,938,600. At December 31, 2005, 473,700 of the 1,772,775 NDM Resource Land shares had been sold for proceeds of US$2,039,902. During the period ended June 30, 2006, the Company managed the sale of an additional 1,277,028 NDM Resource Land shares for proceeds paid to Teck Cominco of US$7,898,698, and thereby releasing its commitment regarding the resale of the NDM Resource Lands shares. During the period ended September 30, 2006, Teck Cominco returned the remaining 22,047 NDM Resource Land shares to the Company’s treasury.

The Company was also committed to guarantee the resale of 977,795 common shares of the Company (“NDM Exploration Lands shares”) for proceeds of US$4 million to Teck Cominco pursuant to an agreement to acquire the Exploration Lands of the Pebble copper-gold-molybdenum property. During the period ended June 30, 2006, the Company had managed the sale of 654,502 NDM Exploration Lands shares for proceeds paid to Teck Cominco of approximately US$4,000,000, and thereby releasing its commitment regarding the resale of the NDM Exploration Lands shares. During the period ended September 30, 2006, Teck Cominco returned the remaining 323,293 NDM Exploration Lands shares to the Company’s treasury.

In total, 345,340 common shares of the Company at a value of $1,772,276 were returned by Teck Cominco to the treasury of the Company.