CONDENSED CONSOLIDATED INTERIM
FINANCIAL STATEMENTS

THREE MONTHS ENDED
MARCH 31, 2009

(Expressed in thousands of Canadian Dollars)

(Unaudited)

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

Northern Dynasty Minerals Ltd.
Condensed Consolidated Interim Statements of Financial Position
(Unaudited - Expressed in thousands of Canadian Dollars)

			March 31			December 31
			2009			2008
	Note					(Note 8	)
ASSETS
Non-current assets
Property, plant and equipment		$	2		$	11
Investment in the Pebble Limited Partnership	5		125,935			121,611
			125,937			121,622
Current assets
Balances receivable from related parties	6		14			149
Amounts receivable and prepayments			138			165
Marketable securities			2			2
Cash and cash equivalents			45,162			45,966
			45,316			46,282
Total Assets		$	171,253		$	167,904
EQUITY
Share capital		$	365,682		$	365,202
Reserves			55,119			47,710
Deficit			(249,714	)		(245,156	)
			171,087			167,756
LIABILITIES
Current liabilities
Accounts payable and accrued liabilities			166			148
			166			148
Total Equity and Liabilities		$	171,253		$	167,904

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

These consolidated financial statements are authorized for issue on May 14, 2009. They are signed on its behalf by:

/s/ Ronald W. Thiessen	/s/ Robert A. Dickinson
Ronald W. Thiessen	Robert A. Dickinson
Director	Director

Northern Dynasty Minerals Ltd.
Condensed Consolidated Interim Statements of Comprehensive Loss
(Unaudited - Expressed in thousands of Canadian Dollars, except for share information)

			Three months ended March 31
			2009			2008
	Note					(Note 8	)
Expenses
Depreciation		$	9		$	–
Conference and travel			110			62
Exploration			52			66
Foreign exchange gain			(42	)		(1,291	)
Legal, accounting and audit			41			(60	)
Office and administration			1,039			336
Shareholder communication			194			52
Share-based compensation			4,468			670
Trust and filing			146			171
Loss (income) from operating activities			6,017			6
Interest income			(88	)		(392	)
Loss (income) before taxes			5,929			(386	)
Income taxes			–			–
Loss (income) for the period		$	5,929		$	(386	)
Other comprehensive loss (income)
Unrealized loss on available-for-sale marketable securities			–			2
Exchange difference arising on translation of investment in
the Pebble Limited Partnership			(4,324	)		(3,654	)
Other comprehensive loss (income)		$	(4,324	)	$	(3,652	)
Total comprehensive loss (income)		$	1,605		$	(4,038	)
Basic and diluted loss per common share	4	$	0.06		$	–

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

Northern Dynasty Minerals Ltd.
Condensed Consolidated Interim Statements of Cash Flows
(Unaudited - Expressed in thousands of Canadian Dollars)

		Three months ended March 31
		2009			2008
					(Note 8	)
Operating activities
(Loss) income for the period	$	(5,929	)	$	386
Items not involving cash:
Depreciation		9			–
Donation of shares		437			–
Interest income		(88	)		(392	)
Share-based compensation		4,468			670
		(1,103	)		664
Changes in non-cash working capital items
Amounts receivable and prepaid expenses		27			64
Accounts payable and accrued liabilities		18			(1,542	)
Balances receivable from related parties		135			976
		180			(502	)
Net cash provided by (used in) operating activities		(923	)		162
Investing activities
Interest income		88			392
Net cash provided from investing activities		88			392
Financing activities
Common shares issued for cash, net of issue costs		31			–
Net cash provided from financing activities		31			–
Increase (decrease) in cash and cash equivalents		(804	)		554
Effect of exchange rate fluctuations on cash held		–			–
Cash and cash equivalents at beginning of the period		45,966			39,128
Cash and cash equivalents at end of the period	$	45,162		$	39,682

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

Northern Dynasty Minerals Ltd.
Condensed Consolidated Interim Statements of Changes in Equity
(Unaudited -Expressed in thousands of Canadian Dollars, except for share information)

	Share capital				Reserves
								Foreign		Available-for-
					Share based			currency		sale financial
	Number of shares		Amount		payments			translation		assets			Deficit			Total
Balance at January 1, 2008 (Note 8)	92,543,639	$	365,202	$	17,381		$	–	$	(3	)	$	(244,005	)	$	138,575
Share-based compensation	–		–		670			–		–			–			670
Total comprehensive income (loss) for the year (Note 8)	–		–		–			3,654		(2	)		386			4,038
Balance at March 31, 2008	92,543,639	$	365,202	$	18,051		$	3,654	$	(5	)	$	(243,619	)	$	143,283
Balance at January 1, 2009	92,543,639	$	365,202	$	23,718		$	22,635	$	(14	)	$	(243,785	)	$	167,756
Shares issued	85,238		468		–			–		–			–			468
Share-based compensation	–		–		4,468			–		–			–			4,468
Fair value of stock options allocated to shares issued on exercise	–		12		(12	)		–		–			–			–
Total comprehensive income (loss) for the period	–		–		–			4,324		–			(5,929	)		(1,605	)
Balance at March 31, 2009	92,628,877	$	365,682	$	28,174		$	26,959	$	(14	)	$	(249,714	)	$	171,087

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

Northern Dynasty Minerals Ltd.

Notes to the Condensed Consolidated Interim Financial Statements

For the three months ended March 31, 2009 and 2008

(Unaudited - Expressed in thousands of Canadian Dollars, unless otherwise stated)

1.	NATURE OF OPERATIONS AND CONTINUANCE OF OPERATIONS
	Northern Dynasty Minerals Ltd. (the "Company") is incorporated under the laws of the Province of British Columbia, Canada, and its principal business activity is the exploration of mineral properties. The address of the Company’s registered office is #1020 – 800 West Pender Street, Vancouver, BC, Canada V6C 2V6. The consolidated financial statements of the Company as at and for the period ended March 31, 2009 comprise the Company and its subsidiaries and the Company’s interest in jointly controlled entities. The Company is the ultimate parent. The Company’s principal mineral property interest is its 50% share in the Pebble Project located in Alaska, United States of America (“USA”).
	The Company is in the process of exploring its mineral property interests and has not yet determined whether its investment in the Pebble Project contains mineral reserves that are economically recoverable. The Company’s continuing operations and the underlying value and recoverability of the amounts shown for the investment in the Pebble Project is entirely dependent upon the existence of economically recoverable mineral reserves, the ability of the Company to obtain the necessary financing to complete the exploration and development of the investment in the Pebble Project, obtaining the necessary permits to mine, and on future profitable production or proceeds from the disposition of the investment in the Pebble Project.
2.	SIGNIFICANT ACCOUNTING POLICIES
	(a)	Statement of Compliance and Conversion to International Financial Reporting Standards
	The Canadian Accounting Standards Board (“AcSB”) confirmed in February 2008 that IFRS will replace Canadian generally accepted accounting principles (“GAAP”) for publicly accountable enterprises for financial periods beginning on and after January 1, 2011, with the option available to early adopt IFRS from periods beginning on or after January 1, 2009 upon receipt of approval from the Canadian Securities regulatory authorities.
	These condensed consolidated interim financial statements have been prepared in accordance with International Accounting Standard 34, Interim Financial Reporting (“IAS 34”) using accounting policies consistent with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”) and interpretations of the International Financial Reporting Interpretations Committee (“IFRIC”).
	These are the Company’s first IFRS condensed consolidated interim financial statements for part of the period covered by the first IFRS consolidated annual financial statements to be presented in accordance with IFRS for the year ending December 31, 2009. Previously, the Company prepared its consolidated annual and consolidated interim financial statements in accordance with GAAP.
	(b)	Basis of Preparation
	These condensed consolidated interim financial statements have been prepared on a historical cost basis except for financial instruments classified as available-for-sale which are stated at their fair value. In addition these condensed consolidated interim financial statements have been prepared using the accrual basis of accounting, except for cash flow information.

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Northern Dynasty Minerals Ltd.

Notes to the Condensed Consolidated Interim Financial Statements

For the three months ended March 31, 2009 and 2008

(Unaudited - Expressed in thousands of Canadian Dollars, unless otherwise stated)

The preparation of interim financial statements in conformity with IAS 34 requires management to make judgments, estimates and assumptions that affect the application of policies and reported amounts of assets and liabilities, income and expenses. Actual results may differ from these estimates. These condensed consolidated interim financial statements do not include all of the information required for full annual financial statements

These condensed consolidated interim financial statements have been prepared on the basis of IFRS standards that are effective or available for early adoption on December 31, 2009, the Company’s first annual reporting date.

The standards that will be effective or available for voluntary early adoption in the annual financial statements for the year ending December 31, 2009 are subject to change and maybe affected by additional interpretation(s). Accordingly, the accounting policies for the annual period that are relevant to these condensed consolidated interim financial statements will be determined only when the first IFRS financial statements are prepared for the year ending December 31, 2009.

The preparation of these condensed consolidated interim financial statements resulted in changes to the accounting policies as compared with the most recent annual financial statements prepared under GAAP. The accounting policies set out below have been applied consistently to all periods presented in these condensed consolidated interim financial statements. They also have been applied in preparing an opening IFRS balance sheet at January 1, 2008 for the purposes of the transition to IFRS, as required by IFRS 1,

First Time Adoption of International Financial Reporting Standards (IFRS 1). The impact of the transition from GAAP to IFRS is explained in Note 8.

(c)        Basis of Consolidation

These condensed consolidated interim financial statements include the accounts of the Company and all its subsidiaries (note 7).

The Company has determined that its investment in the Pebble Limited Partnership (the “Pebble Partnership”), a 50:50 partnership with an indirect wholly-owned subsidiary of Anglo-American plc (“Anglo”) in the Pebble Project, qualifies as a jointly controlled entity which is a joint venture carried on by each venturer using its own assets in pursuit of the joint operations in accordance with IAS 31, Interests in Joint Ventures. The Company has elected to apply the equity method to account for its interest in the Pebble Partnership (note 8). The investment is carried in the statement of financial position at cost and adjusted by post-acquisition changes in the Company’s share of the net assets of the joint venture, less any impairments.

Inter-company balances and transactions, including any unrealised income and expenses arising from inter-company transactions, are eliminated in preparing the condensed consolidated interim financial statements.

Unrealised gains arising from transactions with equity accounted investees are eliminated against the investment to the extent of the Company’s interest in the investee. Unrealised losses are eliminated in the same way as unrealised gains, but only to the extent that there is no evidence of impairment.

(d)        Business Combinations

Business combinations that occurred prior to January 1, 2008 were not accounted for in accordance with IFRS 3, Business Combinations (“IFRS 3”) or IAS 27, Consolidated and Separate Financial Statements, in accordance with the IFRS 1 exemption discussed in Note 8.

Page 2

Northern Dynasty Minerals Ltd.

Notes to the Condensed Consolidated Interim Financial Statements

For the three months ended March 31, 2009 and 2008

(Unaudited - Expressed in thousands of Canadian Dollars, unless otherwise stated)

Acquisitions of subsidiaries and businesses are accounted for using the purchase method. The cost of the business combination is measured as the aggregate of the fair values (at the date of exchange) of assets given, liabilities incurred or assumed, and equity instruments issued by the Company in exchange for control of the acquire, plus any costs directly attributable to the business combination. The acquiree’s identifiable assets, liabilities and contingent liabilities that meet the conditions for recognition under IFRS 3 are recognized at their fair values at the acquisition date, except for non-current assets (or disposal groups) that are classified as held for sale in accordance with IFRS 5, Non-current Assets Held for Sale and Discontinued Operations, which are recognized and measured at fair value less costs to sell.

Goodwill arising on acquisition is recognized as an asset and initially measured at cost, being the excess of the cost of the business combination over the Company’s interest in the net fair value of the identifiable assets, liabilities and contingent liabilities recognized. If, after reassessment, the Company’s interest in the net fair value of the acquiree’s identifiable assets, liabilities and contingent liabilities exceeds the cost of the business combination, the excess is recognized immediately in profit or loss.

The interest of non-controlling shareholders in the acquiree is initially measured at the non-controlling shareholders’ proportion of the net fair value of the assets, liabilities and contingent liabilities recognized.

(e)        Foreign Currencies

The functional and presentation currency of the Company is the Canadian dollar.

Transactions in currencies other than the functional currency are recorded at the rates of exchange prevailing on dates of transactions. At each financial position reporting date, monetary assets and liabilities that are denominated in foreign currencies are translated at the rates prevailing at the date when the fair value was determined. Non-monetary items that are measured in terms of historical cost in a foreign currency are not retranslated.

The Company has determined that the functional currency of the Pebble Partnership is the US dollar. Exchange differences arising from the translation of the net investment in the Pebble Partnership are taken directly to the foreign currency translation reserve in other comprehensive income.

(f)        Financial Instruments

Financial assets and liabilities:

Investments are recognized and derecognized on trade date where the purchase or sale of an investment is under a contract whose terms require delivery of the investment within the timeframe established by the market concerned, and are initially measured at fair value, plus transaction costs, except for those financial assets classified as at fair value through profit or loss, which are initially measured at fair value. Financial assets held are balances receivable from related parties, amounts receivable and prepayments, marketable securities and cash and cash equivalents. These are classified into the following specified categories: loans and receivables and other liabilities and available-for-sale (“AFS”) financial assets. The classification depends on the nature and purpose of the financial assets and is determined at the time of initial recognition.

Marketable securities held by the Company that are traded in an active market are classified as being AFS and are stated at fair value. Gains and losses arising from changes in fair value are recognized directly in other comprehensive income in the investments revaluation reserve with the exception of impairment losses, interest calculated using the effective interest method and foreign exchange gains and losses on monetary

Page 3

Northern Dynasty Minerals Ltd.

Notes to the Condensed Consolidated Interim Financial Statements

For the three months ended March 31, 2009 and 2008

(Unaudited - Expressed in thousands of Canadian Dollars, unless otherwise stated)

assets, which are recognized directly in profit or loss. Where the investment is disposed of or is determined to be impaired, the cumulative gain or loss previously recognized in the investments revaluation reserve is included in profit or loss for the period.

The fair value of AFS monetary assets denominated in a foreign currency is determined in that foreign currency and translated at the spot rate at the financial position reporting date. The change in fair value attributable to translation differences that result from a change in amortized cost of the asset is recognized in profit or loss, and other changes are recognized in other comprehensive income.

Amounts receivable, accounts payable and accrued liabilities that have fixed or determinable payments that are not quoted in an active market are classified as loans and receivables. Loans and receivables are measured at amortized cost using the effective interest method, less any impairment. Interest income is recognized by applying the effective interest rate, except for short-term receivables when the recognition of interest would be immaterial.

Impairment of financial assets:

Financial assets are assessed for indicators of impairment at each financial position reporting date. Financial assets are impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows of the investment have been impacted. For unlisted shares classified as AFS, a significant or prolonged decline in the fair value of the security below its cost is considered to be objective evidence of impairment.

For all other financial assets objective evidence of impairment could include:

significant financial difficulty of the issuer or counterparty; or

default or delinquency in interest or principal payments; or

it becoming probable that the borrower will enter bankruptcy or financial re-organization.

For certain categories of financial assets, such as amounts receivable and prepayments, assets that are assessed not to be impaired individually are subsequently assessed for impairment on a collective basis. The carrying amount of the financial asset is reduced by the impairment loss directly for all financial assets with the exception of amounts receivable, where the carrying amount is reduced through the use of an allowance account. When an amount receivable is considered uncollectible, it is written off against the allowance account. Subsequent recoveries of amounts previously written off are credited against the allowance account. Changes in the carrying amount of the allowance account are recognized in profit or loss.

With the exception of AFS equity instruments, if, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognized, the previously recognized impairment loss is reversed through profit or loss to the extent that the carrying amount of the investment at the date the impairment is reversed does not exceed what the amortized cost would have been had the impairment not been recognized. In respect of AFS equity securities, impairment losses previously recognized through profit or loss are not reversed through profit or loss. Any increase in fair value subsequent to an impairment loss is recognized directly in equity.

The Company does not have any derivative financial instruments.

Page 4

Northern Dynasty Minerals Ltd.

Notes to the Condensed Consolidated Interim Financial Statements

For the three months ended March 31, 2009 and 2008

(Unaudited - Expressed in thousands of Canadian Dollars, unless otherwise stated)

(g)        Exploration and Evaluation

Exploration and evaluation expenditure include the costs of acquiring licenses, costs associated with exploration and evaluation activity, and the fair value (at acquisition date) of exploration and evaluation assets acquired in a business combination. Exploration and evaluation expenditure is expensed as incurred except for expenditures associated with the acquisition of exploration and evaluation assets through a business combination or asset acquisition which are recognized as assets. Costs incurred before the Company has obtained the legal rights to explore an area are recognized in the income statement.

Capitalized costs, including general and administrative costs, are only allocated to the extent that these costs can be related directly to operational activities in the relevant area of interest where it is considered likely to be recoverable by future exploitation or sale or where the activities have not reached a stage which permits a reasonable assessment of the existence of reserves.

Exploration and evaluation assets are assessed for impairment if (i) sufficient data exists to determine technical feasibility and commercial viability, and (ii) facts and circumstances suggest that the carrying amount exceeds the recoverable amount.

Once the technical feasibility and commercial viability of the extraction of mineral resources in an area of interest are demonstrable, exploration and evaluation assets attributable to that area of interest are first tested for impairment and then reclassified to mining property and development assets within property, plant and equipment.

Recoverability of the carrying amount of the exploration and evaluation assets is dependent on successful development and commercial exploitation, or alternatively, sale of the respective areas of interest.

(h)        Property, Plant and Equipment

Property, plant and equipment (“PPE”) are carried at cost, less accumulated depreciation and accumulated impairment losses.

The cost of an item of PPE consists of the purchase price, any costs directly attributable to bringing the asset to the location and condition necessary for its intended use and an initial estimate of the costs of dismantling and removing the item and restoring the site on which it is located.

Depreciation is provided at rates calculated to write off the cost of property, plant and equipment, less their estimated residual value, using the declining balance method at various rates ranging from 20% - 30% per annum.

An item of PPE is 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 on disposal of the asset, determined as the difference between the net disposal proceeds and the carrying amount of the asset, is recognized in profit or loss in the consolidated statement of comprehensive income or loss.

Where an item of plant and equipment comprises major components with different useful lives, the components are accounted for as separate items of plant and equipment. Expenditures incurred to replace a component of an item of property, plant and equipment that is accounted for separately, including major inspection and overhaul expenditures are capitalized.

Page 5

Northern Dynasty Minerals Ltd.

Notes to the Condensed Consolidated Interim Financial Statements

For the three months ended March 31, 2009 and 2008

(Unaudited - Expressed in thousands of Canadian Dollars, unless otherwise stated)

(i)        Cash and Cash Equivalents

Cash and cash equivalents in the statement of financial position comprise cash at banks and on hand, and short term deposits with an original maturity of three months or less, which are readily convertible into a known amount of cash. The Company’s cash and cash equivalents are invested with major financial institutions in business accounts, bankers’ acceptances and in government treasury bills which are available on demand by the Company for its programs, and are not invested in any asset backed deposits/investments.

(j)        Impairment

At each financial position reporting date the carrying amounts of the Company’s assets are reviewed to determine whether there is any indication that those assets are impaired. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment, if any. The recoverable amount is the higher of fair value less costs to sell and value in use. Fair value is determined as the amount that would be obtained from the sale of the asset in an arm’s length transaction between knowledgeable and willing parties. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. If the recoverable amount of an asset is estimated to be less than its carrying amount, the carrying amount of the asset is reduced to its recoverable amount and the impairment loss is recognized in the profit or loss for the period. For the purposes of impairment testing, exploration and evaluation assets are allocated to cash-generating units to which the exploration activity relates. For an asset that does not generate largely independent cash inflows, the recoverable amount is determined for the cash generating unit to which the asset belongs.

Where an impairment loss subsequently reverses, the carrying amount of the asset (or cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognized for the asset (or cash-generating unit) in prior years. A reversal of an impairment loss is recognized immediately in profit or loss.

(k)        Share Capital

Common shares are classified as equity. Transaction costs directly attributable to the issue of common shares and share options are recognized as a deduction from equity, net of any tax effects.

(l)        Share-based payment transactions

The share option plan allows Company employees and consultants to acquire shares of the Company. The fair value of options granted is recognized as an employee or consultant expense with a corresponding increase in equity. 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 straight line 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.

Page 6

Northern Dynasty Minerals Ltd.

Notes to the Condensed Consolidated Interim Financial Statements

For the three months ended March 31, 2009 and 2008

(Unaudited - Expressed in thousands of Canadian Dollars, unless otherwise stated)

(m)        Income taxes

Income tax on the profit or loss for the periods presented comprises current and deferred tax. Income tax 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 expense is the expected tax payable on the taxable income for the year, using tax rates enacted or substantively enacted at period end, adjusted for amendments to tax payable with regards to previous years.

Deferred tax is provided using the balance sheet 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. The following temporary differences are not provided for: goodwill not deductible for tax purposes; the initial recognition of assets or liabilities that affect neither accounting or taxable profit; and differences relating to investments in subsidiaries to the extent that they will probably not reverse in the foreseeable future. The amount of deferred tax provided is based on the expected manner of realization or settlement of the carrying amount of assets and liabilities, using tax rates enacted or substantively enacted at the balance sheet date.

A deferred tax asset is recognized only to the extent that it is probable that future taxable profits will be available against which the asset can be utilised. To the extent that the Company does not consider it probable that a future tax asset will be recovered, it provides a valuation allowance against that excess.

Additional income taxes that arise from the distribution of dividends are recognized at the same time as the liability to pay the related dividend.

Deferred tax assets and liabilities are offset when there is a legally enforceable right to set of current tax assets against current tax liabilities and when they relate to income taxes levied by the same taxation authority and the Company intends to settle its current tax assets and liabilities on a net basis.

(n)        Asset Retirement Obligation

An obligation to incur restoration, rehabilitation and environmental costs arises when environmental disturbance is caused by the exploration, development or ongoing production of a mineral property interest. Such costs arising from the decommissioning of plant and other site preparation work, discounted to their net present value, are provided for and capitalized at the start of each project to the carrying amount of the asset, as soon as the obligation to incur such costs arises. Discount rates using a pre-tax rate that reflect the time value of money are used to calculate the net present value. These costs are charged against profit or loss over the economic life of the related asset, through amortization using either the unit-of-production or the straight line method. The related liability is adjusted for each period for the unwinding of the discount rate and for changes to the current market-based discount rate, amount or timing of the underlying cash flows needed to settle the obligation. Costs for restoration of subsequent site damage which is created on an ongoing basis during production are provided for at their net present values and charged against profits as extraction progresses.

The Company has no material restoration, rehabilitation and environmental costs as the disturbance to date is minimal.

Page 7

Northern Dynasty Minerals Ltd.

Notes to the Condensed Consolidated Interim Financial Statements

For the three months ended March 31, 2009 and 2008

(Unaudited - Expressed in thousands of Canadian Dollars, unless otherwise stated)

(o)        Earnings (Loss) per Share

The Company presents basic and diluted earnings (loss) per share data for its common shares, calculated by dividing the loss attributable to common shareholders of the Company by the weighted average number of common shares outstanding during the period. Diluted earnings (loss) per share is determined by adjusting the profit or loss attributable to common shareholders and the weighted average number of common shares outstanding for the effects of all dilutive potential common shares.

(p)        Segment Reporting

The Company operates in a single reportable operating segment – the acquisition, exploration and development of mineral properties.

(q)        Significant Accounting Judgments and Estimates

The preparation of these condensed consolidated financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and reported amounts of expenses during the reporting period. Actual outcomes could differ from these estimates. The condensed consolidated financial statements include estimates which, by their nature, are uncertain. The impacts of such estimates are pervasive throughout the consolidated financial statements, and may require accounting adjustments based on future occurrences. Revisions to accounting estimates are recognized in the period in which the estimate is revised and the revision affects both current and future periods.

Significant assumptions about the future and other sources of estimation uncertainty that management has made at the balance sheet date, that could result in a material adjustment to the carrying amounts of assets and liabilities, in the event that actual results differ from assumptions made, relate to, but are not limited to, the following:

i.	the recoverability of amounts receivable and prepayments which are included in the condensed consolidated interim statement of financial position;
ii.	the carrying value of the investment in the Pebble Partnership and the recoverability of the carrying value which are included in the condensed consolidated interim statement of financial position;
iii.	the estimated useful lives of property, plant and equipment which are included in the condensed consolidated interim statement of financial position and the related depreciation included in the consolidated statement of comprehensive loss for the period ended March 31, 2009;
iv.	the inputs used in accounting for share purchase option expense in the condensed consolidated interim statement of comprehensive loss; and
v.	the nil provision for income taxes which is included in the condensed consolidated interim statements of comprehensive loss and composition of deferred income tax assets and liabilities included in the condensed consolidated interim statement of financial position at March 31, 2009.

(r)        New Standards Not Yet Adopted

Standards and interpretations issued but not yet effective:

Amendments to IFRS 3, Business Combinations

Amendments to IFRS 5, Non-current Assets Held for Sale and Discontinued Operations

Amendments to IAS 16, Property, Plant and Equipment

Page 8

Northern Dynasty Minerals Ltd.

Notes to the Condensed Consolidated Interim Financial Statements

For the three months ended March 31, 2009 and 2008

(Unaudited - Expressed in thousands of Canadian Dollars, unless otherwise stated)

Amendments to IAS 27, Consolidated and Separate Financial Statements

Amendments to IAS 28, Investments in Associates

Amendments to IAS 31, Interests in Joint Ventures

Amendments to IAS 40, Investment Property

	The Company anticipates that the adoption of these standards and interpretations in future periods will have no material impact on the consolidated financial statements of the Company except for additional disclosures.
3.	CAPITAL AND RESERVES
	(a)	Authorized Share Capital
	At March 31, 2009, the authorized share capital comprised an unlimited number of common shares. The common shares do not have a par value. All issued shares are fully paid.
	(b)	Share purchase option compensation plan
	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 officers, directors, employees, and service providers. The share option plan (the "2008 Rolling Option Plan") is based on the maximum number of eligible shares equalling a rolling percentage of up to 10% of the Company's outstanding common shares, calculated from time to time. Pursuant to the 2008 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.

Page 9

Northern Dynasty Minerals Ltd.

Notes to the Condensed Consolidated Interim Financial Statements

For the three months ended March 31, 2009 and 2008

(Unaudited - Expressed in thousands of Canadian Dollars, unless otherwise stated)

The continuity of share purchase options for the period ended March 31, 2009 is as follows:

	Exercise		Dec 31							Expired /			Mar 31
Expiry date	price		2008		Granted		Exercised			cancelled			2009
April 30, 2009	$ 7.25		359,400		–		–			(344,400	)		15,000
April 30, 2009	$ 9.81		50,000		–		–			(50,000	)		–
April 30, 2009	$10.32		593,000		–		–			(543,000	)		50,000
April 14, 2011	$ 9.74		1,461,668		–		–			(1,426,668	)		35,000
April 30, 2011	$ 7.25		945,000		–		–			(765,000	)		180,000
October 27, 2011	$ 3.00		221,877		–		(10,238	)		(2,829	)		208,810
February 2, 2012	$ 5.00		–		529,000		–			–			529,000
February 4, 2012	$ 5.00		–		2,168,200		–			(10,000	)		2,158,200
February 20, 2012	$10.95		828,000		–		–			(678,000	)		150,000
March 26, 2012	$ 8.25		–		25,000		–			–			25,000
April 11, 2013	$ 9.74		753,000		–		–			(678,000	)		75,000
August 22, 2013	$ 5.35		40,000		–		–			–			40,000
October 27, 2013	$ 3.00		140,000		–		–			–			140,000
February 2, 2014	$ 5.00		–		2,063,000		–			–			2,063,000
February 4, 2014	$ 5.00		–		220,000		–			–			220,000
			5,391,945		5,005,200		(10,238	)		(4,497,897	)		5,889,010
Weighted average
exercise price		$	8.90	$	5.02	$	3.00		$	9.36		$	5.26

During the period, the Company issued 4,980,200 options with an exercise price of $5.00 per common share, with expiry dates ranging from February 2, 2012 to February 4, 2014. The Company cancelled 4,497,897 options with exercise prices between $7.25 and $10.95 and with various expiry dates between April 04, 2009 and April 11, 2013. The Company determined that the new options are replacement options and as such, a modification of the cancelled options has occurred for accounting purposes. For modified options, compensation expense is based on the fair value of the options on the alteration date less the fair value of the original options based on the shorter of the remaining expanded life of the old option or the expected life of the modified option.

The weighted average assumptions used to estimate the fair value of options for the period ended March 31, 2009 and 2008 were:

	Three months ended
	March 31
	2009	2008
Risk-free interest rate	1.55%	2.79%
Expected life	3.62 years	2.60 years
Expected volatility	65.6%	62.1%
Expected dividend yield	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.

Page 10

Northern Dynasty Minerals Ltd.

Notes to the Condensed Consolidated Interim Financial Statements

For the three months ended March 31, 2009 and 2008

(Unaudited - Expressed in thousands of Canadian Dollars, unless otherwise stated)

4.	LOSS (INCOME) PER SHARE
	Basic and diluted loss (income) per share
	The calculation of basic and diluted loss per share for the three months ended March 31, 2009 was based on the loss (income) attributable to common shareholders of $5,929 (2008 – ($386)) and a weighted average number of common shares outstanding of 92,557,829 (2008 – 92,543,639).
	Diluted loss per share did not include the effect of 5,889,010 share purchase options as they are anti-dilutive.
5.	INVESTMENT IN THE PEBBLE LIMITED PARTNERSHIP
	On July 26, 2007, the Company converted a wholly-owned general partnership formed in 2006 to hold its Pebble Property interest into a limited partnership, the Pebble Partnership, so that an indirect wholly-owned subsidiary of Anglo could subscribe for 50% of the Pebble Partnership's equity effective July 31, 2007. Each of the Company and Anglo American plc (“Anglo”) have equal rights in the Pebble Partnership through wholly-owned affiliates. The purpose of the strategic Partnership is to engineer, permit, construct and operate a modern, long-life mine at the Pebble Project. The Pebble Partnership's assets include the shares of two Alaskan subsidiaries which hold registered title to the claims. To maintain its 50% interest in the Pebble Partnership, Anglo is required to make staged cash investments into the Pebble Partnership aggregating to US$1.425 billion as discussed below.
	Anglo’s staged investment requirements includes an initial minimum expenditure of US$125 million to be expended towards a prefeasibility study (funding completed in 2008) plus a requirement to fund additional expenditures approved by the board of the general partner (Pebble Mines Corp.) unless Anglo elects to terminate its rights and relinquish all its interests in the Pebble Partnership. After the completion and approval by the partners of the prefeasibility study, Anglo is required, in order to retain its 50% interest in the Pebble Partnership, to commit to further expenditures which bring its total investment to at least US$450 million which amount is to be expended in producing a final feasibility study and in related activities, the completion of which is expected to take the Pebble Partnership to a production decision. Upon an affirmative decision by the partnership to develop a mine, Anglo is required to commit to the remainder of the total investment of US$1.425 billion in order to retain its interest in the Pebble Partnership. Following completion of the US$1.425 billion expenditure, any further expenditure will be funded by Anglo and Northern Dynasty on a 50:50 basis. If the feasibility study is completed after 2011, Anglo’s overall funding requirement increases from US$1.425 billion to US$1.5 billion. The Pebble Partnership agreement provides for equal project control rights for both partners with no operator’s fees payable to either party.
	The Company has determined that its investment in the Pebble Partnership qualifies as an interest in a jointly controlled entity under IAS 31, Interests in Joint Ventures, and has elected to apply the equity method in accounting for its interest in the Pebble Partnership. The Company’s share of the loss in the Pebble Partnership for the period was $Nil (2008 - $Nil) as the agreement with Anglo states that the distribution of losses funded by Anglo are allocated 100% to Anglo until the total investment of US$1.4 billion is met. The Company has not recognized losses relating to the Pebble Partnership totaling $14,434 in the period (2008 - $19,980), since the Company has no obligation in respect of these losses.

Page 11

Northern Dynasty Minerals Ltd.

Notes to the Condensed Consolidated Interim Financial Statements

For the three months ended March 31, 2009 and 2008

(Unaudited - Expressed in thousands of Canadian Dollars, unless otherwise stated)

Investment in Pebble Partnership		As at March 31		As At December 31
		2009		2008
Carrying value at the beginning of year	$	121,611	$	98,976
Foreign currency translation		4,324		22,635
Carrying value at the end of period	$	125,935	$	121,611

Summary financial information for the equity accounted investee, not adjusted for the percentage ownership held by the Company is as follows:

		As at and for the three months
		ended March 31
		2009		2008
Ownership		50%		50%
Non-current assets	$	595	$	769
Current assets		4,648		9,308
Total assets		5,243		10,077
Current liabilities		7,545		9,360
Total liabilities		7,545		9,360
Expenses		14,434		19,980
Net loss	$	14,434	$	19,980

	The results of the Pebble Partnership have not been included in the financial statements of the Company.
6.	RELATED PARTY BALANCES AND TRANSACTIONS
	A number of key management personnel, or their related parties, hold positions in other entities that result in them having control or significant influence over the financial or operating policies of the entities outlined below.
	The following entity transacted with the Company in the reporting period. The terms and conditions of the transactions with key management personnel and their related parties were no more favourable than those available, or which might reasonably be expected to be available, on similar transactions to non-key management personnel related entities on an arm’s length basis.
	The aggregate value of transactions and outstanding balances relating to key management personnel and entities over which they have control or significant influence were as follows:

Transactions		Three months ended March 31
		2009		2008
Services rendered:
Hunter Dickinson Services Inc.	$	288	$	524

Page 12

Northern Dynasty Minerals Ltd.

Notes to the Condensed Consolidated Interim Financial Statements

For the three months ended March 31, 2009 and 2008

(Unaudited - Expressed in thousands of Canadian Dollars, unless otherwise stated)

		As at March 31		As at December 31
Related party balances receivable		2009		2008
Hunter Dickinson Services Inc.	$	14	$	149

Hunter Dickinson Services Inc. ("HDSI") is a private Company owned equally by several public companies, one of which is the Company. HDSI has certain directors in common with the Company and provides geological, corporate development, administrative and management services to, and incurs third party costs on behalf of, the Company and its subsidiaries on a full cost recovery basis pursuant to an agreement dated June 1, 2008. No interest is accrued on these related party balances.

7.

SUBSIDIARIES

		Proportion of
Name of Subsidiary	Place of Incorporation	Ownership Interest	Principal Activity
3537137 Canada Inc.	British Columbia, Canada	100%	Holding company
0796412 BC Ltd.	British Columbia, Canada	100%	Not active
Northern Dynasty Partnership	Alaska, United States	100%	Holding company

8	TRANSITION TO INTERNATIONAL FINANCIAL REPORTING STANDARDS
	As stated in Note 2, these are the Company’s first condensed consolidated interim financial statements for the period covered by the first annual consolidated financial statements prepared in accordance with IFRS.
	The accounting policies in Note 2 have been applied in preparing the condensed consolidated interim financial statements for the three months ended March 31, 2009, the comparative information for the three months ended March 31, 2008, the financial statements for the year ended December 31, 2008 and the preparation of an opening IFRS statement of financial position on the Transition Date, January 1, 2008.
	In preparing its opening IFRS statement of financial position, comparative information for the three months ended March 31, 2008 and financial statements for the year ended December 31, 2008, the Company has adjusted amounts reported previously in financial statements prepared in accordance with GAAP.
	An explanation of how the transition from previous GAAP to IFRS has affected the Company’s financial position, financial performance and cash flows is set out in the following tables.
	The guidance for the first time adoption of IFRS are set out in IFRS 1. IFRS 1 provides for certain mandatory exceptions and optional exemptions for first time adopters of IFRS. The Company elected to take the following IFRS 1 optional exemptions:

Page 13

Northern Dynasty Minerals Ltd.

Notes to the Condensed Consolidated Interim Financial Statements

For the three months ended March 31, 2009 and 2008

(Unaudited - Expressed in thousands of Canadian Dollars, unless otherwise stated)

to apply the requirements of IFRS 3, Business Combinations, prospectively from the Transition Date;

to apply the requirements of IFRS 2, Share-based payments, only to equity instruments granted after November 7, 2002 which had not vested as of the Transition Date; and

to transfer all foreign currency translation differences, recognized as a separate component of equity, to deficit as at the Transition Date including those foreign currency differences which arise on adoption of IFRS.

Reconciliation of Assets, Liabilities & Equity

		As at January 1, 2008
					Effect of transition to
		GAAP			IFRS							IFRS
					Notes (a) (d)					Notes
ASSETS
Non-current assets
Property, plant and equipment	$	674		$	(659	)	$	–			$	15
Mineral property interest		168,222			(105,983	)		–				–
					(62,239	)		–				–
Investment in the Pebble Limited Partnership		–			98,976			–				98,976
Total non-current assets		168,896			(69,905	)		–				98,991
Current assets
Balances receivable from related parties		27			1,193			–				1,220
Amounts receivable and prepayments		1,000			(125	)		–				875
Marketable securities		13			–			–				13
Cash and cash equivalents		40,341			(1,213	)		–				39,128
Total current assets		41,381			(145	)		–				41,236
	$	210,277		$	(70,050	)	$	–			$	140,227
EQUITY
Share capital	$	365,202		$	–		$	–			$	365,202
Reserves		18,015			–			(637	)	(c)		17,378
Deficit		(273,906	)		29,264			637		(c)		(244,005	)
Total equity		109,311			29,264			–				138,575
LIABILITIES
Current liabilities
Balance payable to related parties		21			–			–				21
Accounts payable and accrued liabilities		7,607			(5,976	)		–				1,631
Total current liabilities		7,628			(5,976	)		–				1,652
Future income tax liability		57,786			(57,786	)		–				–
Non-controlling interest		35,552			(35,552	)		–				–
Total liabilities		100,966			(99,314	)		–				1,652
	$	210,277		$	(70,050	)	$	–			$	140,227

Page 14

Northern Dynasty Minerals Ltd.

Notes to the Condensed Consolidated Interim Financial Statements

For the three months ended March 31, 2009 and 2008

(Unaudited - Expressed in thousands of Canadian Dollars, unless otherwise stated)

Reconciliation of Assets, Liabilities & Equity (continued)

		As at March 31, 2008
					Effect of transition to
		GAAP			IFRS							IFRS
					Notes (a) (d)					Notes
ASSETS
Non-current assets
Property, plant and equipment	$	785		$	(770	)	$	–			$	15
Mineral property interest		168,222			(105,983	)		–				–
					(62,239	)		–				–
Investment in the Pebble Limited Partnership		–			102,631			–				102,631
Total non-current assets		169,007			(66,361	)		–				102,646
Current assets
Balances receivable from related parties		–			80			–				80
Amounts receivable and prepayments		2,368			(1,558	)		–				810
Marketable securities		11			–			–				11
Cash and cash equivalents		47,401			(7,719	)		–				39,682
Total current assets		49,780			(9,197	)		–				40,583
	$	218,787		$	(75,558	)	$	–			$	143,229
EQUITY
Share capital	$	365,202		$	–		$	–			$	365,202
Reserves		17,962			3,654			85		(c)		21,701
Deficit		(292,779	)		49,243			(85	)	(c)		(243,621	)
Total equity		90,385			52,897			–				143,282
LIABILITIES
Current liabilities
Balance payable to related parties		504			(647	)		–				(143	)
Accounts payable and accrued liabilities		8,723			(8,633	)		–				90
Total current liabilities		9,227			(9,280	)		–				(53	)
Future income tax liability		57,786			(57,786	)		–		(d)		–
Non-controlling interest		61,389			(61,389	)		–				–
Total liabilities		128,402			(128,455	)		–				(53	)
	$	218,787		$	(75,558	)	$	–			$	143,229

Page 15

Northern Dynasty Minerals Ltd.

Notes to the Condensed Consolidated Interim Financial Statements

For the three months ended March 31, 2009 and 2008

(Unaudited - Expressed in thousands of Canadian Dollars, unless otherwise stated)

Reconciliation of Assets, Liabilities & Equity (continued)

		As at December 31, 2008
					Effect of transition to
		GAAP			IFRS							IFRS
					Notes (a) (d)					Notes
ASSETS
Non-current assets
Property, plant and equipment	$	619		$	(608	)	$	–			$	11
Mineral property interest		168,222			(105,983	)		–				–
					(62,239	)
Investment in the Pebble Limited Partnership		–			121,611			–				121,611
Total non-current assets		168,841			(47,219	)		–				121,622
Current assets
Balances receivable from related parties		–			149			–				149
Amounts receivable and prepayments		1,109			(944	)		–				165
Marketable securities		2			–			–				2
Cash and cash equivalents		59,201			(13,235	)		–				45,966
Total current assets		60,312			(14,030	)		–				46,282
	$	229,153		$	(61,249	)	$	–			$	167,904
EQUITY
Share capital	$	365,202		$	–		$	–			$	365,202
Reserves		22,485			23,571			1,654		(c)		47,710
Deficit		(423,812	)		180,310			(1,654	)	(c)		(245,156	)
Total equity		(36,125	)		203,881			–				167,756
LIABILITIES
Current liabilities
Balance payable to related parties		1,328			(1,328	)		–				–
Accounts payable and accrued liabilities		12,015			(11,867	)		–				148
Total current liabilities		13,343			(13,195	)		–				148
Future income tax liability		57,753			(57,753	)		–				–
Non-controlling interest		194,182			(194,182	)		–				–
Total liabilities		265,278			(265,130	)		–				148
	$	229,153		$	(61,249	)	$	–			$	167,904

Page 16

Northern Dynasty Minerals Ltd.

Notes to the Condensed Consolidated Interim Financial Statements

For the three months ended March 31, 2009 and 2008

(Unaudited - Expressed in thousands of Canadian Dollars, unless otherwise stated)

Reconciliation of Loss (Income) and Comprehensive Loss (Income)

		Three months ended March 31, 2008
					Effect of
		GAAP			transition to IFRS							IFRS
					Notes (a) (d)					Notes
Expenses (income)
Depreciation	$	40		$	(40	)	$	–			$	–
Conference and travel		304			(242	)		–				62
Exploration		18,275			(18,209	)		–				66
Foreign exchange loss (gain)		(1,133	)		(158	)		–				(1,291	)
Interest income		(428	)		36			–				(392	)
Legal, accounting and audit		118			(178	)		–				(60	)
Office and administration		1,490			(1,154	)		–				336
Shareholder communication		52			–			–				52
Share-based compensation - exploration		(265	)		–			–				(265	)
Share-based compensation - administration		214			–			721		(c)		935
Trust and filing		171			–			–				171
Loss (income) before taxes		18,838			(19,945	)		721				(386	)
Income taxes		35			(35	)		–				–
Future income tax recovery		–			–			–				–
Loss (income) for the period	$	18,873		$	(19,980	)		721			$	(386	)
Other comprehensive loss (income)
Unrealized loss on available-for-sale marketable securities		2			–			–				2
Exchange difference on translation of investment in the Pebble Limited
Partnership		–			–			(3,654	)	(b)		(3,654	)
Other comprehensive loss (income)	$	2		$	–		$	(3,654	)		$	(3,652	)
Total comprehensive loss (income)	$	18,875		$	(19,980	)	$	(2,933	)		$	(4,038	)

Page 17

Northern Dynasty Minerals Ltd.

Notes to the Condensed Consolidated Interim Financial Statements

For the three months ended March 31, 2009 and 2008

(Unaudited - Expressed in thousands of Canadian Dollars, unless otherwise stated)

Reconciliation of Loss (Income) and Comprehensive Loss (Income) (continued)

		Year ended December 31, 2008
					Effect of
		GAAP			transition to IFRS						IFRS
					Notes (a) (d)				Notes
Expenses (income)
Depreciation	$	182		$	(178	)	$	–		$	4
Conference and travel		1,756			(1,483	)		–			273
Exploration		140,603			(140,195	)		–			408
Foreign exchange loss (gain)		(9,168	)		38			–			(9,130	)
Interest income		(1,268	)		153			–			(1,115	)
Legal, accounting and audit		1,141			(771	)		–			370
Office and administration		10,657			(8,644	)		–			2,013
Shareholder communication		384			–			–			384
Share-based compensation - exploration		1,641			–			–			1,641
Share-based compensation - administration		3,776			–			2,291	(c)		6,067
Trust and filing		235			–			–			235
Loss (income) before taxes		149,939			(151,080	)		2,291			1,150
Income taxes		–			–			–			–
Future income tax recovery		(33	)		33			–			–
Loss (income) for the period	$	149,906		$	(151,047	)	$	2,291		$	1,150
Other comprehensive loss (income)
Unrealized loss on available-for-sale marketable securities		11			–			–			11
Exchange difference on translation of investment in the Pebble Limited
Partnership		936			(23,571	)		–			(22,635	)
Other comprehensive loss (income)	$	947		$	(23,571	)	$	–		$	(22,624	)
Total comprehensive loss (income)	$	150,853		$	(174,618	)	$	2,291		$	(21,474	)

Page 18

Northern Dynasty Minerals Ltd.

Notes to the Condensed Consolidated Interim Financial Statements

For the three months ended March 31, 2009 and 2008

(Unaudited - Expressed in thousands of Canadian Dollars, unless otherwise stated)

Reconciliation of Cash Flows

		Three months ended March 31, 2008
					Effect of transition
		GAAP			to IFRS							IFRS
					Notes (a) (d)					Notes
Operating activities
Income (loss) for the period	$	(18,873	)	$	19,980		$	(721	)	(c)	$	386
Contributions from non-controlling interest		25,877			(25,877	)		–				–
Share-based compensation		(51	)		–			721		(c)		670
Changes in non-cash working capital		258			(760	)		–				(502	)
Cash and equivalents provided by (used in) operating activities		7,211			(6,657	)		–				554
Cash and equivalents used for investing activities		(151	)		151			–				–
Cash provided from financing activities		–			–			–				–
Increase (decrease) in cash and cash equivalents		7,060			(6,506	)		–				554
Cash and cash equivalents, beginning of period		40,341			(1,213	)		–				39,128
Cash and cash equivalents, end of period	$	47,401		$	(7,719	)	$	–			$	39,682

		Year ended December 31, 2008
					Effect of transition
		GAAP			to IFRS							IFRS
					Notes (a) (d)					Notes
Operating activities
Income (loss) for the period	$	(149,906	)	$	151,080		$	(2,324	)	(c) (b)	$	(1,150	)
Contributions from non-controlling interest		157,843			(157,872	)		33		(b)		4
Share-based compensation		5,417			–			2,291		(c)		7,708
Changes in non-cash working capital		5,633			(5,357	)		–				276
Cash and equivalents provided by (used in) operating activities		18,987			(12,149	)		–				6,838
Cash and equivalents used for investing activities		(127	)		127			–				–
Cash provided from financing activities		–			–			–				–
Increase (decrease) in cash and cash equivalents		18,860			(12,022	)		–				6,838
Cash and cash equivalents, beginning of period		40,341			(1,213	)		–				39,128
Cash and cash equivalents, end of period	$	59,201		$	(13,235	)	$	–			$	45,966

Page 19

Northern Dynasty Minerals Ltd.

Notes to the Condensed Consolidated Interim Financial Statements

For the three months ended March 31, 2009 and 2008

(Unaudited - Expressed in thousands of Canadian Dollars, unless otherwise stated)

Notes to Reconciliations

a)	Basis of Consolidation
	Under GAAP, the Company accounted for its interest in the Pebble Partnership as a variable interest entity with the Company as the primary beneficiary. Accordingly, the Company consolidated 100% of the Pebble Partnership, and recognized a non-controlling interest.
	IFRS does not include the concept of a variable interest entity. IFRS requires the Company to consolidate entities including Special Purpose Entities only where the Company has the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities. On application of IFRS, the Company has determined that it has joint control of the Pebble Partnership and can elect to use either the equity method or proportionate consolidation method to account for its interest in the Pebble Partnership.
	The Company has elected to apply the equity method to account for its interest in the Pebble Partnership, and the carrying value of the investment is the Company’s cost of investment to date in US dollars.
b)	Cumulative translation differences
	IFRS requires that the functional currency of each entity of the Company be determined separately. The Company has determined that as at the Transition Date the Canadian dollar was the functional currency of all entities in the Company except the Pebble Partnership which has a US dollar functional currency. In accordance with IFRS 1 optional exemptions, the Company elected to transfer the cumulative translation differences, recognized as a separate component of equity, to deficit at the Transition Date. Under GAAP, the Pebble Partnership was a defined as an integrated foreign operation from the date the Partnership was formed (“formation date”) to the Transition Date and therefore no foreign exchange translation in equity was noted. Under IFRS, the Pebble Partnership has a US dollar functional currency since the formation date and therefore as at the Transition Date a foreign exchange translation reserve of $7,554 had accumulated. In electing to take this IFRS 1 exemption, the Company has included this foreign exchange translation reserve at the Transition Date within the deficit. For the period ended March 31, 2008 and for the year ended December 31, 2008, shareholders’ equity increased due to an increase in the foreign currency translation reserve of $3,654 and $22,635 respectively with a corresponding increase in the equity investment in the Pebble Partnership.
c)	Share-based Payment
	Under GAAP, the Company measured share-based compensation related to share purchase options at the fair value of the options granted using the Black-Scholes option pricing formula and recognized this expense over the vesting period of the options. For the purpose of accounting for share based payment transactions an individual is classified as an employee when the individual is consistently represented to be an employee under law. The fair value of the options granted to employees is measured on the date of grant. The fair value of options granted to contractors and consultants are measured on the date the services are completed. Forfeitures are recognized as they occur.
	IFRS 2, similar to GAAP, requires the Company to measure share-based compensation related to share purchase options granted to employees at the fair value of the options on the date of grant and to recognize such expense over the vesting period of the options. However, for options granted to non-employees, IFRS requires that share-based compensation be measured at the fair value of the services received unless the fair value cannot be reliably measured. For the purpose of accounting for share based payment transactions an individual is classified as an employee when the individual is an employee for legal or tax purposes (direct employee) or

Page 20

Northern Dynasty Minerals Ltd.

Notes to the Condensed Consolidated Interim Financial Statements

For the three months ended March 31, 2009 and 2008

(Unaudited - Expressed in thousands of Canadian Dollars, unless otherwise stated)

	provides services similar to those performed by a direct employee. This definition of an employee is broader than that previously applied by the Company and resulted in certain contractors and consultants being classified as employees under IFRS.
	For the share purchase options granted to the individuals reclassified, changes in fair value after the grant date previously recognized for GAAP purposes have been adjusted. The adjustments were calculated only for unvested options issued and outstanding as of and after the Transition Date
d)	Deferred Tax on Mineral Properties
	Under GAAP, the Company, in determination of the net loss from its interest in the Pebble Partnership, recognized a future income tax liability on temporary differences arising on the initial recognition of the Pebble Partnership mineral property interest (where the fair value of the asset acquired exceeded its tax basis) in a transaction which was not a business combination and affected neither accounting profit or loss nor taxable profit or loss. IAS 12, Income Taxes does not permit the recognition of deferred taxes on such transactions.
	As of the Transition Date and December 31, 2008, the Company has derecognized the impacts of all future income tax liabilities which had previously been recognized on the initial acquisition of the investment in the Pebble Partnership through transactions deemed not to be business combinations and affecting neither accounting profit or loss nor taxable profit or loss.

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