6-K

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C.  20549

FORM 6-K

REPORT OF FOREIGN ISSUER PURSUANT TO RULE 13a-16 AND 15d-16

UNDER THE SECURITIES EXCHANGE ACT OF 1934

For the Period   December 2010            File No.    0-51352

PORTAL RESOURCES LTD.

(Name of Registrant)

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

(Address of principal executive offices)

1.

Interim Financial Statements for the period ended September 30, 2010

2.

Management Discussion and Analysis

Indicate by check mark whether the Registrant files or will file annual reports under cover of Form 20-F or Form 40-F.     

FORM 20-F XXX

FORM 40-F ____

Indicate by check mark whether the Registrant by furnishing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.     

Yes _____

No XXX

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this Form 6-K to be signed on its behalf by the undersigned, thereunto duly authorized.

Portal Resources Ltd.

(Registrant)

Dated:  December 8, 2010 By:   /s/  David Hottman David Hottman President and CEO

EX-99.1

PORTAL RESOURCES LTD.

Consolidated Financial Statements

(Unaudited)

For the three months ended

September 30, 2010

(An exploration stage company)

Portal Resources Ltd.

Trading Symbol: PDO

Head Office: Suite 750 – 625 Howe Street

Telephone:  604-629-1929

Vancouver, British Columbia, Canada V6C 2T6

Facsimile:   604-629-1930

NOTICE OF NO AUDITOR REVIEW OF INTERIM FINANCIAL STATEMENTS

Under National Instrument 51-102, Part 4, subsection 4.3 (3) (a), if an auditor has not performed a review of the interim financial statements, they must be accompanied by a notice indicating that the financial statements have not been reviewed by an auditor.

The accompanying unaudited interim consolidated financial statements of Portal Resources Ltd. have been prepared by and are the responsibility of the Company’s management.

The Company’s independent auditor has not performed a review of these financial statements in accordance with standards established by the Canadian Institute of Chartered Accountants for a review of interim financial statements by an entity’s auditor.

PORTAL RESOURCES LTD.

CONSOLIDATED BALANCE SHEETS

(stated in Canadian dollars)

(Unaudited)

	September 30, 2010 (Unaudited)	June 30, 2010 (Audited)
ASSETS
Current
Cash	$        177,629	$          137,609
Short-term investments (Note 3)	74,603	275,222
Marketable securities (Note 4)	13,892	9,581
Amounts receivable	16,021	63,880
Prepaid expenses	32,317	21,552
Calgary office advance	21,753	-
	336,215	507,844
Equipment (Note 5)	26,771	21,833
Oil and gas properties (Note 7)	586,932	571,932
	$        949,918	$       1,101,609
LIABILITIES
Current
Accounts payable and accrued liabilities	$          73,347	$            43,417
SHAREHOLDERS’ EQUITY
Share capital (Note 8)	$   14,850,161	$     14,850,161
Contributed surplus (Note 8)	1,056,543	1,024,993
Deficit	(15,030,133)	(14,816,962)
	876,571	1,058,192
	$        949,918	$       1,101,609

Nature of operations (Note 1)

Commitments (Note 9)

Subsequent Events (Note 15)

         Approved by the Board of Directors:

“David Hottman”	“Mark T. Brown”
David Hottman, Director	Mark T. Brown, Director

See notes to consolidated financial statements

PORTAL RESOURCES LTD.

CONSOLIDATED STATEMENTS OF OPERATIONS AND DEFICIT

For the three months ended September 30,

(stated in Canadian dollars)

(Unaudited)

	2010	2009
Expenses
Accounting and audit	$          3,000	$           5,250
Amortization	3,062	3,717
Bank charges and interest	299	526
Consulting and management fees	14,165	24,750
Director fees	7,833	7,833
Foreign exchange	2,203	8,240
Investor relations	26,180	3,784
Legal	4,167	12,422
Office and miscellaneous	17,928	23,767
Rent	23,123	25,384
Project investigation	12,000	33,487
Salaries and benefits	60,629	46,576
Stock-based compensation (Note 8)	31,550	53,634
Travel	10,057	4,121
Transfer agent and filing fees	1,441	752
	217,637	254,243
Other Items
Gain on sale of equipment	-	-
Interest income	(155)	(3,765)
Unrealized gain on marketable securities (Note 4)	(4,311)	(6,941)
	(4,466)	(10,706)
Net loss and comprehensive loss for the period	$     (213,171)	$     (243,537)
Loss per share (Note 2)	$           (0.01)	$           (0.01)
Weighted average number of common   shares outstanding	30,151,539	29,651,539

See notes to consolidated financial statements

PORTAL RESOURCES LTD.

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

(stated in Canadian dollars)

(Unaudited)

	Number of Shares	Amount	Contributed Surplus	Deficit	Total Shareholders Equity
Balance June 30, 2008 (Audited)	29,651,539	14,760,161	783,340	(7,305,178)	8,238,323
Share issues:
Stock based compensation	-	-	21,811	-	21,811
Net loss and comprehensive income	-	-	-	(6,366,236)	(6,366,236)
Balance June 30, 2009 (Audited)	29,651,539	14,760,161	805,151	(13,671,414)	1,893,898
Share issues:
Issued for purchase of oil & gas interest	500,000	90,000	-	-	90,000
Stock-based compensation	-	-	219,842	-	219,842
Net loss and comprehensive income	-	-	-	(1,145,548)	(1,145,548)
Balance at June 30, 2010 (Audited)	30,151,539	14,850,161	1,024,993	(14,816,962)	1,058,192
Share Issues:
Stock based compensation	-	-	31,550	-	31,550
Net loss and comprehensive income	-	-	-	(213,171)	(213,171)
Balance at September 30, 2010 (Unaudited)	30,151,539	$  14,850,161	$  1,056,543	$ (15,030,133)	$    876,571

See notes to consolidated financial statements

PORTAL RESOURCES LTD.

CONSOLIDATED STATEMENTS OF CASH FLOWS

For the three months ended September 30,

(stated in Canadian dollars)

(Unaudited)

	2010	2009
Cash provided by (used for):
Operating Activities
Net loss for the period	$    (213,171)	$     (243,537)
Items not involving cash:
Stock-based compensation	31,550	53,634
Amortization	3,062	3,717
Unrealized gain on marketable securities	(4,311)	(6,941)
	(182,870)	(193,127)
Changes in non-cash working capital:
Amounts receivable	26,106	(1,540)
Prepaid expenses	(10,765)	(8,120)
Accounts payable and accrued liabilities	29,930	(28,860)
	(137,599)	(231,647)
Investing Activities
Purchase of equipment and software	(8,000)	(855)
Short-term investments	200,619	181,031
Expenditures on oil and gas properties	(15,000)	(28,378)
	177,619	151,798
Net increase (decrease) in cash and cash equivalents	40,020	(79,849)
Cash and cash equivalents – beginning of period	137,609	248,572
Cash and cash equivalents– end of period	$     177,629	$      168,723

See notes to consolidated financial statements

PORTAL RESOURCES LTD.

Notes to the Consolidated Financial Statements

For the three months ended September 30 2010 (Unaudited)

(stated in Canadian dollars)

1.

NATURE OF OPERATIONS

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

The Company is an exploration stage company whose business activity is the exploration of oil and gas in Alberta, Canada. The Company has not yet established the presence of economic oil or gas reserves on Company interest lands, and, accordingly, the amounts shown for deferred exploration costs represent costs incurred to date, less write-downs, and do not necessarily reflect present or future values.  The recovery of these amounts is dependent upon the discovery of economically recoverable reserves, the ability of the Company to obtain the necessary financing to complete the exploration of the rights, and upon the commencement of future profitable production or, alternatively, upon the Company’s ability to dispose of its interests on an advantageous basis. To date, the Company has not earned significant revenues and has an accumulated operation deficit of $15,030,133.

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

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

2.

SIGNIFICANT ACCOUNTING POLICIES

Basis of presentation and principles of consolidation

These consolidated financial statements have been prepared in accordance with generally accepted accounting principles in Canada (Canadian GAAP). These interim consolidated financial statements have been prepared in accordance with the accounting policies described in the Company’s annual consolidated financial statements, do not include in all respects the annual disclosure requirements of generally accepted accounting principles, and should be read in conjunction with the most recent annual consolidated financial statements. The differences between those principles and the ones that would be applied under U.S. generally accepted accounting principles (U.S. GAAP) are disclosed in Note 14.

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

The accounting policies followed by the Company are set out in Note 2 to the audited consolidated financial statements for the year ended June 30, 2010 and have been consistently followed in preparation of these interim consolidated financial statements, except with respect to the following new and revised accounting standards which the Company is required to adopt under Canadian GAAP for interim and annual financial statements relating to its fiscal year commencing July 1, 2010.

New accounting policies

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

PORTAL RESOURCES LTD.

Notes to the Consolidated Financial Statements

For the three months ended September 30 2010 (Unaudited)

(stated in Canadian dollars)

2.

SIGNIFICANT ACCOUNTING POLICIES, (Continued)

New accounting policies, (Continued)

a)

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

b)

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

c)

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

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

Accounting Policies Not Yet Adopted

Convergence to international Financial Reporting Standards (“IFRS”)

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

The Company has commenced its IFRS conversion project in 2008. The Company’s IFRS project consists of three phases – scoping, evaluation and design, and implementation and review. The Company has commenced the scoping phase of the project, which consists of project initiation and awareness, identification of high-level differences between Canadian GAAP and IFRS and project planning and resourcing. The Company has completed a high level scoping exercise and has prepared a preliminary comparison of financial statement areas that will be impacted by the conversion.

A detailed assessment of the impact of adopting IFRS on the Company’s consolidated financial statements, accounting policies, information technology and data systems, internal controls over financial reporting, disclosure controls and procedures, and the various covenants and capital requirements and business activities has not been completed. The impact on such elements will depend on the particular circumstances prevailing at the adoption date and the IFRS accounting policy choices made by the Company. The Company has not completed its quantification of the effects of adopting IFRS. The financial performance and financial position as disclosed in our Canadian GAAP financial statements may be significantly different when presented in accordance with IFRS.

Business combinations

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

PORTAL RESOURCES LTD.

Notes to the Consolidated Financial Statements

For the three months ended September 30 2010 (Unaudited)

(stated in Canadian dollars)

2.

SIGNIFICANT ACCOUNTING POLICIES, (Continued)

business combinations. Although the Company is considering the impact of adopting this pronouncement on the consolidated financial statements, it will be limited to any future acquisitions beginning in fiscal 2012.

Consolidated financial statement and non-controlling interests

In January 2009, the CICA issued the new handbook Section 1601, “Consolidated Financial Statements”, and Section1602, “Non-controlling Interests”, effective for fiscal years beginning on or after January 1, 2011. Earlier adoption of these recommendations is permitted. These pronouncements further align Canadian GAAP with US GAAP and IFRS. Sections 1601 and 1602 change the accounting and reporting for ownership interest in subsidiaries held by parties other than the parent. Non-controlling interests are to be presented in the consolidated statement of financial position within equity but separate from the parent’s equity. The amount of consolidated net income attributable to the parent and to the non-controlling interest is to be clearly identified and presented on the face of the consolidated statement of income. In addition, these pronouncements establish standards for a change in a parent’s ownership interest in a subsidiary and the valuation of retained non-controlling equity investments when a subsidiary is deconsolidated. They also establish reporting requirements for providing sufficient disclosures that clearly identify and distinguish between the interests of the parent and the interests of the non-controlling owners. The Company is currently considering the impact of adopting these pronouncements on its consolidated financial statements in fiscal 2012 in connection with the conversion to IFRS.

3.

SHORT TERM INVESTMENTS

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

4.

MARKETABLE SECURITIES

On May 29, 2009 Portal Resources US Inc. acquired 150,000 shares of Pengram Corporation (“Pengram”) in return for assigning all of its interest in an option agreement (see Note 6).  The shares were recorded at fair value $41,104. At September 30, 2010, the fair value of the Pengram shares was $13,892 (June 30, 2010 - $9,581). During the period the Company recorded an unrealized gain of $4,311 (September 30, 2009 - $6,941).

5.

EQUIPMENT

	September 30, 2010			June 30, 2010
	Cost	Accumulated amortization	Net book value	Cost	Accumulated amortization	Net book value
Computer equipment	$   17,461	$  15,932	$    1,529	$   17,461	$     15,580	$     1,881
Computer software	28,854	20,779	8,075	20,854	20,756	98
Furniture & fixtures	5,655	3,875	1,780	5,655	3,678	1,977
Vehicles	25,896	13,599	12,297	25,896	11,653	14,243
Field equipment	10,892	7,802	3,090	10,892	7,258	3,634
	$  88,758	$  61,987	$  26,771	$  80,758	$     58,925	$  21,833

PORTAL RESOURCES LTD.

Notes to the Consolidated Financial Statements

For the three months ended September 30 2010 (Unaudited)

(stated in Canadian dollars)

6.

UNPROVEN MINERAL RIGHTS

Argentina

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

United States

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

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

7.

OIL AND GAS PROPERTIES

The Company’s oil and gas interests are all located in Central Alberta, Canada.

Oil and Gas Joint Ventures

Bigwave Joint Venture

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

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

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

On April 22, 2010, the Company announced that it agreed to purchase the “Participation Agreement” related to the Bigwave Oil and Gas Joint Venture (the “Joint Venture”) for a total of $5,000 in cash and 500,000 common shares in the capital of the Company. The Participation Agreement has been terminated with Portal holding a 22% working interest in the Joint Venture.

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

PORTAL RESOURCES LTD.

Notes to the Consolidated Financial Statements

For the three months ended September 30 2010 (Unaudited)

(stated in Canadian dollars)

7.

OIL AND GAS PROPERTIES, (Continued)

Bigwave Joint Venture, (Continued)

On September21, 2010, the Company announced it entered into a binding Farm-in Agreement Term Sheet (the “Agreement”) with all of the Bigwave Joint Venture partners, under which the Company has the right to increase its working interest to 64.25% in two sections (two square miles), out of a total of 17¾ sections of land held by the Joint Venture by undertaking at its sole expense “completion operations” within the horizontal leg of the first exploration well drilled on the property.

The Agreement further provides Portal with the opportunity to drill additional wells, ona a rolling option basis, at its sole expense, on the remaining 15.75 sections of land held by the Joint Venture on a rolling option basis. All option wells drilled and completed (one well per section) will increase Portal's working interest up to 71.40% in each of the drilled sections to the deepest formation drilled in that section.

The Agreement further provides Portal with the right, at its sole expense, within 180 days from the commencement of “completion operations” within the horizontal leg of the first exploration well drilled on the property, 2010, to select certain lands (the “Selection Period”) of interest out of the land held by the Joint Venture that it considers to have deeper hydrocarbon potential (natural gas).

Portal will then have the option, within 90 days of the Selection Period, to commit to the drilling of a test well on the identified target lands. The drilling and completion operations of the deep test well will increase Portal's existing 28.5% working interest in the drilled section of land to a maximum of 78.55% working interest. Additional deep test wells can be drilled on a rolling option basis in order to earn additional working interest in the remaining unearned lands.

As at September 30, 2010 the Company has spent a total of $568,932 (June 30, 2010 - $553,932) on the Bigwave Joint Venture.

Manito Joint Venture

On March 9, 2009 the Company signed the Manito Joint Venture Agreement to participate for a 33.3% interest for the exploration, exploitation and production of petroleum and natural gas resources from certain land in central Alberta.

The Company has agreed to pay a 5.5% Gross Over Riding Royalty (GORR) on all products produced.

The Manito Joint Venture has acquired one section of land to date through the Alberta Crown Sale.

As at March 31, 2010 the Company has spent a total of $18,000 (June 30, 2009 - $18,000) on the Manito Joint Venture.

Border Play

On May 13^th, 2010, the Company announced that it had acquired a 100% interest in two parcels of land (the Border Play) totaling 560 acres (0.875 square miles) at the April 7, 2010 Alberta Crown Land Sale. The primary play is Bakken oil exploitation using horizontal drilling. The two parcels lie within the Esther Field. Bakken oil production in the field area has exceeded 4.8MMBBL (million barrels) to date.

PORTAL RESOURCES LTD.

Notes to the Consolidated Financial Statements

For the three months ended September 30 2010 (Unaudited)

(stated in Canadian dollars)

7.

OIL AND GAS PROPERTIES, (Continued)

Oil and gas expenditures  

	Bigwave	Manito	Total
Total as at June 30, 2009 (audited)	$     343,437	$       18,000	$     361,437
Crown Lease	12,023	-	12,023
Lease costs	139,357	-	139,357
Drilling (well costs)	58,526	-	58,526
Geological and engineering	589	-	589
Total expenditures	210,495	-	210,495
Total as at June 30, 2010 (audited)	$     553,932	$       18,000	$     571,932
Crown Lease	-	-	-
Lease costs	-	-	-
Drilling (well costs)	-	-	-
Geological and engineering	15,000	-	15,000
Total expenditures	15,000	-	15,000
Total as at September 30, 2010 (unaudited)	$    568,932	$       18,000	$    586,932

8.

SHARE CAPITAL

Authorized

100,000,000 Common Shares without par value

100,000,000 Preferred shares issuable in series

Stock-based Compensation

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

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

The Company accounts for its option grants in accordance with the fair value method of accounting for stock-based compensation.  For the three months ended September 30, 2010, the Company recognized $31,550 (2009 - $53,634) in stock-based compensation for employees, directors and consultants.

PORTAL RESOURCES LTD.

Notes to the Consolidated Financial Statements

For the three months ended September 30 2010 (Unaudited)

(stated in Canadian dollars)

8.

SHARE CAPITAL, (Continued)

Stock-based Compensation, (Continued)

The fair value of the options has been calculated using the Black-Scholes option-pricing model, based on the following assumptions:

	Years ended June 30,
	2010	2009	2008
Stock based compensation	$       219,842	$       21,811	$      147,744
Risk-free interest rate	2.61% - 2.66%	1.50% - 2.90%	4.00%
Expected stock price volatility	126% - 129%	121% - 227%	74%
Expected option life in years	5 years	5 years	1 year
Expected dividend in yield	Nil	Nil	Nil

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

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

	September 30		June 30
	2010		2010
	Number of shares	Weighted Average Exercise Price	Number of shares	Weighted Average Exercise Price
Outstanding at beginning of period	3,533,600	$0.35	3,688,600	$0.35
Granted under plan	750,000	$0.14	1,020,000	$0.18
Forfeited or cancelled	(200,000)	$0.12	(1,175,000)	$0.50
Outstanding at end of period	4,083,600	$0.23	3,533,600	$0.25
Options vested and exercisable at end of period	2,923,600	$0.27	2,868,600	$0.27

At September 30, 2010, the weighted average remaining life of the outstanding options is 3.39 years (June 30, 2010 – 3.33 years).

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

PORTAL RESOURCES LTD.

Notes to the Consolidated Financial Statements

For the three months ended September 30 2010 (Unaudited)

(stated in Canadian dollars)

8.

SHARE CAPITAL, (Continued)

Stock-based Compensation, (Continued)

Stock options outstanding as at September 30, 2010 are as follows:

Number	Exercise Price	Expiry Date
75,000	$0.70	20-Jan-11
766,400	$0.52	5-Dec-11
835,000	$0.20	7-Oct-13
837,200	$0.12	9-Jun-14
620,000	$0.15	17-Jan-15
200,000	$0.26	6-Mar-15
750,000	$0.14	9-Sep-15
4,083,600

9.

COMMITMENTS

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

2011	$68,031
2012	$94,961
2013	$65,197

10.

RELATED PARTY TRANSACTIOINS

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

During the three months ended September 30, 2010

a)

$9,320 (2009 - $8,661) was charged to a public company with a director in common with the Company for rent.  As at September 30, 2010, $Nil (June 30, 2010 - $Nil) was receivable from this public company.

b)

$1,804 (2009 - $1,575) was charged to a private company with a director in common with the Company for administrative fees. As at September 30, 2010, $8,130 (June 30, 2010 - $57,861) was receivable from this private company.

c)

$Nil (2009 - $1,050) was charged to a private company with a director in common with the Company for rent.  As at September 30, 2010, $Nil (June 30, 2010 - $Nil) was receivable from this private company.

d)

the Company paid or accrued to pay a private company with a director in common with the Company an aggregate of $2,061 (2009 - $767) for fees and expense. As at September 30, 2010, the Company owed this company an aggregate of $213 (June 30, 2010 - $Nil).

e)

$1,182 (2009 - $Nil) was owed by the Company to certain directors for expense reimbursements.

f)

the Company incurred director fees of $7,833 (2009 - $7,833) to five directors. As at September 30, 2010, $7,833 (June 30, 2010 - $Nil) are payable to these directors.

PORTAL RESOURCES LTD.

Notes to the Consolidated Financial Statements

For the three months ended September 30 2010 (Unaudited)

(stated in Canadian dollars)

11.

FINANCIAL INSTRUMENTS

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

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

(a)

Currency risk

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

(b)

Credit risk

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

(c)

Liquidity risk

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

(d)

Interest rate risk

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The risk that the Company will realize a loss as a result of a decline in the fair value of the short-term investments is limited because they are generally held to maturity. A 1% change in the interest rate, with other variables unchanged, would affect the Company by an annualized amount of interest equal to approximately $100.

(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. Currently the Company is not in the production phase therefore there is no revenue being generated. In the future, the Company will sell its oil production at spot rates exposing the Company to the risk of price movements.

The Company did not have any commodity price contracts in place as at or during the three months ended September 30, 2010. However changes in commodity prices did not affect the Company’s results of operations.

PORTAL RESOURCES LTD.

Notes to the Consolidated Financial Statements

For the three months ended September 30 2010 (Unaudited)

(stated in Canadian dollars)

12.

MANAGEMENT OF CAPITAL RISK

The Company manages its cash and cash equivalents, common shares and stock options as capital (see Note 8). 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 oil and gas properties and to maintain a flexible capital structure which optimizes the cost 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 cash equivalents.

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

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

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

13.

SEGMENTED INFORMATION

The Company operates in a single reportable operating segment, being exploration and development of oil and gas properties.

Summarized financial information for the geographic segments the Company operates in are as follows:

	Canada	Total
Three months ended September 30, 2010
Loss for the period	$     213,171	$      213,171
Three months ended September 30, 2009
Loss for the period	$     243,537	$      243,537
As at September 30, 2010
Assets	$     949,918	$      949,918
As at June 30, 2010
Assets	$  1,101,609	$   1,101,609

PORTAL RESOURCES LTD.

Notes to the Consolidated Financial Statements

For the three months ended September 30 2010 (Unaudited)

(stated in Canadian dollars)

14.      

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

The company uses “successful efforts method” of accounting for our oil and gas properties. Under this method, oil and gas lease acquisition costs and intangible drilling costs associated with exploration efforts that result in the discovery of proved reserves and costs associated with development drilling, whether or not successful, are capitalized when incurred. If proved commercial reserves are not discovered, such drilling costs are expensed. In some circumstances, it may be uncertain whether proved commercial reserves have been found when drilling has been completed. Under Financial Accounting Standard Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 932, Extractive Activities – Oil and Gas (“ASC 932”), such exploratory well drilling costs may continue to be capitalized if the reserve quantity is sufficien t to justify its completion as a producing well and sufficient progress in assessing the reserves and economic and operating viability of the project is being made. We assess our capitalized exploratory wells pending evaluation periodically to determine whether costs should remain capitalized or should be charged to earnings.

	Three months ended September 30,		Year ended June 30,
	2010	2009		2010
a)  Assets
Unproven Mineral Rights Costs
Unproven mineral rights costs under Canadian GAAP:	$                     -	$                    -		$                     -
Unproven mineral rights under U.S. GAAP	$                     -	$                    -		$                     -

b)  Operations
Net loss under Canadian GAAP	$      (213,171)	$      (243,537)	$   (1,145,548)
Net loss under U.S. GAAP	$      (213,171)	$      (243,537)	$   (1,145,548)
c)  Deficit
Closing deficit under Canadian GAAP	$ (15,030,133)	$ (13,914,951)	$ (14,816,962)
Closing deficit under U.S. GAAP	$ (15,030,133)	$ (13,914,951)	$ (14,816,962)

d)  Cash Flows – Operating Activities
Cash applied to operations under Canadian GAAP	$     (137,599)	$      (231,647)	$      (936,712)
Cash applied to operations under U.S. GAAP	$     (137,599)	$      (231,647)	$      (936,712)

e)  Cash Flows – Investing Activities
Cash applied under Canadian GAAP	$        177,619	$        151,798	$        825,749
Cash applied under U.S. GAAP	$        177,619	$        151,798	$        825,749

PORTAL RESOURCES LTD.

Notes to the Consolidated Financial Statements

For the three months ended September 30 2010 (Unaudited)

(stated in Canadian dollars)

14.

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

OTHER DIFFERENCES BETWEEN CANADIAN AND U.S. GAAP

f)

Stockholders’ Equity

Common Stock

There are no differences between Canadian and U.S. GAAP for the years ended June 30, 2010, 2009 and 2008 or the three months ended September 30, 2010 with respect to the disclosure of stock-based compensation.

g)

Loss per Share

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

	For the three months ended		Year ended
	September 30,		June 30,
	2010	2009	2010
Numerator: Net loss for the period under U.S. GAAP	$(213,171)	$(243,537)	$(1,145,548)
Denominator: Weighted-average number of shares under Canadian and U.S. GAAP	30,151,539	29,651,539		29,759,758
Basic and fully diluted loss per share under U. S. GAAP	$       (0.03)	$        (0.04)			$      (0.05)

15.

SUBSEQUENT EVENTS

On October 18, 2010, the Company issued 200,000 shares as a result of the exercise of 200,000 stock options by a former director of the Company.

EX-99.2

PORTAL RESOURCES LTD.

MANAGEMENT’S DISCUSSION AND ANALYSIS

For the three months ended September 30, 2010

NOTE TO READER

This Management’s Discussion and Analysis (“MD&A”) is intended to help the reader understand Portal Resources Ltd. (“Portal” or the “Company”), its history, business environment, strategies, performance and risk factors from the viewpoint of management.  The information provided should be read in conjunction with the Company’s audited annual consolidated financial statements and notes for the years ended June 30, 2010 and 2009, and the Company’s unaudited interim consolidated financial statements and notes for the three months ended September 30, 2010.  The Company’s consolidated financial statements and related notes have been prepared in accordance with Canadian generally accepted accounting principles (“GAAP”) and all amounts are presented in Canadian dollars unless otherwise noted.

The following comments may contain management estimates of anticipated future trends, activities or results. These are not a guarantee of future performance, since actual results will change based on other factors and variables beyond management control.

Management is responsible for the preparation and integrity of the consolidated financial statements, including the maintenance of appropriate information systems, procedures and internal controls, and to ensure that information used internally or disclosed externally, including the consolidated financial statements and MD&A, is complete and reliable.

The Company’s board of directors follows recommended corporate governance guidelines for public companies to ensure transparency and accountability to shareholders.  The board’s audit committee meets with management regularly to review financial statement results, including the MD&A and to discuss other financial, operating and internal control matters.

The reader is encouraged to review Company statutory filings on www.sedar.com and to review general information, including maps on the Company’s website at www.portalresources.net.

DATE

This MD&A has been prepared based on information known to management as of November 29, 2010.  

DESCRIPTION OF BUSINESS AND OVERVIEW

Portal is a growth oriented natural resource exploration company focused primarily on the acquisition exploration and development of light crude oil projects in Canada. The Company is concentrating on identifying early stage or oil or natural gas properties that have potential for discovery of large reserves as well as acquiring more advanced projects that with further development have good production potential.

On November 1, 2008, the Company signed a Joint Venture Agreement to participate for the exploration, exploitation and production of oil and natural gas located in Central Alberta – see “Exploration review”.

EXPLORATION REVIEW

HIGHLIGHTS

•

Portal has a 28.5% in the Bigwave Joint Venture focused in the exploration, exploitation and production of oil and natural gas from lands located in central Alberta. (See Bigwave Joint Venture).

•

Portal entered into a binding Farm-in Letter Agreement under which it has the right to increase its working interest up to 78.55% in certain sections of the land owned by the Bigwave Joint Venture.

•

Portal entered the Manito Joint Venture Agreement to participate as to a 33.3% interest for the exploration, exploitation and production of oil and natural gas resources in central Alberta.

•

Portal acquired a 100% interest in two parcels (the Border Play) of land in the Esther Field (Bakken Oil). Production in the vicinity of the Field has exceeded 4.8MMBBL (million barrels) of oil to date.

OIL AND GAS JOINT VENTURES

Bigwave Joint Venture

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

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

On January 5, 2009 the Company signed an agreement, “Participation Agreement”, with certain other partners in the Bigwave Joint Venture. Portal agreed to pay 100% of 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 Spacing Unit.

During the quarter ended December 31, 2009, the Company completed drilling the first horizontal well operated by partner Bigwave Exploration Inc. of Calgary Alberta. The Bigwave Joint Venture now controls 10,720 acres of land covering a source oil sand-shale sequence with several potential reservoirs (Bakken Formation type).

On April 9, 2010 the Company purchased a the “Participation Agreement” in the Company's Bigwave Oil and Gas Joint Venture for a total of C$5,000 in cash and 500,000 common shares in the capital of the Company. On the closing of the purchase of the ”Participation Agreement, the Participation Agreement was terminated and Portal now holds a 22% working interest in the Joint Venture.

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

On September 2010 the Company entered into a binding Farm-in Agreement Term Sheet (the "Agreement") with all of the Bigwave Joint Venture partners under which the Company has the right to increase its working interest to 64.25% in two sections (two square miles) out of a total of 17 ¾ sections of land held by the Joint Venture by undertaking, at its sole expense "completion operations" within the horizontal leg of the first exploration well drilled on the property.

The Agreement further provides the Company with the opportunity to drill additional wells, on a rolling option basis, at its sole expense, on the remaining 15.75 sections of land held by the Joint Venture. All option wells drilled and completed (one well per section) will increase Portal's working interest up to 71.40% in each of the drilled sections to the deepest formation drilled in that section.

The Agreement further provides the Company with the right, at its sole expense, within 180 days from the commencement of “completion operations” within the horizontal leg of the first exploration well drilled on the property, to select certain lands (the “Selection Period”) of interest out of the land held by the Joint Venture that it considers to have deeper conventional oil and gas potential.

The Company will then have the option, within 90 days of the Selection Period, to commit to the drilling of a test well on the identified target lands. The drilling and completion operations of the deep test well will increase the Company’s existing 28.5% working interest in the drilled section of land to a potential maximum of 78.55% working interest. Additional deep test wells can me drilled on a rolling option basis to earn additional working interest in the remaining unearned lands.

Manito Joint Venture

On March 9^th, 2009 Portal signed the Manito Joint Venture Agreement to participate in a 33.3% interest for the exploration, exploitation and production of petroleum and natural gas resources in central Alberta.

Portal has agreed to pay a 5.5% Gross Over Riding Royalty (GORR) on all products produced from certain geological formations.

The Manito Joint Venture has acquired one section of land to date through the Alberta Crown Sale.

Border Play

On May 13^th, 2010, the Company announced that it acquired a 100% interest in two parcels of land (the Border Play) totaling 560 acres (0.875 square miles) at the April 7, 2010 Alberta Crown Land Sale. The primary play is Bakken oil exploitation using horizontal drilling. The two parcels lie within the Esther Field Bakken oil production in the Field area has exceeded 4.8MMBBL (million barrels) to date.

Oil and Gas Exploration Expenditures

	Bigwave	Manito	Total
Total as at June 30, 2009 (audited)	$     343,437	$       18,000	$     361,437
Crown Lease	12,023	-	12,023
Lease costs	139,357	-	139,357
Drilling (well costs)	58,526	-	58,526
Geological and engineering	589	-	589
Total expenditures	210,495	-	210,495
Total as at June 30, 2010 (audited)	$     553,932	$       18,000	$     571,932
Crown Lease	-	-	-
Lease costs	-	-	-
Drilling (well costs)	-	-	-
Geological and engineering	15,000	-	15,000
Total expenditures	15,000	-	15,000
Total as at March 31, 2010 (unaudited)	$    568,932	$       18,000	$    586,932

SUMMARY OF QUARTERLY RESULTS

	Three Months Ended
	September 30 2010	June 30 2010	March 31 2010	December 31 2009
	$	$	$	$
Interest Income	155	306	611	872
General & Administration
(excluding property write-offs)	213,326	290,549	341,476	247,986
Property write-offs on sale of subsidiary	-	-	-	-
Net loss	213,171	314,028	340,865	247,114
Net loss per share	0.01	0.01	0.01	0.01

	Three Months Ended
	September 30 2009	June 30 2009	March 31 2009	December 31 2008
	$	$	$	$
Interest Income	3,765	10,447	12,567	17,436
General & Administration
(excluding property write-offs)	247,302	242,751	250,248	330,398
Property write-offs	-	58,194	5,134,856	163
Net loss	243,537	152,802	5,372,537	313,125
Net loss per share	0.01	0.01	0.18	0.01

RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2010 AND 2009

This review of the Results of Operations should be read in conjunction with the unaudited Consolidated Financial Statements of the Company for the three months ended September 30, 2010 and 2009.

Loss for the period

For the three months ended September 30, 2010 the Company incurred a net loss of $213,171 ($0.01 per share) compared to a net loss of $243,537 ($0.01 per share) for the three months ended September 30, 2009. The decrease of $30,366 in the net loss for the period from 2009 to 2010 is primarily due to: (a) a decrease in stock based compensation of $22,084 due to lower vesting of officers’, employees’ and consultant’s stock options; (b) a decrease in project investigation expenses of  $21,487 due to the cessation of project search in Mexico; (c) a decrease of consulting and management fees of $10,585 due to the reduction of consultants; (d) a decrease of legal expenses of $8,255 due to the reduction of legal services required; and (e) a decrease in foreign exchange expenses of $6,037 due to the reduction of transactions in foreign currency due to the cessation of operations in Mexico; offset by an increase in salaries and benefits of $14,053 due to the inc rease of salaried employees; and an increase in investor relations expenses of $22,396 due to the increase of show attendance and investor relations travel expenses to increase awareness of the Company’s oil and gas projects.

Expenses

General and administrative costs were $217,637 for the three months ended September 30, 2010, a decrease of $36,606 as compared to $254,243 for the same period in the prior year.  The six largest expense items for this fiscal period, which account for 80% (2009 – 70%) of total general and administrative expenditures are: salaries and benefits of $60,629 (2009 - $46,576); stock based compensation expense of $31,550 (2009 – $53,634); investor relations expense of $26,180 (2009 – $3,784); rent of $23,123 (2009 – $25,384); office and miscellaneous expenses of $17,928 (2009 – $23,767); and consulting and management fees of $14,165 (2009 - $24,750). The increase in salaries and benefits is the result of an increase in the number of salaried employees. The decrease in stock based compensation expense is due to the lower vesting of officers’, consultants’ and employees’ stock options. The increase in investor relations expenses is due t o an increase of trade show attendances and travel expenses to increase awareness of the Company’s oil and gas projects. The decrease in rent is due to the recovery of rent due to the sub-lease of office space to other companies. The decrease in office and miscellaneous expenses is the result of increased efforts to conserve and maintain capital.

SELECTED ANNUAL INFORMATION

For the years ended June 30^th

	2010	2009	2008
Interest Income	$  5,554	$ 65,418	$  161,429
Net income (loss)	(1,145,548)	(6,366,236)	(3,288,433)
Basic and diluted EPS	(0.04)	(0.21)	(0.11)
Total assets	1,101,609	1,965,990	8,319,819
Total long-term liabilities	Nil	Nil	Nil
Cash dividends declared	Nil	Nil	Nil

LIQUIDITY AND CAPITAL RESOURCES

The Company had cash on hand of $177,629 and working capital of $262,868 as of September 30, 2010 (June 30, 2010: $137,609 and $464,427 respectively).  The decrease in working capital is primarily due to expenditures on oil and gas properties of $15,000 and the funding of operating activities of $182,870.

The Company is working to raise through a private placement sufficient cash to meet its on-going obligations as they become due and will modify budgeted exploration activities as necessary to ensure it continues to meet its on-going obligations.

The Company’s authorized capital consists of 100,000,000 common shares without par value and 100,000,000 preferred shares, issuable in series.  As at September 30, 2010, the Company’s share capital was $14,850,161 representing 30,151,539 common shares (June 30, 2010 - $14,850,161 representing 30,151,539 common shares).

During the three moths ended September 30, 2010, the Company cancelled 200,000 stock options and issued 750,000 at an exercise price of $0.14.

As at September 30, 2010, Contributed Surplus totaled $1,056,543 (June 30, 2010 - $1,024,993). During the three months ended September 30, 2010, the Company recognized $31,550 (2009 - $53,634) in stock-based compensation expense for share purchase options that vested during the period.

Stock options outstanding as at September 30, 2010 are as follows:

Number	Exercise Price	Expiry Date
75,000	$0.70	20-Jan-11
766,400	$0.52	5-Dec-11
835,000	$0.20	7-Oct-13
837,200	$0.12	9-Jun-14
620,000	$0.15	17-Jan-15
200,000	$0.26	6-Mar-15
750,000	$0.14	9-Sep-15
4,083,600

At September 30, 2010 the Company had 4,083,600 (June 30, 2010 – 3,533,600) outstanding stock options with a weighted average exercise price of $0.25. If the remaining outstanding options were exercised, the Company’s available cash would increase by $956,492.

As the date of the MD&A there were 30,351,539 common shares issued and outstanding and there would be 34,435,139 common shares on a fully diluted basis.

The Company relies on equity financings to fund its exploration activities and corporate overhead expenses.  There is no guarantee that the Company will be able to secure additional financing in the future on terms that are considered favourable by management.  To date, the Company has not used debt or other means of financing to further its exploration programs, and the Company has no plans to use debt financing at the present time.

TRANSACTIONS WITH RELATED PARTIES

During the three months ended September 30, 2010

a)

$9,320 (2009 - $8,661) was charged to a public company with a director in common with the Company for rent.  As at September 30, 2010, $Nil (June 30, 2010 - $Nil) was receivable from this public company.

b)

$1,804 (2009 - $1,575) was charged to a private company with a director in common with the Company for administrative fees. As at September 30, 2010, $8,130 (June 30, 2010 - $57,861) was receivable from this private company.

c)

$Nil (2009 - $1,050) was charged to a private company with a director in common with the Company for rent.  As at September 30, 2010, $Nil (June 30, 2010 - $Nil) was receivable from this private company.

d)

the Company paid or accrued to pay a private company with a director in common with the Company an aggregate of $2,061 (2009 - $767) for fees and expense. As at September 30, 2010, the Company owed this company an aggregate of $213 (June 30, 2010 - $Nil).

e)

$1,182 (2009 - $Nil) was owed by the Company to certain directors for expense reimbursements.

f)

the Company incurred director fees of $7,833 (2009 - $7,833) to five directors. As at September 30, 2010, $7,833 (June 30, 2010 - $Nil) are payable to these directors.

ADDITIONAL INFORMATION

Additional information about the Company is available on SEDAR at www.sedar.com.

Outstanding Share Data

As at November 29, 2010 the Company had the following items issued and outstanding (see also “Subsequent Events”):

•

30,351,539 common shares

•

  4,083,600 common stock options with a weighted average exercise price of $0.23 expiring at various dates until September 9, 2015.

Commitments and Contingencies

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

2011	68,031
2012	94,961
2013	65,197
	$   228,189

RISK FACTORS

The Company’s financial success will be dependent upon the extent to which it can discover oil and gas reserves or acquire oil and gas properties and the economic viability of developing its properties.

The Company competes with many companies possessing greater financial resources and technical facilities than itself.  The market price oil and gas is volatile and cannot be controlled. There is no assurance that the Company’s oil and gas exploration and development activities will be successful. The development of oil and gas properties involves many risks that even a combination of experience, knowledge and careful evaluation may not be able to overcome.

The development of oil and gas resources in Canada are subject to a comprehensive review, approval and permitting process that involves various federal, provincial, and regional agencies.  There can be no assurance given that the required approvals and permits for an oil and gas project, if technically and economically warranted, on the Company’s lands can be obtained in a timely or cost effective manner.

All of the Company’s short to medium term operating and cash flow must be derived from external financing.  Actual funding may vary from what is planned due to a number of factors including the progress of exploration and development on its current properties.  Should changes in equity market conditions prevent the Company from obtaining additional external financing, the Company will need to review its exploration and oil and gas property holdings to prioritise project expenditures based on funding availability.

The Company competes with larger and better financed companies for exploration personnel, contractors and equipment.  Increased exploration activity increases the demand for equipment and services.  There can be no assurance that the Company can obtain required equipment and services in a timely or cost effective manner.

The Company’s operations are in Canada and its financing activities are in Canada making it subject to minimal foreign currency fluctuations that could materially affect its financial position and results.

OUTLOOK

Portal has planned exploration programs for the oil and gas project on central Alberta and its continuing to review other projects for acquisition.

FORWARD LOOKING STATEMENTS

Certain information set forth in this report contains forward-looking statements.  By their nature, forward-looking statements are subject to numerous risks and uncertainties including: the results of current operation and exploration activities; market reaction to future operation and exploration activities; significant changes in metal prices; currency fluctuations; general market and industry conditions; and other factors detailed in the Company’s public filings. Readers are cautioned that the assumptions used in the preparation of such information, although considered reasonable at the time of preparation, may prove to be imprecise and, as such, undue reliance should not be placed on forward-looking statements.  Portal Resources Ltd.’s actual results, programs and financial position could differ materially from those expressed in or implied by these forward-looking statements, and accordingly, no assurance can be given that the events anticipated by the forward-looking statements will transpire or occur, or if any of them do so, what benefits Portal Resources Ltd. will derive therefrom. Portal Resources Ltd. disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

Forward looking statements included or incorporated by reference in this document include statements with respect to:

•

The Company’s progress, potential and uncertainties of its oil and gas drilling program in central Alberta.

•

The Company’s expectations regarding the ability to find new projects in Canada

•

Expectations regarding the ability to raise capital to continue its exploration and project search programs.

•

The Company’s future adoption of IFRS; and,

•

Plans to complete a financing.

DISCLOSURE CONTROLS AND PROCEDURES

Disclosure controls and procedures are designed to provide reasonable assurance that material information is gathered and reported to senior management, including the Chief Executive Officer and Chief Financial Officer, as appropriate to permit timely decisions regarding public disclosure.

Management, including the Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of the design and operation of our disclosure controls and procedures as of June 30, 2010.  Based on this evaluation, the Chief Executive Officer and Chief Financial Officer have concluded that the Company’s disclosure controls and procedures, as defined in Multilateral Instrument 52-109 – Certification of Disclosure in Issuer’s Annual and Interim Filings, are effective to ensure that information required to be disclosed in reports that are filed or submitted under Canadian securities legislation are recorded, processed, summarized and reported within the time period specified in those rules.

INTERNAL CONTROLS AND PROCEDURES OVER FINANCIAL REPORTING

Changes in Internal Control Over Financial Reporting (“ICFR”)

The Company’s management is also responsible for establishing and maintaining internal controls over financial reporting.  The internal controls are designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with Canadian generally accepted accounting principles.  It should be noted that a control system, no matter how well conceived or operated, can only provide reasonable assurance, not absolute assurance, that the objectives of the control system are met.

No changes occurred in the current period of the Company’s ICFR that have materially affected or are reasonable likely to materially affect the Company’s ICFR.

INTERNATIONAL FINANCIAL REPORTING STANDARDS

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

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

The Company intends to adopt these requirements as set out by the AcSB and other regulatory bodies. At this time, the impact of adopting IFRS cannot be reasonably quantified. Nonetheless the Company has identified several areas relating to IFRS that could materially affect the Company:

(a)

Impairment

Upon conversion to IFRS, an assessment of whether there is any impairment to oil and gas properties will have to be made.

(b)  Mineral Resources

  At present, the issue of capitalizing exploration expenses under GAAP appears to be acceptable under IFRS.

(c)

Business combination

The effect of IFRS on the Company’s present business combinations is minimal because the first-time adoption of IFRS has exemptions allowing the new accounting policies on the business combinations be applied prospectively.

(d)

Foreign currency

The adoption of IFRS will involve the identification of a functional currency. At present, it appears that the Canadian dollar is the Company’s functional currency. Upon consolidation, the presentation currency will be that of the parent’s functional currency and therefore, the adoption of IFRS should have a minimal impact on the foreign currency translation. In addition, an exemption is allowed whereby any cumulative translation differences prior to transition date will be deemed to be zero.

(e)

Income taxes

Although there are many areas where GAAP is similar to IFRS, there are differences as well, such as the differentiation between deferred tax assets and deferred tax liabilities; and whether deferred tax is to be charged to the income statement, equity or goodwill.

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

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

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

FINANCIAL INSTRUMENTS AND OTHER INSTRUMENTS

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

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

(a)

Currency risk

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

(b)

Credit risk

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

(c)

Liquidity risk

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

(d)

Interest rate risk

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

(e)

Commodity Price Risk

Commodity price risk is the risk that future cash flows will fluctuate as a result of changes in commodity prices, affecting results of operations and cash generated from operating activities. Such prices may also affect the value of exploration and development properties and the level of spending for future activities. Prices received by the Company for its production are largely beyond the Company’s control as oil and gas prices are impacted by world economic events that dictate the levels of supply and demand. Currently the Company is not in the production phase therefore there is no revenue being generated. In the future, the Company will sell its oil production at spot rates exposing the Company to the risk of price movements.

The Company did not have any commodity price contracts in place as at or during the three months ended September 30, 2010 or the year ended June 30, 2010.  However changes in commodity prices did not affect the Company’s results of operations.

SUBSEQUENT EVENTS

On October 18, 2010, the Company issued 200,000 shares as a result of the exercise of 200,000 stock options by a former director of the Company.

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