Portal Form 6-K

0001217160-11-000059.txt : 20110304 0001217160-11-000059.hdr.sgml : 20110304 20110304160702 ACCESSION NUMBER: 0001217160-11-000059 CONFORMED SUBMISSION TYPE: 6-K PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 20110228 FILED AS OF DATE: 20110304 DATE AS OF CHANGE: 20110304 FILER: COMPANY DATA: COMPANY CONFORMED NAME: Portal Resources Ltd. CENTRAL INDEX KEY: 0001326910 STANDARD INDUSTRIAL CLASSIFICATION: MINING, QUARRYING OF NONMETALLIC MINERALS (NO FUELS) [1400] IRS NUMBER: 000000000 STATE OF INCORPORATION: A1 FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 6-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-51352 FILM NUMBER: 11664717 BUSINESS ADDRESS: STREET 1: SUITE 750, 625 HOWE ST. CITY: VANCOUVER STATE: A1 ZIP: V6C 2T6 BUSINESS PHONE: 604-629-1929 MAIL ADDRESS: STREET 1: SUITE 750, 625 HOWE ST. CITY: VANCOUVER STATE: A1 ZIP: V6C 2T6 6-K 1 portalq220106k.htm PORTAL FORM 6-K Portal Form 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 February 2011 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)

Interim Financial Statements (unaudited) for the 6 month period ended December 31, 2010.

Management Discussion and Analysis for the period ended December 31, 2010.

Certification of CEO

Certification of CFO

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: February 28, 2011

By: /s/ "David Hottman"

David Hottman

President and CEO

EX-99.1 2 pdoq2dec3110fsfinal.htm PORTAL INTERIM FINANCIAL STATEMENTS FOR THE PERIOD ENDED DECEMBER 31, 2010 Portal Interim Financial Statements

PORTAL RESOURCES LTD.

Consolidated Financial Statements

(Unaudited)

For the six months ended

December 31, 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)

	December 31, 2010 (Unaudited)	June 30, 2010 (Audited)

ASSETS
Current
Cash and cash equivalents	$ 75,759	$ 137,609
Short-term investments (Note 3)	726,604	275,222
Marketable securities (Note 4)	8,951	9,581
Amounts receivable	13,480	63,880
Prepaid expenses	31,748	21,552
	156,542	507,844

Equipment (Note 5)	59,820	21,833
Oil and gas properties (Note 7)	645,701	571,932

	$ 862,063	$ 1,101,609

LIABILITIES

Current
Accounts payable and accrued liabilities	$ 185,926	$ 43,417


SHAREHOLDERS’ EQUITY

Share capital (Note 8)	$ 14,900,007	$ 14,850,161
Contributed surplus (Note 8)	1,086,628	1,024,993
Deficit	(15,310,498)	(14,816,962)
	676,137	1,058,192

	$ 862,063	$ 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

(stated in Canadian dollars)

(Unaudited)

	For the three months ended December 31,		For the six months ended December 31,

	2010	2009	2010	2009

Expenses
Accounting and audit	$ (1,400)	$ 12,180	$ 1,600	$ 17,430
Amortization	5,104	3,717	8,166	7,435
Bank charges and interest	640	630	939	1,156
Consulting and management fees	12,430	2,132	26,595	26,882
Director fees	6,500	6,500	14,333	14,333
Foreign exchange	1,646	1,911	3,849	10,151
Investor relations	36,338	21,565	62,518	25,349
Legal	4,344	7,172	8,511	19,594
Office and miscellaneous	22,540	26,976	40,468	50,742
Rent	21,805	22,930	44,928	48,314
Project investigation	3,750	64,012	15,750	97,499
Salaries and benefits	94,876	50,047	155,505	96,623
Stock-based compensation (Note 8)	52,255	27,330	83,805	80,964
Travel	11,382	10,935	21,439	15,056
Transfer agent and filing fees	3,292	3,311	4,733	4,063

	275,502	261,348	493,139	515,591

Other Items
Interest income	(78)	(872)	(233)	(4,637)
Unrealized (gain)/loss on marketable securities (Note 4)	4,941	(13,362)	630	(20,303)
	4,863	(14,234)	397	(24,940)

Net loss and comprehensive loss for the period	$ (280,365)	$ (247,114)	$ (493,536)	$ (490,651)

Loss per share	$ (0.01)	$ (0.01)	$ (0.02)	$ (0.02)

Weighted average number of common shares outstanding	30,322,789	29,651,539	30,237,164	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 at 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:
Exercise of options	227,500	27,676	-	-	27,676
Fair market value of stock options exercised	-	22,170	(22,170)	-	-
Stock based compensation	-	-	83,805	-	83,805
Net loss and comprehensive income	-	-	-	(493,536)	(493,536)

Balance at December 31, 2010 (Unaudited)	30,379,039	$ 14,900,007	$ 1,086,628	$ (15,310,498)	$ 676,137

See notes to consolidated financial statements

PORTAL RESOURCES LTD.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(stated in Canadian dollars)

(Unaudited)

	For the three months ended December 31,		For the six months ended December 31,

	2010	2009	2010	2009


Cash provided by (used for):
Operating Activities
Net loss for the period	$ (280,365)	$ (247,114)	$ (493,536)	$ (490,651)
Items not involving cash:
Stock-based compensation	52,255	27,330	83,805	80,964
Amortization	5,104	3,717	8,166	7,435
Unrealized gain on marketable securities	4,941	(13,362)	630	(20,303)

	(218,065)	(229,429)	(400,935)	(422,555)

Changes in non-cash working capital:
Amounts receivable	2,541	(3,056)	50,400	(4,596)
Prepaid expenses	569	3,927	(10,196)	(4,193)
Accounts payable and accrued liabilities	134,332	7,646	142,509	(21,214)

	(80,623)	(220,912)	(218,222)	(452,558)

Investing Activities
Purchase of equipment and software	(38,153)	-	(46,153)	(856)
Short-term investments	47,999	399,662	248,618	580,693
Expenditures on oil and gas properties	(58,769)	(43,658)	(73,769)	(72,036)

	(48,923)	356,004	128,696	507,801

Financing Activities
Common shares issued on option exercise	27,676	-	27,676	-

	27,676	-	27,676	-

Net increase (decrease) in cash and cash equivalents	(101,870)	135,092	(61,850)	55,243
Cash and cash equivalents – beginning of period	177,629	168,723	137,609	248,572

Cash and cash equivalents– end of period	$ 75,759	$ 303,815	$ 75,759	$ 303,815

See notes to consolidated financial statements

PORTAL RESOURCES LTD.

Notes to the Consolidated Financial Statements

For the six months ended December 31, 2010 (Unaudited)

(stated in Canadian dollars)

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 $15,310,498.

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.

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 six months ended December 31, 2010 (Unaudited)

(stated in Canadian dollars)

SIGNIFICANT ACCOUNTING POLICIES, (Continued)

New accounting policies, (Continued)

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

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.

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 six months ended December 31, 2010 (Unaudited)

(stated in Canadian dollars)

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.

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.

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 of $41,104. At December 31, 2010, the fair value of the Pengram shares was $8,951 (June 30, 2010 - $9,581). During the period the Company recorded an unrealized loss of $630 (December 31, 2009 - $Nil).

EQUIPMENT

	December 31, 2010			June 30, 2010

	Cost	Accumulated amortization	Net book value	Cost	Accumulated amortization	Net book value

Computer equipment	$ 24,691	$ 16,556	$ 8,135	$ 17,461	$ 15,580	$ 1,881
Computer software	59,777	22,576	37,201	20,854	20,756	98
Furniture & fixtures	5,655	4,073	1,582	5,655	3,678	1,977
Vehicles	25,896	15,539	10,357	25,896	11,653	14,243
Field equipment	10,892	8,347	2,545	10,892	7,258	3,634
	$ 126,911	$ 67,091	$ 59,820	$ 80,758	$ 58,925	$ 21,833

PORTAL RESOURCES LTD.

Notes to the Consolidated Financial Statements

For the six months ended December 31, 2010 (Unaudited)

(stated in Canadian dollars)

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).

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

On September 21, 2010, the Company 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 six months ended December 31, 2010 (Unaudited)

(stated in Canadian dollars)

OIL AND GAS PROPERTIES, (Continued)

Bigwave Joint Venture, (Continued)

On September 21, 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 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, on 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, 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 December 31, 2010 the Company has spent a total of $627,701 (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 December 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 six months ended December 31, 2010 (Unaudited)

(stated in Canadian dollars)

OIL AND GAS PROPERTIES, (Continued)

Oil and gas expenditures

	Bigwave	Manito	Total

Total as at June 30, 2009	$ 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	$ 553,932	$ 18,000	$ 571,932

Crown Lease	-	-	-
Lease costs	58,769	-	58,769
Drilling (well costs)	-	-	-
Geological and engineering	15,000	-	15,000

Total expenditures	73,769	-	73,769

Total as at December 31, 2010	$ 627,701	$ 18,000	$ 645,701

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 six months ended December 31, 2010, the Company recognized $83,805 (2009 - $80,964) in stock-based compensation for employees, directors and consultants.

PORTAL RESOURCES LTD.

Notes to the Consolidated Financial Statements

For the six months ended December 31, 2010 (Unaudited)

(stated in Canadian dollars)

SHARE CAPITAL, (Continued)

Stock-based Compensation, (Continued)

The fair value of the options has been calculated using the Black-Scholes option-pricing model. For the period ending December 31, 2010 and 2009 the following assumptions were used:

	2010	2009

Stock based compensation	$ 83,805	$ 80,964

Risk-free interest rate	1.17% - 2.52%	1.28% - 2.52%
Expected stock price volatility	144%	126% - 129%
Expected option life in years	5 years	5 years
Expected dividend in yield	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:

	December 31			June 30
	2010			2010
		Weighted Average			Weighted Average
	Number of shares	Exercise Price	Number of shares		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
Exercised	(227,500)	$0.12	-		-
Forfeited or cancelled	(462,500)	$0.12	(1,175,000)		$0.50
Outstanding at end of period	3,593,600	$0.24	3,533,600		$0.25

Options vested and exercisable at end of period	2,813,600	$26.00	2,868,600		$0.27

At December 31, 2010, the weighted average remaining life of the outstanding options is 3.14 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.

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

PORTAL RESOURCES LTD.

Notes to the Consolidated Financial Statements

For the six months ended December 31, 2010 (Unaudited)

(stated in Canadian dollars)

SHARE CAPITAL, (Continued)

Stock-based Compensation, (Continued)

Stock options outstanding as at December 31, 2010 are as follows:

Number	Exercise Price	Expiry Date
75,000	$0.70	20-Jan-11
666,400	$0.52	5-Dec-11
810,000	$0.20	7-Oct-13
622,200	$0.12	9-Jun-14
470,000	$0.15	17-Jan-15
200,000	$0.26	6-Mar-15
750,000	$0.14	9-Sep-15
3,593,600

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	$45,354
	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 six months ended December 31, 2010

$18,705 (2009 - $5,774) was charged to a public company with a director in common with the Company for rent. As at December 31, 2010, $Nil (June 30, 2010 - $Nil) was receivable from this public company.

$5,910 (2009 - $3,150) was charged to a private company with a director in common with the Company for administrative fees and expense reimbursements. As at December 31, 2010, $Nil (June 30, 2010 - $57,861) was receivable from this private company.

the Company paid or accrued to pay a private company with a director in common with the Company an aggregate of $2,061 (2009 - $4,179) for fees and expense. As at December 31, 2010, the Company owed this company an aggregate of $Nil (June 30, 2010 - $Nil).

the Company incurred director fees of $14,333 (2009 - $14,333) to five directors. As at December 31, 2010, $11,667 (June 30, 2010 - $Nil) are payable to these directors.

$30,000 (2009 - $Nil) was received from a director as demand loan with no fixed term of repayment. As at December 31, 2010, the Company owed this director an aggregate of $30,000 (2009 - $Nil).

PORTAL RESOURCES LTD.

Notes to the Consolidated Financial Statements

For the six months ended December 31, 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 December 31, 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 six months ended December 31, 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
Six months ended December 31, 2010
Loss for the period	$ 493,536	$ 493,536

Six months ended December 31, 2009
Loss for the period	$ 490,651	$ 490,651

As at December 31, 2010
Assets	$ 862,063	$ 862,063

As at June 30, 2010
Assets	$ 1,101,609	$ 1,101,609

PORTAL RESOURCES LTD.

Notes to the Consolidated Financial Statements

For the six months ended December 31, 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 sufficient to justify its completion as a producing well and sufficient progress in assessing the reserves and economic and operating viability of the project is being made. We assess our capitalized exploratory wells pending evaluation periodically to determine whether costs should remain capitalized or should be charged to earnings.

	Three months ended December 31,			Six months ended December 31,			Year ended June 30,
	2010	2009	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)	$ (247,114)	$ (831,516)		$ (490,651)	$ (1,145,548)
Net loss under U.S. GAAP	$ (213,171)	$ (247,114)	$ (831,516)		$ (490,651)	$ (1,145,548)

c) Deficit
Closing deficit under Canadian GAAP	$(15,030,133)	$ (14,162,065)	$ (15,030,133)		$ (14,162,065)	$ (14,816,962)
Closing deficit under U.S. GAAP	$(15,030,133)	$ (14,162,065)	$ (15,030,133)		$ (14,162,065)	$ (14,816,962)

d) Cash Flows - Operating Activities
Cash applied to operations under Canadian GAAP	$ (137,599)	$ (220,912)	$ (880,678)		$ (452,558)	$ (936,712)
Cash applied to operations under U.S. GAAP	$ (137,599)	$ (220,912)	$ (880,678)		$ (452,558)	$ (936,712)

e) Cash Flows - Investing Activities
Cash applied under Canadian GAAP	$ 177,619	$ 356,004	$ 897,774		$ 507,801	$ 825,749
Cash applied under U.S. GAAP	$ 177,619	$ 356,004	$ 897,774		$ 507,801	$ 825,749

OTHER DIFFERENCES BETWEEN CANADIAN AND U.S. GAAP

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.

PORTAL RESOURCES LTD.

Notes to the Consolidated Financial Statements

For the six months ended December 31, 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, (Continued)

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 six months ended			Year ended
	December 31,			June 30,
	2010	2009		2010
Numerator: Net loss for the period under U.S. GAAP	$(493,536)	$(490,651)		$(1,145,548)

Denominator: Weighted-average number of shares under Canadian and U.S. GAAP	30,237,164	29,651,539	29,759,758

Basic and fully diluted loss per share under U. S. GAAP	$ (0.02)	$ (0.02)	$ (0.05)

15.

SUBSEQUENT EVENTS

On January 20, 2011 a total of 75,000 stock options at a price of seventy cents expired.

On February 18, 2011 the Company closed a non-brokered private placement. The proceeds will be used for exploration at the Bigwave project and for general working capital. The placement consists of 6,410,000 units at a price of 12.5 cents per unit. Each unit consists of one common share and one share purchase warrant. Each share purchase warrant will be exercisable to buy one common share at a price of 15 cents until February 17, 2012. A $10,500 fee was paid in cash on a portion of the Private Placement.

EX-99.2 3 pdoq2december10mda.htm MANAGEMENT DISCUSSION AND ANALYSIS Management Discussion and Analysis

PORTAL RESOURCES LTD.

MANAGEMENT’S DISCUSSION AND ANALYSIS

For the six months ended December 31, 2010

UINTRODUCTION

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 six months ended December 31, 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.

UDATE

This MD&A has been prepared based on information known to management as of February 28, 2011.

UDESCRIPTION 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 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”.

UEXPLORATION 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.

•

Portal completed a private placement on February 17, 2011 for gross proceeds of $801,250 which will be used for general working capital and oil and gas exploration.

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.

On January 12, 2011 the Company announced that it has not been able to complete a definitive Farm-in Agreement concerning the Bigwave Joint Venture lands in accordance with the terms of the Term Sheet announced on September 21, 2010. While Portal’s management team remains optimistic as to a conclusion to this matter there can be no assurances that a final document will be executed

Manito Joint Venture

On March 9P^th^P, 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 13P^th^P, 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	$ 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	$ 553,932	$ 18,000	$ 571,932

Crown Lease	-	-	-
Lease costs	58,769	-	58,769
Drilling (well costs)	-	-	-
Geological and engineering	15,000	-	15,000

Total expenditures	73,769	-	73,769
Total as at December 31, 2010	$ 627,701	$ 18,000	$ 645,701

SUMMARY OF QUARTERLY RESULTS

	Three Months Ended
	December 31 2010	September 30 2010	June 30 2010	March 31 2010
	$	$	$	$

Interest Income	78	155	306	611
General & Administration (excluding property write-offs)	280,443	213,326	290,549	341,476
Net loss	280,365	213,171	314,028	340,865
Net loss per share	0.01	0.01	0.01	0.01

	Three Months Ended
	December 2009	September 30 2009	June 30 2009	March 31 2009
	$	$	$	$

Interest Income	872	3,765	10,447	12,567
General & Administration (excluding property write-offs)	247,986	247,302	242,751	250,248
Property write-offs	-	-	58,194	5,134,856
Net loss	247,114	243,537	152,802	5,372,537
Net loss per share	0.01	0.01	0.01	0.18

RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED DECEMBER 31, 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 six months ended December 31, 2010 and 2009.

Loss for the period

For the three months ended December 31, 2010 the Company incurred a net loss of $280,365 ($0.01 per share) compared to a net loss of $247,114 ($0.01 per share) for the three months ended December 31, 2009. The increase of $33,251 in the net loss for the period from 2009 to 2010 is primarily due to: (a) an increase in salaries and benefits of $44,829 due to the increase of salaried employees; (b) an increase in stock based compensation of $24,925 due to the increased vesting of officers’, employees’ and consultant’s stock options; (c) an increase in investor relations expenses of $14,773 due to the increase of attorney’s fees paid in relation to the Company’s annual general meeting; and (d) an increase of consulting and management fees of $10,298 due to the increase of fees paid to consultants; offset by an decrease in project investigation of $60,262; a decrease in accounting auditing fees of $13,580 due to a reduction of audit fees.

Expenses

General and administrative costs were $275,502 for the three months ended December 31, 2010, a decrease of $14,154 as compared to $261,348 for the same period in the prior year. The five largest expense items for this fiscal period, which account for 83% (2009 – 57%) of total general and administrative expenditures are: salaries and benefits of $94,876 (2009 - $50,047); stock based compensation expense of $52,255 (2009 – $27,330); investor relations expense of $36,338 (2009 – $21,565); office and miscellaneous expenses of $22,540 (2009 – $26,976); and rent of $21,805 (2009 – $22,930). The increase in salaries and benefits is the result of an increase in the number of salaried employees from two to three. The increase in stock based compensation expense is due to a higher vesting of officers’, consultants’ and employees’ stock options. The increase in investor relations expenses is due to the increase in attorney’s fees paid in relation to the Company’s annual general meeting. The decrease in office and miscellaneous expenses is the result of increased efforts to conserve and maintain capital.

RESULTS OF OPERATIONS FOR THE SIX MONTHS ENDED DECEMBER 31, 2010 AND 2009

Loss for the year

For the six months ended December 31, 2010 the Company incurred a net loss of $493,536 ($0.02 per share) compared to a net loss of $490,651 ($0.02 per share) for the six months ended December 31, 2009. The increase in the net loss for the period from 2009 to 2010 of $ 2,885 is primarily due to: (a) an increase in salaries and benefits of $58,882 due to the increase of salaried employees; (b) an increase in investor relations expense of $37,169 due to the increase of show attendances and travel expenses to increase awareness of the Company’s oil and gas projects and the increase of attorney’s fees paid in relation of the Company’s annual general meeting; and (c) a decrease in the unrealized gain on marketable securities of $20,933 due to the marketable securities’ price decrease; offset by a decrease of project investigation expenses of $81,749 due to the Company’s increased focus in the current projects; the decrease of accounting and audit fees of $ 15,830 due to a reduction of auditor’s fees; a decrease of legal fees of $11,083 due to reduced lawyer’s fees; and a decrease of office and miscellaneous expenses of $10,274 due to the Company’s increased efforts to conserve and maintain capital.

Expenses

General and administrative costs were $493,139 for the six months ended December 31, 2010, a decrease of $22,452 as compared to $515,591 for the same period in the prior year. The five largest expense items for this fiscal period, which account for 79% (2009 – 59%) of total general and administrative expenditures are: salaries and benefits of $155,505 (2009 - $58,882); stock based compensation expense of $83,805 (2009 – $80,964); investor relations expense of $62,518 (2009 – $25,349); rent of $44,928 (2009 – $48,314); and office and miscellaneous expenses of $40,468 (2009 – $50,742). The increase in salaries and benefits is the result of an increase in the number of salaried employees from two to three. The increase in stock based compensation expense is due to a higher vesting of officers’, consultants’ and employees’ stock options. The increase in investor relations expenses is due to the increase in show attendances and travel expenses to increase awareness of the Company’s oil and gas projects and an increase in attorney’s fees paid in relation to the Company’s annual general meeting. 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 30P^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 $75,759 and working capital of ($29,384) as of December 31, 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 $73,769 and the funding of operating activities of $400,935.

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 December 31, 2010, the Company’s share capital was $14,900,007 representing 30,379,039 common shares (June 30, 2010 - $14,850,161 representing 30,151,539 common shares).

At December 31, 2010 the Company had 3,593,600 (June 30, 2010 – 3,533,600) outstanding stock options with a weighted average exercise price of $0.24 expiring from January 20, 2011 to September 15, 2015.

During the six moths ended December 31, 2010, the Company cancelled 462,500 stock options and issued 750,000 new options at an exercise price of $0.14. During the six months ended December 31, 2010 a total of 227,500 stock options were exercised at prices of 12 and 15 cents for gross proceeds of $27,676. A fair value of $22,170 was recognized on these exercised options. On January 20, 2011 a total of 75,000 stock options at an exercise price of $0.70 expired unexercised.

As at December 31, 2010, Contributed Surplus totaled $1,086,628 (June 30, 2010 - $1,024,993). During the six months ended December 31, 2010, the Company recognized $83,805 (2009 - $80,964) in stock-based compensation expense for share purchase options that vested during the period.

Stock options outstanding as at December 31, 2010 are as follows:

Number	Exercise Price	Expiry Date
75,000	$0.70	20-Jan-11
666,400	$0.52	5-Dec-11
810,000	$0.20	7-Oct-13
622,200	$0.12	9-Jun-14
470,000	$0.15	17-Jan-15
200,000	$0.26	6-Mar-15
750,000	$0.14	9-Sep-15
3,593,600

If the remaining outstanding options were exercised, the Company’s available cash would increase by $851,192.

As the date of the MD&A there were 36,789,039 common shares issued and outstanding and there would be 40,382,639 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 six months ended December 31, 2010

the Company incurred director fees of $14,333 (2009 - $14,333) to five directors. As at December 31, 2010, $11,667 (June 30, 2010 - $Nil) are payable to these directors.

$30,000 (2009 - $Nil) was received from a director as a demand loan with no fixed terms of re-payment. As at December 31, 2010, the Company owed this director an aggregate of $30,000 (2009 - $Nil)

ADDITIONAL INFORMATION

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

Outstanding Share Data

As at February 28, 2011 the Company had the following items issued and outstanding:

•

36,789,039 common shares

•

3,668,600 common stock options with a weighted average exercise price of $0.23 expiring at various dates until February 15, 2016.

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	45,354
	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,

•

The completion of 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, 2011 balance sheet that will be required for comparative purposes for fiscal year ending June 30, 2012.

FINANCIAL INSTRUMENTS AND OTHER INSTRUMENTS

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

(c)

Liquidity risk

(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

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.

EX-99.3 4 ceocertificationdec2010.htm CEO CERTIFICATION CEO Certification

Form 52-109FV2

Certification of interim filings - venture issuer basic certificate

I, David Hottman, Chief Executive Officer & President of Portal Resources Ltd., certify the following:

Review: I have reviewed the interim financial statements and interim MD&A (together, the “interim filings”) of Portal Resources Ltd. (the “issuer”) for the interim period ended December 31, 2010.

No misrepresentations: Based on my knowledge, having exercised reasonable diligence, the interim filings do not contain any untrue statement of a material fact or omit to state a material fact required to be stated or that is necessary to make a statement not misleading in light of the circumstances under which it was made, with respect to the period covered by the interim filings.

Fair presentation: Based on my knowledge, having exercised reasonable diligence, the interim financial statements together with the other financial information included in the interim filings fairly present in all material respects the financial condition, results of operations and cash flows of the issuer, as of the date of and for the periods presented in the interim filings.

Date: February 28, 2011

“David Hottman”

_______________________

David Hottman

Chief Executive Officer & President

NOTE TO READER

In contrast to the certificate required for non-venture issuers under National Instrument 52-109 Certification of Disclosure in Issuers’ Annual and Interim Filings (NI 52-109), this Venture Issuer Basic Certificate does not include representations relating to the establishment and maintenance of disclosure controls and procedures (DC&P) and internal control over financial reporting (ICFR), as defined in NI 52-109. In particular, the certifying officers filing this certificate are not making any representations relating to the establishment and maintenance of

controls and other procedures designed to provide reasonable assurance that information required to be disclosed by the issuer in its annual filings, interim filings or other reports filed or submitted under securities legislation is recorded, processed, summarized and reported within the time periods specified in securities legislation; and

ii)

a process to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with the issuer’s GAAP

The issuer’s certifying officers are responsible for ensuring that processes are in place to provide them with sufficient knowledge to support the representations they are making in this certificate. Investors should be aware that inherent limitations on the ability of certifying officers of a venture issuer to design and implement on a cost effective basis DC&P and ICFR as defined in NI 52-109 may result in additional risks to the quality, reliability, transparency and timeliness of interim and annual filings and other reports provided under securities legislation.

EX-99.4 5 cfocertificationdec2010.htm CFO CERTIFICATION CFO Certification

Form 52-109FV2

Certification of interim filings - venture issuer basic certificate

I, Mark T. Brown, Chief Financial Officer of Portal Resources Ltd., certify the following:

Date: February 28, 2011

“Mark T Brown”

_______________________

Mark T. Brown

Chief Financial Officer

NOTE TO READER

ii)

a process to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with the issuer’s GAAP