SolGold Regulatory News (SOLG)

11 Dec 2007 13:51

Solomon Gold PLC11 December 2007 Solomon Gold plc11 December 2007 NEWS RELEASE FOR IMMEDIATE RELEASE AIM Code - SOLG ISSUE OF ANNUAL REPORT FOR THE YEAR ENDED 30 JUNE 2007 Solomon Gold plc has today issued consolidated financial statements for the yearended 30 June 2007. The Chairmans' Statement, Operation Review, Directors'Report, Consolidated Income Statement, Consolidated and Company Balance Sheets,Statement of Changes of Equity and Consolidated and Company Statements of CashFlows are included below. The full Annual Report is available on the Company's website www.solomongold.com. For further information in respect of the Company's activities, please contact: Nicholas Mather Duncan CornishCEO Company Secretary and CFOTel: +61 417 880448 Tel: +61 7 3303 0660Email:nmather@solomongold.com Email: dcornish@solomongold.com Nominated adviser for the purposes of AIM:Contact: Mr Stephen WeirRFC Corporate FinanceTel +61 2 9250 0048Email: Stephen.Weir@rfc.com.au CORPORATE INFORMATION DIRECTORS Nicholas Mather (Chief Executive Officer)Cameron Wenck (Non-Executive Chairman)Brian Moller (Non-Executive Director)Dr Robert Weinberg (Non-Executive Director) COMPANY SECRETARY Duncan Cornish REGISTERED OFFICE 7 Pilgrim Street, London EC4V 6LBUnited Kingdom Registered Number 5449516 AUSTRALIAN OFFICE Level 5, 60 Edward Street,Brisbane QLD 4000Phone: + 61 7 3303 0660Fax: +61 7 3303 0681Email: info@solomongold.comWeb Site: www.solomongold.com AUDITORS PKF (UK) LLPFarringdon Place, 20 Farringdon RoadLondon EC1M 3AP NOMINATED ADVISOR RFC Corporate Finance LtdLevel 14, 19-31 Pitt StreetSydney NSW 2000, Australia BROKER Hanson Westhouse LtdOne Angel Court, London EC2R 7HUnited Kingdom BANKERS Macquarie Bank Ltd (Brisbane Branch)300 Queen Street, Brisbane QLD 4000Australia SOLICITORS Faegre & Benson LLP7 Pilgrim Street, London EC4V 6LBUnited Kingdom AUSTRALIAN SOLICITORS Hopgood GanimLevel 8, Waterfront Place1 Eagle Street, Brisbane QLD 4000 REGISTRARS Computershare Investor Services plcThe Pavilions, Bridgwater RoadBristol BS99 7NH CHAIRMAN'S STATEMENT Dear Shareholder, The year to 30th June 2007 saw your company further intensify its mineralexploration activities in Solomon Islands on the Country's main island ofGuadalcanal. Our drilling program has experienced a strong turn around from theinitially slow start and frustrating delays experienced in the 2006 year. Thedrilling program has been escalated such that we now have three fullyoperational drilling rigs on Guadalcanal Island. Despite the inevitabledifficulties drilling in such perilous terrain, approximately 7,500 metres weredrilled in the 12 months ending November 2007, over the prospects at Sutakiki,Koloula and more recently, Chikora. In 2006, the Company identified a very extensive and intensely mineralisedcopper gold porphyry system at Sutakiki. Results from extensive, deep drillingof this system throughout the year have ratified our initial optimism around thediscovery. We were encouraged by the results of the first hole drilled atSutakiki, which intersected 309 metres grading 0.54 g/t gold. Although thegrade was low, the intersection was very large. Subsequent drilling wasencouraging enough to further intensify our drilling program at Sutakiki. The company's exploration strategies will, we believe, be vindicated in thecoming year as a result of follow up drilling planned for the very encouragingdiscovery, recently made at Sutakiki. Solomon Gold recently reported ahigh-grade intersection of 32 metres grading 9.45 g/t gold from 108m depth, indrill-hole SK11. Drilling around the discovery has commenced and we await theresults. This is undoubtedly a very significant find and has created some welldeserved attention and interest in the company. Solomon Gold's exploration capabilities have been boosted by the recruitment ofadditional geologists and the engagement of further drilling rigs over the pastyear. Our increased scale should result in improved cost efficiencies goingforward. Your Board and Management are convinced that Solomon Gold's ambitiousprogramme, foreseen when the Company commenced operations there in September2005, is likely to lead to a major gold discovery. The Company and its wholly owned operating subsidiary, Australian ResourceManagement (ARM) P/L, continues to enjoy a harmonious working relationship withthe landowners, local people and the Solomon Islands Government. We fully expectthis to continue into the future. Throughout this program, your company hasmanaged its activities in an environment of high competition for all services,particularly assay laboratories, drilling rigs and geophysical survey crews.These issues are regularly addressed and we look forward to further improvementsin turnaround times for assays. Solomon Gold continually monitors field efficiency given the higher cost ofoperating in the Guadalcanal environment. Higher operating costs result from thedegree of difficulty of access and slow drilling incurred due to constantcollaring of drill holes through landslide scree. The company is targetingsignificant improvements in operating efficiency and is now aiming to deliveraround 18,000 metres of drilling over the next 12 months of operations. Thiswill be achieved using three drilling rigs and double shifting as much aspossible. In addition the Company has identified additional exploration techniques, whichwe believe will rapidly uncover high priority targets. This has been achievedwith the benefit of reprocessed aeromagnetic information, originally collectedby ARM in 1997 and will be further augmented by an airborne electromagneticsurvey is planned for February 2008. The mineralogical characteristics of thediscovery in SK11 suggest that areas of similar mineralisation will stand out inthis survey. The Company has met the expenditure forecasts of the original programs andbudgets for the Solomon Gold project on Guadalcanal. In order to meet the futurecosts of exploration and resource definition around the recent discovery, acapital raising will be undertaken in the near future. In November 2007, Solomon Gold appointed a new Broker and Nominated Advisor inHanson Westhouse plc and RFC Corporate Finance Limited respectively. The Companylooks forward to a successful relationship with both Hanson Westhouse and RFC. On behalf of the Board, I wish to acknowledge the extraordinary commitment ofour managers and staff in the field. Their tireless work and never-ending faithin the project has kept us focused and optimistic during otherwise difficulttimes. Their efforts will surely be rewarded in the future. During the year ourinaugural Operations Manager and Executive Director, David Jelley, resigned forpersonal reasons and we thank him for his efforts on behalf of the Company andwish him the best for his future. Finally, I would like to take this opportunity to thank all shareholders fortheir support and patience throughout the last two years and to commend to youthe Solomon Gold exploration program going forward. Your Board is confident thatthe next 12 months will see substantial progress towards the definition of aworld-class gold mineral system, substantiating our original representations toyou. Cameron WenckChairman OPERATIONS REVIEW About Solomon Gold plc Solomon Gold holds five granted tenements on the main Island of Guadalcanal,Solomon Islands, for minerals exploration focusing on copper and gold richporphyry systems and high grade epithermal gold mineralisation. The tenementscover 468km2 and are current, including rights to renewal periods, until 10November 2011. The company listed on AIM (London Stock Exchange) on 10 February2006 after a £5m capital raising. The Company has expended those funds inaccordance with the proposed work program and budget and has now established thenecessary infrastructure and field support facilities and gathered sufficientdata from surface mapping, sampling and subsurface drilling programs to enable afurther program of exploration drilling to enable, with added efficiency, theexploration for world class gold and copper orebodies. The Company believes the area has the potential for the discovery of a worldclass copper gold porphyry system similar to other large gold equivalentorebodies in the region such as Ok Tedi (50m oz Au Eq), Grasberg (100m oz AuEq), Lihir (40m oz Au) and Bougainville (50m oz Au Eq). These orebodies arelocated on the circum- Pacific zone of volcanoes and associated mineralisationand Solomon Gold management have identified geological features which point to astrong possibility of similar discoveries being made on the Solomon Goldtenements. Solomon Gold has identified approximately 30 km2 of mineralisation indicative ofsignificant porphyry copper gold and epithermal gold mineralisation systems andis currently engaged in a three rig program, drilling key targets. Recently thedrilling program returned a spectacular intersection of 32 metres at a grade of9.45 grams per tonne from 108m depth gold at the Sutakiki Prospect,demonstrating the potential for discovery of a high grade gold resource. Thehigh grade gold mineralisation encountered in the recent drilling ischaracteristic of high grade gold deposits related to mineralised transformstructures in Papua New Guinea such as Porgera and in the Indonesian archipelagosuch as Halmahera. Solomon Gold is staffed by an active team of expatriate and Solomon Islandgeologists and field hands, supported by integrated logistics support servicesincluding a helicopter contract. Solomon Gold's key prospects are the Sutakiki, Mbina and Chikora gold and copperprospects which all align on a key transform structure through Guadalcanal, andthe Mbetilonga Copper gold project, just 15 km south of Honiara, the nationalcapital. The program is augmented by the services of two drilling contractors operating atotal of three rigs. The past year has seen Solomon Gold focus its exploration efforts primarily onthe Sutakiki prospect in the Sutakiki Valley on the northern side of Guadalcanaland the Mbina and Chikora prospects in the Koloula Valley on the southern sideof Guadalcanal. During the year the Company perfected access into the KumaValley to the east of the Koloula Valley and conducted stream sediment andmapping and sampling programs over areas of extensive mineralisation. No workwas conducted on the Mbetilonga prospect area and the Poleo application to thewest of Koloula was relinquished. In addition the Company applied for several new tenement areas. One of thesehas been granted. The Fauro Island area was applied for over an extinct volcanic caldera which hasyielded significant surface and drilling results for gold in the past, inprograms conducted by other explorers. Solomon Gold's relationships with locallandowners are expected to deliver access to the area in the near future. Faurois located in the Western Provinces immediately south of the Papua New Guineaborder and the giant Bougainville copper gold porphyry. The Fauro project haspotential for both epithermal gold and porphyry style copper gold deposits. Three exploration licence areas prospective for Nickel laterites on eastGuadalcanal, and Makira and Ngella in the Floridas island group were appliedfor. It is the current intention of Solomon Gold to define a world class gold orporphyry copper gold deposit and ultimately bring it to production. Solomon Goldhas access to the required exploration development and financing skills toachieve this goal. Drilling To date Solomon Gold has completed a total of 8,701 metres of drilling on theGuadalcanal field operations as follows: Mbetilonga 909 metres (5 holes) Koloula (Mbina and Chikora ) 1,754 metres (3 holes) Sutakiki 6,038 metres (11 holes) Total 8,701 metres Of this, 4,480 metres were completed during the year under review and 3,156metres were completed since the end of the financial year. Solomon Gold expects to increase the drilling rate in the forthcoming year as aresult of application of improved drilling practices in unconsolidated surfacelandslide material, increased frequency of double or extended drilling shiftsand enhanced operational standards from the drilling companies. Mapping and sampling 87 stream sediment, 1,174 soil and 1,103 rock chip samples were collected duringthe year. The bulk of this activity was centred on the Sutakiki Valley where theCompany made a significant gold discovery. Logistics The establishment of three field camps at Sutakiki, Mbina and Mbetilonga hasenabled the continuance of field operations on a full effort basis. The Companymaintains a full communications and accommodation service at the Sutakiki Camp,which is also the geological base for the Sutakiki field program. Personnel During the year Solomon Gold employed a number of local Solomon Islandspersonnel on the project in positions including field hands, cooks, logisticsofficers , laboratory technicians, book keepers and clerks receptionists andgeologists. The integration of local communities and employees has been a keyelement of Solomon Gold's uniquely constructive approach to community relationson Guadalcanal. The attention to local management issues by Mr Nicholas Biliki, a SolomonIslander who is the Company's manager of administration and community affairs onthe island, has been key in the achievement of Solomon Gold's unprecedentedaccess to field areas on Guadalcanal. Law and Order Law and order has been maintained in Solomon Islands throughout the year. TheRegional Assistance Mission to Solomon Islands ("RAMSI") continued to providesupport to the Country in accordance with resolutions of the Solomon IslandsGovernment. Australia has indicated that it intends to provide an amount of someAUD 800 million for the period 2004 to 2009 and there is no indication of anyreduction in the commitment to RAMSI or Solomon Islands in the near future. Sutakiki During the year under review Solomon Gold focused its efforts on the SutakikiValley, 30 km south east of the capital of Solomon Islands, Honiara. The Sutakiki Valley presented as one of the most important targets for SolomonGold, based on its presence on the Guadalcanal transform structure, and theretrieval by Newmont, during a brief field visit in 1989, of stream sedimentsamples up to 73 ppb gold and float samples in the river up to 1.8 g/t gold.Final reports by Newmont rated the porphyry prospectivity of the headwatershighly. After a period of establishment of Solomon Gold's credentials with thelocal peoples of the Sutakiki Valley, Solomon Gold gained access to the area andfollowed up the Newmont results. The source of the gold anomalism was located upthe River in an outcrop which returned 85 m @ 0.8 g/t gold in composite 5 metrechannel samples in a mineralised porphyry. Landslides further exposed themineralised porphyry, and rock chip sampling of a complex vein system exposedreturned up to 1000 g/t gold. Excluding this high sample the veins averaged 7 g/t gold and the first drill hole was located underneath this discovery outcrop.The drillhole SK01 returned 309 metres at a grade of 0.5g/t gold and 0.16%copper. Further drilling in the Sutakiki Valley up to SK010 did not identify anyfurther significant gold mineralised zones. Mapping and sampling in the areaidentified north westerly trending fault systems, with zones of intense shearingand mineralisation grading up to 3.5 g/t gold in Valehailala Creek, just 500metres north of the discovery zone in the Sutakiki River. The Company alsodiscovered open space veins with similar grades outcropping beside the fault,with an east west or east south east orientation. Drillhole SK 011 was drilled underneath these occurrences and resulted in thediscovery of intense sulphide mineralisation in the Sutakiki fault zone,returning 32 metres @ 9.45 g/t gold from 108m depth including 10 metres @ 21 g/t, including 1 metre @ 74 g/t gold. Subsequent inspection and reinterpretationof airborne magnetic data collected in 1997 resulted in the identification ofstructures evident in the magnetic data with the same orientation and positionas those observed in the field. Solomon Gold has resolved a structural key for the mineralisation whichdemonstrates that there are a number of locations nearby with similar potentialfor high grade gold mineralisation. At the time of this report the company was awaiting the receipt of assay resultsfrom sampling programs along the strike extent of the Suta Fault. Rock chipsampling from Vurakindi Creek, 1 km to the west returned 3.5 g/t from brecciasexhibiting similar characteristics to the mineralisation in SK11. In the next 8 months Solomon Gold intends to drill nine holes from each of 4drill pads along an 800 metre extension of the Suta Fault, to a depth of 300metres in order to test the resource potential of the recent discovery. TheCompany intends after completion of the current program in the Koloula Valley atthe Mbina and Chikora prospects, to place an additional drilling rig on theSutakiki Prospect. Mbina The Mbina Prospect is located in the Koloula River Valley 4 km to the south westof Sutakiki. At Mbina, complex porphyry intrusions are mineralised with copperand gold over long distances. Channel sampling of exposures in the Koloula Riverhave previously returned up to 125 metres @ 0.23 % copper and 0.5 g/t gold. Themineralisation occurs in a 2km by 300m wide zone on the east side of the Mbinacopper porphyry system. During the year drilling at Mbina in KL01 intersectednumerous narrow veins trending east south east which returned grades up to 6.7 g/t over 1 metre sections. Drillhole KL02 has been drilled from the same pad asKL01 and assays are awaited. KL03 is at the time of this report being drilledfrom the same pad to the north west to test western extensions of the veinsystem encountered in KL01 and a magnetic zone interpreted to be a mineralisedporphyry. Additional mapping and sampling has outlined several other drilltargets which the Company plans to drill over the next six months. Chikora - Vurakave. The Chikora copper molybdenum porphyry prospect is located 2 km south west ofMbina in the Koloula valley and 6 km south west of Sutakiki. At Chikora, copper and molybdenum mineralisation is evident over a 2.5 x 1.5 kmzone in which soil sampling by Utah International in the 1970s and SolomonGold's subsidiary ARM in the late 1990s and augmented by recent sampling, hasreturned values over 3000 ppm copper. Molybdenum is also present and has beenassayed up to 0.17% in rock chip samples at the Vurakave prospect on the northeast of the Chikora grid. Mapping and rock chip sampling at Vurakave hasidentified intermittent zones of quartz veining containing visible molybdeniteover a 600m x 200m zone of interest. Utah drilled 13 short vertical holes into Chikora in the 1970s. The best holewas CH08 returning 115m @ 0.34% Copper and 142 ppm Molybdenum from 152m to 266mand showing mineralisation strengthening with depth, Maximum values of 0.76% Cuand 820ppm Molybdenum (0.082%) were intersected in the zone near the end of thehole. The hole was drilled vertically and is believed to have missed thesub-vertical quartz copper molybdenum sulphide veins outcropping in the Chikoraprospect area. The current Solomon Gold hole CK01 is inclined so as to bettertest the steeply dipping veins in the area. Solomon Gold has reinterpreted all the existing data and designed and commenceda two hole drilling program to test the area of high copper anomalies in soilsand a drill intersection by Utah Mining in 1974. The first hole, CK01,penetrated 44 m of loose surface material before entering disseminated 1%bornite (copper sulphide) mineralisation in a porphyry intrusive. CK01 at thetime of this report was at a depth of 361 metres and drilling to 600 metres. Thehole was in a mineralised biotite porphyry containing frequent copper sulphideveins. The Chikora prospect is situated at a vertical elevation of between 650 and1,000 metres above sea level, and only 6 km from the south coast of Guadalcanal.The Chikora prospect is believed by Solomon Gold geologists to represent adeeper, copper and molybdenum phase of the gold mineralisation evident at higherelevations at the Mbina (850 to 1,100 m asl ) and Sutakiki gold and copperprospects (950 to 1,300 m asl). Kuma During the year, the Company gained access to the Kuma River Valley to the eastof the Koloula Valley where reconnaissance had showed extensive alteration ofthe regionally dominant Suta Volcanics. The Company conducted a regionalsampling and mapping program which did not identify any significant mineralisedzones in outcrop. A stream sediment maximum of 0.43 g/t was encountered which isconsidered to be highly anomalous, however the source of that gold has not yetbeen identified. The area is still considered to offer considerableprospectivity and will be reassessed in the forthcoming year. Mbetilonga During the year, the Company conducted further mapping sampling and drillingprograms at Mbetilonga, 15 kms south of Honiara. Extensive surfacemineralisation has not yet led to a significant drilling intersection. TheCompany has tested several target areas at Mbetilonga, with five drill holes ofwhich two, MB-04 at Hambusimaloso and MB05, at Hahala were drilled in thecurrent year. Neither hole intersected significant mineralisation. The Mbetilonga tenement area covers more than 50 km2 of prospective volcanic,intrusive and altered sedimentary rocks, widely anomalous in copper. AtHambusimaloso, copper anomalism over 0.1% copper in soil samples extends over2km2 and peaks at over 13.5% copper in rock chip samples. Magnetic anomaliescoincident with porphyry intrusions at Hahala, 2 km north of Hambusimaloso, didnot yield significant gold mineralisation. Additional important targets at Mbetilonga are at Vuralanggoma on the easternside of the tenement and at Vatuchichi in the northern section of themineralised area. Solomon Gold intends to conduct further drilling atVuralanggoma and Vatuchichi in the forthcoming year. At Vatuchichi drilling isplanned to test magnetic anomalies underneath a limestone cover and at theoutcropping mineralisation, where epithermal gold mineralisation is recorded upto 51 g/t gold in rock chip samples. At Vuralanggoma a hole drilled by Utah inthe 1970s intersected a 38 metre thick zone at a grade of 0.34% copper andSolomon Gold plans to confirm and extend the previous results. Corporate Since the end of the year, Solomon Gold has appointed Hanson Westhouse plc asBroker and RFC Corporate Finance as Nominated Advisor to the Company. Qualified Person Information in this report relating to the exploration results is based on datareviewed by Mr Nicholas Mather (B.Sc. Hons Geol.), the Chief Executive Officer of the Company. Mr Mather is a Fellow of the Australasian Institute of Mining and Metallurgy who has in excess of 25 years experience in mineral exploration and is a Qualified Person under the AIM Rules. Mr Mather consents to the inclusion of the information in the form and context in which it appears. Risks and Uncertainties The Directors consider that the factors and risks described below are the mostsignificant. Use of Funds The Company has prepared detailed budgets setting out the way in which itproposes its funds from time to time. However, the quantum and timing ofexpenditure will necessarily be dependent upon the continued positive resultsfrom the Company's ongoing exploration activities on the Tenements and anongoing acceptable state of law and order. As the Company conducts its drillingand exploration programs, it is possible that results and circumstances maydictate a departure from the existing budget at the time. Further, the Companymay, from time to time as opportunities arise, utilise part of its financialresources (including the funds raised as part of the Placing) to participate inadditional opportunities that arise and fit within the Company's broaderobjectives, as a means of advancing shareholder value. No production history The Group currently has no producing properties and its ultimate success maydepend on its operating ability to generate cashflow from producing propertiesin the future. The Group has not generated any revenue to date and there is noassurance that it will do so in the future. General exploration and extraction risks There is no certainty that the Company will identify commercially mineablereserves in the Tenements. The Company is currently in the early stages ofexploration. The exploration for and development of mineral deposits involvessignificant uncertainties and the Group's operations will be subject to all ofthe hazards and risks normally encountered in such activities and in addition,several unusual risks. These hazards and risks include unusual and unexpectedgeological formations, rock falls, landslides, flooding and other climaticconditions, aircraft or boat accidents and injury or death in civil unrest anyone of which could result in damage to, or destruction of, the Company'sfacilities, damage to life or property, environmental damage or pollution andlegal liability which could have a material adverse impact on the business,operations and financial performance of the Company. Although precautions tominimise risk will be taken, even a combination of careful evaluation,experience and knowledge may not eliminate all of the hazards and risks. Thereare no key man insurance policies taken out on any of the Company's personnel. The Company's exploration models and the bases for its search for potentialresources are subject to variation or alternate interpretation from time to timeas a result of the receipt of new exploration data and interpretation thereonwhich may not be evident to the Company or the Directors at the date of thisdocument. The targets identified by the Company's personnel and consultants, are based oncurrent experience and modelling and all available data. There is no guaranteethat surface sample grades of any metal or mineral taken in the past willpersist below the surface of the ground. As is common with all exploration ventures, there is also uncertainty andtherefore risk associated with the Company's operating parameters and costswhich can be difficult to predict and are often affected by factors outside theCompany's control. Few properties which are explored are ultimately developedinto producing assets. There can be no guarantee that the estimates ofquantities and grades of gold and minerals disclosed will be available forextraction and sale. With all natural resources operations there is uncertaintyand, therefore, risk associated with operating parameters and costs resultingfrom the scaling up of other extraction methods tested in pilot conditions.Natural resources exploration is speculative in nature and there can be noassurance that any potential mineral deposits will be discovered. Project development risks If the Company discovers a potentially economic resource or reserve there is noassurance that the Company will be able to develop a mine thereon, or otherwisecommercially exploit such resource or reserve. Further, there can be noassurance that the Company will be able to manage effectively the expansion ofits operations or that the Company's current personnel, systems, procedures andcontrols will be adequate to support the Company's operations as operationsexpand. Any failure of management to manage effectively the Company's growth anddevelopment could have a material adverse effect on the Company's business,financial condition and results of operations. There is no certainty that allor, indeed, any of the elements of the Company's current strategy will developas anticipated. Operational considerations The Company's operational targets are subject to the completion of plannedoperational goals on time and according to budget and are dependent on theeffective support of the Company's personnel, systems, procedures and controls.Any failure of these may result in delays in the achievement of operationaltargets with a consequent material adverse impact on the business, operationsand financial performance of the Company. The locations of all of the Company's current exploration activities dictatethat climatic conditions have an impact on operations and, in particular, severeweather, including cyclones, could prevent access to the Tenements and disruptthe delivery of supplies, equipment and fuel. It is therefore possible thatexploration and extraction activity levels might fluctuate. Unscheduledinterruptions to the Company's operations due to mechanical or other failures,or industrial relations-related issues, or problems with the supply of goods orservices could have a serious impact on the financial performance of thoseoperations. Being located on the Pacific ''Rim of Fire'', Solomon Islands areexposed to the risk of damage from earthquakes and tsunami. Operations in Solomon Islands will expose the Company's staff, contractors andconsultants to a variety of tropical diseases and related risks. These includebut are not limited to malaria and other numerous skin diseases. The Company maybe exposed to liabilities as a result of this. To mitigate potential access and related issues, the Company has entered into ahelicopter services agreement. There are also operational risks associated with frequent power outages thatoccur in Solomon Islands' capital, Honiara. These regular outages make thetransacting of business in Solomon Islands difficult, and may have an adverseimpact on the ability of the Company to achieve its objectives in a timelymanner. Personnel The Company has a small management team and the loss of any key individual couldaffect the Group's business. Additionally, the Company will be required tosecure other personnel to facilitate its exploration programme on each of theTenements. Any inability to secure appropriate or retain current personnel mayhave a materially adverse impact on the business and operations of the Company. Economic, political, judicial, administrative, taxation or other regulatoryfactors The Company may be adversely affected by changes in economic, political,judicial, administrative, taxation or other regulatory factors, in the areas inwhich the Company (through its subsidiary ARM) operates and holds its majorassets. No assurance can be given as to the future policies of any new Government thatmight be elected. Any policy changes of any new Government may have a materialadverse impact on the business, operations and financial performance of the Company. Tenements and regulatory environment There is no guarantee that if ARM applies for a mining lease in respect ofminerals it has discovered within the Tenements that it will be granted one. Thegrant of a mining lease is subject to the exercise of ministerial discretion andno guarantee can be given as to the favourable exercise of any such discretion.There is no guarantee of the terms of any mining lease. The exploration andextraction activities of ARM are subject to various laws governing prospecting,development, production, taxes, labour standards and occupational health, sitesafety, toxic substances, environmental and other matters. Although theDirectors believe that ARM's exploration activities are currently carried out inaccordance with all applicable rules and regulations, no assurance can be giventhat new rules and regulations will not be enacted or that existing or futurerules and regulations will not be applied in a manner which could limit orcurtail exploration, production or development. Amendments to current laws andregulations governing operations and activities of exploration and extraction,or more stringent implementation thereof, could have a material adverse impacton the business, operations and financial performance of the Company. Title matters Whilst the Company has the benefit of granted PLs and has diligentlyinvestigated its title to, and rights and interests in, the Tenements, there isno absolute guarantee that such title, rights and interests will be held validin the event of any undetected defects. If a defect does exist it is possiblethat ARM may lose all or part of its interest in those Tenements to which thedefect relates. The grant and future renewals of PLs, as the case may be, are governed by therequirements and restrictions set out in the Mining Act. Whilst the Companybelieves it is entitled to rely upon all the actions of the Minerals Board andthe Minister as being valid, compliance with the requirements and restrictionsunder the Mining Act may be open to differing interpretations which, in the caseof an adverse interpretation, may have a material adverse effect on theCompany's title. Volatility of prices of gold and copper The market prices of gold and copper are volatile and are affected by numerousfactors which are beyond the Company's control. These include internationalsupply and demand, the level of consumer product demand, international economictrends, currency exchange rate fluctuations, interest rates, inflation, globalor regional political events and international events as well as a range ofother market forces. Sustained downward movements in gold or copper pricescould render less economic, or uneconomic, some or all of the explorationactivities to be undertaken by the Group. Currency fluctuations The future value of the Ordinary Shares may fluctuate in accordance withmovements in the foreign currency exchange rates. For example, it is commonpractice in the mining industry for mineral production revenue to be denominatedin USD, although some but not all of the costs of exploration production will beincurred in USD and not all of the ore or metal obtained from the Tenements willbe sold in USD denominated transactions. Uninsured risks The Company, as a participant in exploration and potential extractionactivities, may become subject to liability for hazards that cannot be insuredagainst or against which it may elect not to be so insured because of highpremium costs. Furthermore, the Company may incur a liability to third parties(in excess of any insurance cover) arising from negative environmental impact orother damage or injury. Additional requirements for capital Substantial additional financing may be required if the Company is to besuccessful pursuing its ultimate strategy. No assurances can be given that theCompany will be able to raise the additional finance that it may require for itsanticipated future operations. Copper and gold prices, environmentalrehabilitation or restitution, revenues, taxes, transportation costs, capitalexpenditures, operating expenses and geological results and the politicalenvironment are all factors which will have an impact on the amount ofadditional capital that may be required. Any additional equity financing may bedilutive to investors and debt financing, if available, may involve restrictionson financing and operating activities. There is no assurance that additionalfinancing will be available on terms acceptable to the Company or at all. If theCompany is unable to obtain additional financing as needed, it may be requiredto reduce the scope of its operations or anticipated expansion, forfeit itsinterest in some or all of the Tenements, incur financial penalties or reduce orterminate its operations. Landowner issues In the case of mining and exploration operations in Solomon Islands, there is acomplex land tenure structure and while ARM's PLs and Access Agreements entitleit to explore for the duration of the term of each PL, the existing legislativeframework only provides for limited forms of negotiation between the landowners/community leaders on the one hand and mining companies on the other. It is alsoincumbent on the Director of Mines and the mining tenement holder to identifywhich landowners and community leaders they need to negotiate with. The Companydoes not guarantee that the identifications made to date and upon which theAccess Agreements are currently based may not be contested. As a consequencethere may be unexpected difficulties experienced in progressing a promisingresource into a commercial mining operation. The Company has also procured Access Agreements for areas within the Tenementsafter the grant of the Tenement. Whilst the Company believes that it is entitledto rely upon the same to conduct exploration within these areas, no assurancecan be given that there may not be some future challenge to the Company'sability to do so. Whilst the Company has the Access Agreements with landowners covering themajority of the prospective areas identified by the Company within theTenements, its ability to carry out exploration in the residual areas willrequire additional access agreements to be entered into. The ability of theCompany to secure the benefits of all of the access agreements is dependentupon, inter alia, the contracting parties' willingness to perform and dischargetheir obligations thereunder. There may be legal and commercial limitations inrespect of enforcement of contractual rights. Additionally, the Company will notbe permitted to explore in areas nominated by the landowners as reserved orprotected areas under section 4(2) of the Mining Act. Whilst the Company isactively seeking to liaise with landowners to identify relevant reserved orprotected areas, some considerable uncertainty exists as to the precise locationof these areas, the identification of which requires the input of the indigenouspopulation. The inability of the Company to identify these areas, or a claim bylandowners that reserved or protected areas exist over areas identified by theCompany as prospective, may have a material adverse effect on the ability of theCompany to conduct its exploration programme in the manner identified in thisdocument. Sovereign risk and civil disobedience The Company intends to make significant investment of capital in SolomonIslands. The conduct of exploration and mining-related activities and theinvestment of capital and placement of personnel in Solomon Islands arepotentially subject to a degree of sovereign risk and civil disobediencegenerally. A decay in law and order in Solomon Islands may expose the Company toun-budgeted costs delays and other potential damage and loss. Environmental risks Inherent with mining operations is an environmental risk. The legal frameworkgoverning this area is constantly developing. Thus the Company is unable tofully ascertain any future liability that might arise from new law or regulationalthough such regulation is typically strict and may impose severe penalties. The proposed activities of the Company, as with any exploration, may haveenvironmental impact which may result in unbudgeted delays, damage, loss andother costs and obligations including, without limitation, rehabilitation and/orcompensation. Additionally, there is a risk that the Company's operations andfinancial position may be adversely affected by the actions of environmentalgroups or any other group or person opposed in general to the Company'sactivities and in particular the proposed exploration and mining by the Companywithin Solomon Islands. Taxation In addition to the normal level of corporation tax imposed on all companies,mining companies are required to pay government royalties, indirect taxes andother imposts which generally relate to revenue or cash flows. Industryprofitability can be affected by changes in government taxation policies. ARM carries on business in Solomon Islands and will be subject to income andother taxes in that country. The rates of taxation that may apply to ARM onincome and other profits may be higher than the rates that apply in the UnitedKingdom or Australia. No guarantee can be given that these rates will not vary. FINANCIAL REVIEW Equity During the 2007 accounting year there was no change to the Company's issuedshare capital. On 12 September 2006 the Company issued 650,000 unlisted share options todirectors, employees and consultants of the Company. The options were issuedfree of charge and are exercisable at prices between 50 pence and 100 pence perordinary share. The period during which these share options can be exercised isbetween 1 January 2007 and 1 January 2011. At 30 June 2007 the Company had 26,825,001 ordinary shares, 2,389,997 unlistedoptions and 326,400 unlisted warrants on issue. A further 500,000 unlistedoptions (£0.20 expiring 8 November 2010) are being issued to the Company'sNOMAD. At the date of this report, the Company had 26,825,001 ordinary shares,1,689,997 unlisted options and 326,400 unlisted warrants on issue. Financial Controls and Risk Management The Board regularly reviews the risks to which the Group is exposed and ensuresthrough Board Committees and regular reporting that these risks are managed andminimised as far as possible. The Audit Committee is responsible for theimplementation and review of the Group's internal financial controls andfinancial risk management systems. DIRECTORS The Board consists of one Executive Director and three Non-Executive Directors. Cameron Wenck(Non-Executive Chairman) Cameron Wenck (46), appointed 22 November 2005, is a financial adviser andcompany director with 18 years' experience in the financial services industry.Earlier in his career he worked for the London stockbrokers Scrimgeour Vickersand chartered accountants PricewaterhouseCoopers. He has a Bachelor of Commerce,a Diploma of Financial Planning, is a Fellow of the Australian Society ofAccountants and a Certified Financial Planner. Nicholas Mather(Chief Executive Officer) Nicholas Mather (50), appointed 11 May 2005, graduated in 1979 from theUniversity of Queensland with a B.Sc. (Hons, Geology). He has 25 years'experience in exploration and resource company management in a variety ofcountries. His career has taken him to numerous countries exploring for preciousand base metals and fossil fuels. Nicholas Mather has focused his attention onthe identification of and investment in large resource exploration projects. He was managing director of BeMaX Resources NL (an ASX-listed company) from 1997until 2000 and instrumental in the discovery of the world class Ginkgo mineralsand deposit in the Murray Basin in 1998. As an executive director of ArrowEnergy NL (also ASX-listed) until his resignation in 2004, Nicholas Mather drovethe acquisition and business development of Arrow's large Surat Basin Coal BedMethane project in south-east Queensland. He was managing director of AuraliaResources NL, a junior gold explorer, before its USD23 million merger with RossMining NL in 1995. He was a non-executive director of Ballarat Goldfields NLuntil 2004, having assisted that company in its recapitalization and requotationon the ASX in 2003. Nicholas Mather is Chief Executive of D'Aguilar Gold Ltd, a non-executivedirector of ASX-listed Bow Energy Limited and TSX-V listed Waratah Coal Inc. Brian Moller(Non-Executive Director) Brian Moller (49), appointed 11 May 2005, is a corporate partner in theBrisbane-based law firm Hopgood Ganim Lawyers, the Australian solicitors to theCompany. He was admitted as a solicitor in 1981 and has been a partner atHopgood Ganim since 1983. He practices almost exclusively in the corporate areawith an emphasis on capital raising, mergers and acquisitions. Brian Moller holds an LLB Hons from the University of Queensland and is a memberof the Australian Mining and Petroleum Law Association. Brian Moller acts for many publicly-listed resource and industrial companies andbrings a wealth of experience and expertise to the board, particularly in thecorporate regulatory and governance areas. He is a non-executive director of ASXlisted D'Aguilar Gold Ltd and Platina Resources Ltd and TSX-V listed WCB CapitalLtd. Dr Robert Weinberg(Non-Executive Director) Rob Weinberg (60), appointed 22 November 2005, gained his doctorate in geologyfrom Oxford University in 1973. He has more than 30 years experience of theinternational mining industry and is an independent mining research analyst andconsultant. He is a Fellow of the Geological Society of London. Prior to his current activities he was Managing Director, InstitutionalInvestment at the World Gold Council, and a Director of Gold Bullion Securities.Previously he was a Director of the investment banking division at Deutsche Bankin London after having been head of the global mining research team at SGWarburg Securities. He has also held senior positions within Societe Generaleand was head of the mining team at James Capel & Co. He was formerly marketingmanager of the gold and uranium division of Anglo American Corporation of SouthAfrica Ltd. Dr Weinberg is a non-executive Director of AIM listed Falkland Gold and MineralsLtd, ASX listed Kasbah Resources Ltd and Medusa Mining Ltd, a company listed onthe ASX, AIM and the Frankfurt Stock Exchange SECRETARY Mr Duncan Cornish was the Secretary of the Company during the period and untilthe date of this report. Duncan Cornish(Company Secretary and Chief Financial Officer) Duncan Cornish (40) has more than ten years experience in the accountancyprofession both in England and Australia, mainly with the accountancy firmsErnst and Young and PricewaterhouseCoopers. He has extensive experience in allaspects of company financial reporting, corporate regulatory and governanceareas, business acquisition and disposal due diligence, capital raising andcompany listings and company secretarial responsibilities. Mr Cornish is a Chartered Accountant. He holds a Bachelor of Business(Accounting) and is a member of the Australian Institute of CharteredAccountants. STATEMENT OF DIRECTORS' RESPONSIBILITIES The directors are responsible for preparing the annual report and the financialstatements in accordance with applicable law and regulations. Company law requires the directors to prepare financial statements for eachfinancial year. Under that law the directors have elected to prepare thefinancial statements in accordance with International Financial ReportingStandards as adopted by the European Union. The financial statements arerequired to give a true and fair view of the state of affairs of the company andthe group and of the profit or loss of the group for that period. In preparingthese financial statements the directors are required to: • select suitable accounting policies and then apply them consistently; • make judgments and estimates that are reasonable and prudent; • prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company will continue in business. The directors are responsible for keeping proper accounting records thatdisclose with reasonable accuracy at any time the financial position of thecompany and the group and enable them to ensure that the financial statementscomply with the Companies Act 1985. They are also responsible for safeguardingthe assets of the group and hence for taking reasonable steps for the preventionand detection of fraud and other irregularities.The directors are responsible for the maintenance and integrity of the corporateand financial information included on the company's website. Legislation in theUnited Kingdom governing the preparation and dissemination of the financialstatements and other information included in annual reports may differ fromlegislation in other jurisdictions. DIRECTORS' REPORT The directors present their annual report and audited financial statements forthe year ended 30 June 2007. PRINCIPAL ACTIVITIES The principal activities of Solomon Gold plc (the "Company") and itssubsidiaries (together "Solomon Gold" or the "Group") are gold and mineralexploration in Solomon Islands. Details of the Group's activities, together witha description of the principal risks and uncertainties facing the Group, and thedevelopment of the business, are given in the Chairman's Statement andOperations Review. The principal activity of the Company is that of a holding company. BUSINESS REVIEW A review of the Group's business and future developments is set out in theOperations review and Financial review. LAND AND BUILDINGS The directors are of the view that the book value and market value of land andbuildings are not materially different. The land and buildings were acquiredduring 2007 and no independent valuation has been obtained since itsacquisition. GOING CONCERN In common with many exploration companies, the Company raises finance for itsexploration and appraisal activities in discrete tranches. Further funding israised as and when required. When any of the Group's projects move to thedevelopment state, specific financing will be required. CURRENCY The functional and presentational currency is Australian dollars ("A$") and allamounts presented in the Directors' Report and financial statements arepresented in Australian dollars unless otherwise indicated. RESULTS The Group's consolidated loss for the period was A$1,201,646 (2006: A$652,322). CHANGES IN SHARE CAPITAL DURING 2007 A statement of changes in the share capital of the Company is set out in note 15to the financial statements. DIVIDENDS PAID OR RECOMMENDED The directors do not recommend the payment of a dividend. FINANCIAL INSTRUMENTS The Company does not undertake financial instrument transactions that arespeculative or unrelated to the Company's or Group's activities. The Company'sfinancial instruments consist mainly of deposits with banks, accounts payable,and loans to subsidiaries. Further details are provided in note 18 to thefinancial statements. POLICY AND PRACTICE ON PAYMENT OF CREDITORS The Group policy on the payment of creditors is to settle bills in accordancewith the terms agreed with suppliers. At the year end there were 7 days (2006: 32 days) worth of purchases in Grouptrade creditors and 14 days (2006: 21 days) worth of purchases in Company tradecreditors. SUBSEQUENT EVENTS On 23 August 2007, 700,000 unlisted share options in Solomon Gold plc expired asa result of employee resignations. On 8 November 2007, Hanson Westhouse Limited was appointed as Broker to theCompany. On 8 November 2007, RFC Corporate Finance Ltd was appointed as Nominated Advisorto the Company. As part of its appointment, RFC will be issued 500,000 unlistedoptions at an exercise price of £0.20 expiring on 8 November 2010. DIRECTORS AND DIRECTORS' INTERESTS The directors who held office during the period were as follows: Cameron Wenck Non-Executive ChairmanNicholas Mather Chief Executive OfficerBrian Moller Non-Executive DirectorRobert Weinberg Non-Executive DirectorDavid Jelley Executive Director - Operations (resigned 23 May 2007) The Company has a Directors' and Officers Liability insurance policy with AFMInsurance Brokers Pty Ltd for all its directors. The policy indemnifiesdirectors up to a level of A$5 million. The directors who held office at the end of the financial year held interests inthe ordinary shares and unlisted options of the Company as shown in the tablesbelow. On 12 September 2006, the Company issued share options exercisable at pricesbetween 50 pence and 100 pence per ordinary share to the following directors:Cameron Wenck 75,000, Brian Moller 75,000 and Robert Weinberg 75,000. The periodduring which these share options can be exercised is between 1 January 2007 and1 January 2011. Shares held At 30 June 2007 At 30 June 2006Nicholas Mather 565,159 565,159Brian Moller 92,535 92,535Cameron Wenck 212,045 212,045Robert Weinberg 27,000 - Share options held At 30 June 2007 At 30 June 2006 Option Price Exercise PeriodNicholas Mather 233,333 233,333 50p 01/01/07 - 01/01/10 233,333 233,333 75p 01/01/08 - 01/01/11 233,334 233,334 100p 01/01/08 - 01/01/11Cameron Wenck 25,000 - 50p 01/01/07 - 01/01/10 25,000 - 75p 01/01/08 - 01/01/11 25,000 - 100p 01/01/08 - 01/01/11Brian Moller 25,000 - 50p 01/01/07 - 01/01/10 25,000 - 75p 01/01/08 - 01/01/11 25,000 - 100p 01/01/08 - 01/01/11Robert Weinberg 25,000 - 50p 01/01/07 - 01/01/10 25,000 - 75p 01/01/08 - 01/01/11 25,000 - 100p 01/01/08 - 01/01/11 MAJOR SHAREHOLDERS The Company had been notified of the following interests in shares held as at 30November 2007: Major Shareholders Number of Shares % of Issued CapitalCredit Suisse Client Nominees (UK) Ltd 5,761,171 21.48Tenstar Trading Limited 2,225,766 8.30Pershing Keen Nominees Limited 1,228,000 4.58Pershing Keen Nominees Limited 1,110,959 4.14RAB Special Situations (Master) Fund Limited 852,103 3.18 In addition, the Company had been notified (in accordance with the Disclosureand Transparency Rules, "DTR") of the following interests in Shares held as at10 December 2007: Major Shareholders Number of Shares % of Issued CapitalUniversities Superannuation Scheme Limited 1,000,000 3.73Fidelity International Limited 2,000,000 7.45 CORPORATE GOVERNANCE In formulating the Company's corporate governance procedures the Board ofDirectors takes due regard of the principles of good governance set out in theRevised Combined Code issued by the Financial Reporting Council in July 2003 (asappended to the Listing Rules of the Financial Services Authority) so far as ispracticable for a company of Solomon Gold's size. The board of Solomon Gold plc is made up of one executive director and threenon-executive directors. Cameron Wenck chairs the Board and Nicholas Mather isthe Company's Chief Executive. It is the Board's policy to maintainindependence by having at least half of the Board comprising non-executivedirectors who are free from any business or other relationship with the Group.The structure of the Board ensures that no one individual or group is able todominate the decision making process. The Board ordinarily meets on a monthly basis providing effective leadership andoverall control and direction of the Group's affairs through the schedule ofmatters reserved for its decision. This includes the approval of the budget andbusiness plan, major capital expenditure, acquisitions and disposals, riskmanagement policies and the approval of the financial statements. Formalagendas, papers and reports are sent to the directors in a timely manner, priorto Board meetings. The Board also receives summary financial and operationalreports before each Board meeting. The Board delegates certain of itsresponsibilities to management, who have clearly defined terms of reference. All directors have access to the advice and services of the Company Secretary,who is responsible for ensuring that all Board procedures are followed. Anydirector may take independent professional advice at the Company's expense inthe furtherance of his duties. One third of the directors retire from office at every Annual General Meeting ofthe Company. In general, those directors who have held office the longest timesince their election are required to retire. A retiring director may bere-elected and a director appointed by the Board may also be elected, though inthe latter case the director's period of prior appointment by the Board will notbe taken into account for the purposes of rotation. The Audit Committee, which meets not less than twice a year and is responsiblefor ensuring that the financial performance, position and prospects of the Groupare properly monitored as well as liaising with the Company's auditors todiscuss accounts and the Group's internal controls. The Committee is chaired byBrian Moller, the other members being Cameron Wenck and Robert Weinberg. TheAudit committee has reviewed the systems in place and considers these to beappropriate. The Remuneration Committee, which meets at least once a year and is responsiblefor making decisions on directors' remuneration packages, is chaired by CameronWenck. Brian Moller and Robert Weinberg are the other committee members. Remuneration of executive directors is established by reference to theremuneration of executives of equivalent status both in terms of the level ofresponsibility of the position and by reference to their job qualifications andskills. The Remuneration Committee will also have regard to the terms which maybe required to attract an executive of equivalent experience to join the Boardfrom another company. Such packages include performance related bonuses and thegrant of share options. The Board attaches importance to maintaining good relationships with all itsshareholders and ensures that all price sensitive information is released to allshareholders at the same time, in accordance with London Stock Exchange rules.The Company's principal communication with its investors is through the AnnualGeneral Meeting and through the annual report and accounts and the interimstatement. The 2007 Annual General Meeting will provide an opportunity for the Chairman topresent to the shareholders a report on current operations and developments andwill enable the shareholders to question and express their views about theCompany's business. A separate resolution will be proposed on eachsubstantially separate issue, including the receipt of the financial statementsand shareholders will be entitled to vote either in person or by proxy. A Health, Safety, Environment and Community Committee (HSEC Committee) isresponsible for the overall health, safety and environmental performance of theCompany and its operations and its relationship with the local community and ischaired by Brian Moller, the other members being Nicholas Mather and RobertWeinberg. POLITICAL AND CHARITABLE CONTRIBUTIONS The Group made no political or charitable donations in the year. AUDITORS A resolution for the reappointment of PKF (UK) LLP will be proposed at theforthcoming annual general meeting. Provision of information to auditors In the case of each person who are directors of the Company at the date whenthis report is approved: • So far as they are individually aware, there is no relevant audit information of which the Company's auditors are unaware; and • Each of the directors has taken all the steps that they ought to have taken as a director to make themselves aware of any relevant audit information and to establish that the Company's auditors are aware of the information. This report was approved by the board on 10 December 2007 and signed on itsbehalf. Duncan CornishCompany SecretaryLevel 5, 60 Edward StreetBrisbane QLD 4000Australia INDEPENDENT AUDITORS' REPORT INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF SOLOMON GOLD PLC We have audited the group and parent company financial statements ('thefinancial statements') of Solomon Gold plc for the year ended 30 June 2007 whichcomprise the consolidated income statement and the consolidated and companybalance sheets, cash flow statements and statements of changes in shareholders'equity and the related notes. The financial statements have been prepared underthe accounting policies set out therein. This report is made solely to the company's members, as a body, in accordancewith section 235 of the Companies Act 1985. Our audit work has been undertakenso that we might state to the company's members those matters we are required tostate to them in an auditors' report and for no other purpose. To the fullestextent permitted by law, we do not accept or assume responsibility to anyoneother than the company and the company's members as a body, for our audit work,for this report, or for the opinions we have formed. Respective responsibilities of directors and auditors The directors' responsibilities for preparing the annual report and thefinancial statements in accordance with applicable law and InternationalFinancial Reporting Standards ('IFRSs') as adopted by the European Union are setout in the statement of directors' responsibilities. Our responsibility is to audit the financial statements in accordance withrelevant legal and regulatory requirements and International Standards onAuditing (UK and Ireland). We report to you our opinion as to whether the financial statements give a trueand fair view and have been properly prepared in accordance with the CompaniesAct 1985. We also report to you if, in our opinion, the information given in thedirectors' report is consistent with the financial statements. The informationin the directors' report includes that specific information presented in thechairman's statement, operations review and financial review that is crossreferenced from the principal activities and business review section of thedirectors' report. In addition we report to if, in our opinion, the company has not kept properaccounting records, if we have not received all the information and explanationswe require for our audit, or if information specified by law regardingdirectors' remuneration and other transactions is not disclosed. We read other information contained in the annual report and consider whether itis consistent with the audited financial statements. The other informationcomprises only the directors' report, the chairman's statement, the operationsreview and financial review. We consider the implications for our report if webecome aware of any apparent misstatements or material inconsistencies with thefinancial statements. Our responsibilities do not extend to any otherinformation. Basis of audit opinion We conducted our audit in accordance with International Standards on Auditing(UK and Ireland) issued by the Auditing Practices Board. An audit includesexamination, on a test basis, of evidence relevant to the amounts anddisclosures in the financial statements. It also includes an assessment of thesignificant estimates and judgments made by the directors in the preparation ofthe financial statements, and of whether the accounting policies are appropriateto the group's and company's circumstances, consistently applied and adequatelydisclosed. We planned and performed our audit so as to obtain all the information andexplanations we considered necessary in order to provide us with sufficientevidence to give reasonable assurance that the financial statements are freefrom material misstatement, whether caused by fraud or other irregularity orerror. In forming our opinion we also evaluated the overall adequacy of thepresentation of information in the financial statements. Opinion In our opinion: • the group financial statements give a true and fair view, in accordance with IFRSs as adopted by the European Union, of the state of the group's affairs as at 30 June 2007 and of its loss for the period then ended; • the parent company financial statements give a true and fair view, in accordance with IFRSs as adopted by the European Union as applied in accordance with the provisions of the Companies Act 1985, of the state of the parent company's affairs as at 30 June 2007; • the financial statements have been properly prepared in accordance with the Companies Act 1985; and • the information given in the directors' report is consistent with the financial statements. Emphasis of matter - going concern In forming our opinion, which is not qualified, we have considered the adequacyof the disclosures made in note 1 to the financial statements concerning thegroup's and the company's ability to continue as a going concern. As explainedin note 1 to the financial statements, the company raises finance for thegroup's exploration and appraisal activities in discrete tranches, and will needto raise further funds in the near future to continue with its plannedexploration programme and to provide working capital. The future of the groupdepends on the ability of the company to raise such finance. This indicates theexistence of a material uncertainty which may cast significant doubt about thecompany and the group's ability to continue as a going concern. If the companyis unable to secure such additional funding, this may have a consequentialimpact on the carrying value of the related exploration assets and theinvestment of the parent company. The financial statements do not include theadjustments that would result if the group was unable to continue as a goingconcern. PKF (UK) LLPRegistered AuditorsLondon, UK 10 December 2007 CONSOLIDATED INCOME STATEMENT FOR THE YEAR ENDED 30 JUNE 2007 Group Group Notes 2007 2006 A$ A$Revenue - -Cost of sales - -Gross profit - -Other income 3,302 72,924Administrative expenses (1,552,102) (908,064)Exploration costs written off - (10,000)Operating loss (1,548,800) (845,140)Finance income 6 347,154 192,818Loss before and after tax 3 (1,201,646) (652,322)Loss for the period (1,201,646) (652,322) Basic and diluted loss per ordinary share- Basic and diluted 8 (0.0448) (0.0431) CONSOLIDATED AND COMPANY BALANCE SHEETS AS AT 30 JUNE 2007 Group Group Company Company Notes 2007 2006 2007 2006 A$ A$ A$ A$AssetsProperty, plant and equipment 10 273,969 71,189 1,414 2,173Intangible assets 11 6,799,726 2,201,948 - -Investment in subsidiary 9 - - 10,516,194 2,248,885Total non-current assets 7,073,695 2,273,137 10,517,608 2,251,058Other receivables and prepayments 13 381,724 257,677 243,997 220,228Cash and cash equivalents 14 3,450,530 9,077,456 937 9,055,488Total current assets 3,832,254 9,335,133 244,934 9,275,716Total assets 10,905,949 11,608,270 10,762,542 11,526,774 EquityShare capital 15 631,679 631,679 631,679 631,679Share premium 15 10,752,408 10,752,408 10,752,408 10,752,408Other reserves 849,251 389,874 849,251 389,874Retained loss (1,853,968) (652,322) (1,857,699) (553,631)Total equity 10,379,370 11,121,639 10,375,639 11,220,330 LiabilitiesTrade and other payables 16 526,579 486,631 386,903 306,444Total current liabilities 526,579 486,631 386,903 306,444Total liabilities 526,579 486,631 386,903 306,444Total equity and liabilities 10,905,949 11,608,270 10,762,542 11,526,774 The financial statements were approved and authorised for issue by the Board andwere signed in its behalf on 10 December 2007. Nicholas MatherDirector STATEMENT OF CHANGES IN EQUITY Group Statement of changes in shareholders' equity Share Share Share option Warrants Retained capital premium reserve reserve loss Total Note A$ A$ A$ A$ A$ A$ Balance at 11 May 2005* - - - - - -Loss for the period - - - - (652,322) (652,322)New share capital 631,679 12,879,279 - - - 13,510,958subscribedShare issue costs - (2,126,871) - - - (2,126,871)Value of options issued - - 217,071 - - 217,071 to directors, employeesand consultants Value of warrants issued - - - 172,803 - 172,803Balance at 30 June 2006 631,679 10,752,408 217,071 172,803 (652,322) 11,121,639Loss for the period - - - - (1,201,646) (1,201,646)New share capital - - - - - -subscribedShare issue costs - - - - - -Value of options issued - - 459,377 - - 459,377 to directors, employeesand consultants Value of warrants issued - - - - - -Balance 30 June 2007 15 631,679 10,752,408 676,448 172,803 (1,853,968) 10,379,370 Company Statement of changes in shareholders' equity Share Share Share option Warrants Retained capital premium reserve reserve loss Total Note A$ A$ A$ A$ A$ A$ Balance at 11 May 2005* - - - - - -Loss for the period - - - - (553,631) (553,631)New share capital 631,679 12,879,279 - - - 13,510,958subscribedShare issue costs - (2,126,871) - - - (2,126,871)Value of options issued - - 217,071 - - 217,071 to directors, employeesand consultants Value of warrants issued - - - 172,803 - 172,803Balance at 30 June 2006 631,679 10,752,408 217,071 172,803 (553,631) 11,220,330Loss for the period - - - - (1,304,068) (1,304,068)New share capital - - - - - -subscribedShare issue costs - - - - - -Value of options issued - - 459,377 - - 459,377 to directors, employeesand consultants Value of warrants issued - - - - - -Balance 30 June 2007 15 631,679 10,752,408 676,448 172,803 (1,857,699) 10,375,639 * The Company was incorporated on 11 May 2005 with one subscriber share of£0.0001. CONSOLIDATED AND COMPANY STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 30 JUNE 2007 Group Group Company Company Note 2007 2006 2007 2006 A$ A$ A$ A$Cash flows from operating activitiesOperating loss (1,201,646) (652,322) (1,304,068) (553,631)Depreciation 28,955 12,290 759 117Share based payment expense 459,377 217,071 459,377 217,071Increase in other receivables and (124,046) (253,587) (23,793) (220,228)prepaymentsIncrease/(decrease) in trade and other 39,947 (23,608) 80,483 145,865payablesForgiveness of loan liability 3 - (72,924) - -Cash used in operations (797,413) (773,080) (787,242) (410,806)Net cash outflow from operating activities (797,413) (773,080) (787,242) (410,806)Cash flows from investing activitiesAcquisition of property, plant and (231,735) (72,147) - (2,290)equipmentAcquisition of intangible assets (4,597,778) (1,541,712) - -(exploration expenditure)Loans advanced to subsidiary - - (8,267,309) (1,978,314)Payment for subsidiaries net of cash - 17,497 - -acquiredNet cash outflow from investing activities (4,829,513) (1,596,362) (8,267,309) (1,980,604)Cash flows from financing activitiesProceeds from the issue of ordinary share - 13,240,362 - 13,240,362capitalPayment of issue costs - (1,793,464) - (1,793,464)Net cash inflow from financing activities - 11,446,898 - 11,446,898Net increase in cash and cash equivalents (5,626,926) 9,077,456 (9,054,551) 9,055,488Cash and cash equivalents at beginning of 9,077,456 - 9,055,488 -periodCash and cash equivalents at end of period 3,450,530 9,077,456 937 9,055,488 To view the complete 2007 Annual Report, please visit the Company's website:www.solomongold.com Contacts: Mr Duncan CornishSecretaryTel: +61 7 3303 0680Email: dcornish@solomongold.com Mr Stephen WeirRFC Corporate FinanceTel: +61 2 9250 0048Email: Stephen.Weir@rfc.com.au This information is provided by RNS The company news service from the London Stock Exchange