SolGold Regulatory News (SOLG)

14 February 2020

SolGold plc

Half-Yearly Financial Report

Quarterly MD&A Filed in Canada

The Board of SolGold (LSE and TSX code: SOLG) is pleased to advise all shareholders and interested investors of the release of the Company's interim financial results for the half year ended 31 December 2019. The interim financial report is included as part of this announcement.

Further, the Board advises shareholders and interested investors that the Company's website also contains access to additional information required to be filed on Sedar in Canada in connection with the Company's quarterly financial period ended 31 December 2019. This additional information is available in the Financial Reports section of the Investor Centre on the Company's website: www.solgold.com.au

By order of the Board

Karl Schlobohm

Company Secretary

UNAUDITED Interim Condensed Consolidated Financial Statements

FOR THE SIX MONTHS ENDED 31 DECEMBER 2019

Corporate Information

DIRECTORS

Brian Moller (Non-Executive Chairman)

Nicholas Mather (Executive Director)

Robert Weinberg (Non-Executive Director)

Craig Jones (Non-Executive Director)

James Clare (Non-Executive Director)

Liam Twigger (Non-Executive Director)

Jason Ward (Executive Director)

COMPANY SECRETARY

Karl Schlobohm

REGISTERED OFFICE

Locke Lord LLP

201 Bishopsgate

London EC2M 3AB

United Kingdom

Registered Number 5449516

AUSTRALIAN OFFICE

Level 27, 111 Eagle St

Brisbane QLD 4000

Phone: + 61 7 3303 0660

Fax: +61 7 3303 0681

Email: info@solgold.com

Web Site: www.solgold.com.au 

AUDITORS

BDO LLP

55 Baker Street

London W1U 7EU

United Kingdom

BROKERS

Hannam & Partners

2 Park Street

London W1K 2HX

United Kingdom

SP Angel Corporate Finance LLP

Prince Frederick House

35-39 Maddox Street

London W1S 2PP

United Kingdom

UK SOLICITORS

Locke Lord LLP

201 Bishopsgate

London EC2M 3AB

United Kingdom

AUSTRALIAN SOLICITORS

HopgoodGanim

Level 8, Waterfront Place

1 Eagle Street

Brisbane QLD 4000

Australia

REGISTRARS

Computershare Investor Services plc

The Pavilions, Bridgwater Road

Bristol BS99 7NH

OPERATIONS REPORT

The Directors present their report on the company and its controlled entities for the half year ended 31 December 2019. SolGold plc is a public limited company incorporated in England and Wales.

DIRECTORS

The names of the Directors in office at any time during or since the end of the period are:

Brian Moller (Non-Executive Director)

Nicholas Mather (Executive Director)

Robert Weinberg (Non-Executive Director)

Craig Jones (Non-Executive Director)

James Clare (Non-Executive Director)

Liam Twigger - (Non-Executive Director)

Jason Ward - (Executive Director)

Anna Legge - (Executive Director) - resigned 13 November 2019

Directors have been in office since the start of the financial year to the date of this report unless otherwise stated.

PRINCIPAL ACTIVITIES

The principal activities of SolGold plc (the "Company") and its subsidiaries (together "SolGold" or the "Group") are exploration for copper, gold and other minerals in Ecuador, Solomon Islands and Queensland, Australia.

Review and results of operations

The loss after tax for the Company for the half-year ended 31 December 2019 was US$4,982,381 (31 December 2018 loss of US$27,483,519).

Exploration Activities

Cascabel Project (Ecuador)

The Cascabel Project is located on the northern section of the prolific Andean Copper belt, renowned as the base for nearly half of the world's copper production. The project area hosts mineralisation of Eocene age, the same age as numerous Tier 1 deposits along the Andean Copper Belt in Chile and Peru to the south. The project base is located at Rocafuerte in northern Ecuador, approximately three hours' drive north of Quito, close to water, power supply and Pacific ports. Having fulfilled its earn in requirements, SolGold is a registered shareholder with an unencumbered legal and beneficial 85% interest in ENSA (Exploraciones Novomining S.A.) which holds 100% of the Cascabel tenement covering approximately 50km2, and subject to a royalty which may be purchased by SolGold for US$4.0m at development decision. Following the preparation of a Feasibility Study by ENSA, Cornerstone - which currently holds a 15% interest in ENSA - will be obligated to contribute to the funding of ENSA.

A review of drilling results has identified world class intersections at updated metal prices, and geology model analysis is constantly improving drill targeting capabilities. Drilling to date has not yet constrained the rich Alpala copper-gold deposit, and the deposit continues to grow.

During the six months ended 31 December 2019, the Company capitalised US$22,947,251 on the Cascabel project.

SolGold drilling activities focused on activities supporting the Alpala Deposit Pre-Feasibility Study (PFS) while continuing to extend and upgrade the status of the Alpala Resource. Drill testing of the Trivinio target has commenced, whilst the numerous other untested targets, namely at Moran, Cristal, Tandayama-America and Chinambicito, are flagged for drill testing as overall program demands allow.

SolGold's current focus is the collection of additional metallurgical, geotechnical, hydrological, and hydrogeological data for the Pre-Feasibility Study (PFS) and the delivery of a third Mineral Resource Estimate (MRE#3). The conversion of most of the MRE#2 Inferred Resource into Indicated Resources has been a major objective of the drilling this year as the Indicated Resources are the basis for the PFS.

OPERATIONS REPORT (continued)

Supplementary work underway at the Alpala Deposit includes geotechnical mining studies using downhole optical and acoustic Televiewer imaging, and rock-mechanics investigations using in-situ over-coring (3D stress testing), as well as in-situ measurement of rock mass permeability by packer testing.

As a consequence of drought conditions and in consideration of impacts on local waterways and as well as a cash management measure, drilling operations remain curtailed since September.

2019 drilling intersected zones of very high gold grades in the core and periphery of the deposit at Alpala. This may be related to intermediate- to high- sulfidation state sulphide-mineral assemblages associated with a phyllic alteration over-print and is a feature common in many of the world's richest porphyry deposits, like Oyu Tolgoi, Grasberg and Wafi-Golpu.

3D modelling of key geological parameters for the Alpala deposit has resulted in the completion of dynamic models for geology, veining, alteration and copper and gold grades, all of which are constantly updated as drilling progresses.

A study to develop the understanding of the stratigraphic and post mineral structural architecture and geometry of the Alpala deposit and greater Alpala district was undertaken during this period. The knowledge gained from the study supports ongoing exploration and drill targeting for both the Alpala deposit, and other targets in the Cascabel concession.

A study of the orientation of B-veins (a key input for modeling the grade distribution at Alpala) was re-modelled using structural information from oriented core. The geometry of the porphyry is controlled by the orientation of the B-veins, and the distribution indicates potential mineralization toward the north of the Alpala system which is interpreted as another porphyry body. This information is used in the MRE#3.

Anaconda 1:5000 geological mapping was conducted across the concession to enhance existing and complete previously unmapped areas of the concession. This enabled updated knowledge of surface features including lithology, mineralisation, alteration and structures.

An updated structural model encompassing new surface mapping and oriented core was developed. This will be an integral input into mine design and planning in the Feasibility Studies.

Seven groundwater monitoring sites was identified at key locations throughout the project. 2133m (averaging 305m at each site) of electrical resistivity tomography (ERT) sections were performed at 7 of the drill pad locations to confirm the presence of water and structures targeted. Three of the water monitoring sites (comprising two drill holes at each) were completed by the end of November 2019. Downhole piezometers have been installed and are currently logging underground water levels. Additionally, manual downhole measurements are recorded each week for those paired holes without piezometers.

Two weather stations and five streamflow monitoring stations have also been installed for environmental purposes.

A program of geotechnical characterisation of soils was undertaken. The field component has been completed as of the end of December. The program comprised 56 pits of 5m depth excavated by hand, and included insitu tests (soil vane, penetrometer and insitu density), and lab testing of soil samples. The laboratory testing is ongoing.

Samples of clay and/or fault gauge from the Alpala deposit and proposed decline geotechnical drillholes were collected and analysed with the SolGold Terraspec device. Soil samples taken from the geotechnical pits were also analysed with the onsite Terraspec machine to provide information on clay composition.

OPERATIONS REPORT (continued)

A detailed study of the 12 Aguinaga holes was completed as part of an ongoing re-evaluation of the Aguinaga target. The study included:

·; Relogging all holes (7258.69m of drilling).

·; Lithology reinterpretation based on thin sections and macroscopic description.

·; Litho-geochemical analysis and their correlation with the lithology reinterpretation.

·; Geochemical footprint analysis and their comparation with the Yerington model (Halley 2015).

·; Structural B-veins trend analysis.

·; Description of existing alteration and veins type present in Aguinaga.

·; Photographic register of lithology and their special characteristics.

The study has identified additional targets within the Aguinaga prospect to the North and to the West of the existing drilling.

Laboratory metallurgical test programs continued at ALS Metallurgical Laboratories, Kamloops, Ca, and Balcatta, W.A. Four master composites were used for process optimisation and locked cycle tests, with the optimised circuit and conditions used for locked cycle tests. The locked cycle tests were run with site sourced water, initially without water recycle. The tests were then repeated with recycled water to simulate process water use. This produced eight sets of locked cycle results, with feed grades that varied from 0.21% Cu to 1.56% Cu. Copper concentrate grade ranged from 25.7% Cu to 30.1% Cu. Gold varied from 10.3 g/t to 16.7 g/t, and silver from 45 g/t to 93 g/t. Extended analysis showed very low deleterious elements in concentrate, well below penalty limits.

The rougher tailing from each of the rougher flotation variability tests were subjected to Davis Tube Recovery (DTR) tests to evaluate potential for magnetite recovery. The tests were conducted at the as received grind size (typically 150 µm) at a magnetic intensity of 4,000 Gauss, providing a preliminary magnetite roughing evaluation. Magnetite recoveries were calculated based on the flotation feed mineralogy. The results indicate that above a feed grade of 2.5% magnetite, concentrate grades of >40% magnetite is produced, potentially suitable for regrind and cleaning to saleable magnetite concentrate specifications. Magnetite recoveries to these concentrates averaged 85%.

The copper cleaner tailing from the flotation program was collected and formed into three composites, with bottle roll cyanidation testwork in progress to evaluate extraction of copper, gold and silver to enhance recovery. Further work is planned to evaluate biological and pressure oxidation and thiosulphate leach.

Further work scheduled for the laboratory test program include settling tests on tailing and concentrate, concentrate regrind power evaluation tests and variability flotation tests.

Longer term planning includes a bulk sampling program to generate 20 t to 30 t of material for pilot plant evaluation. This will include vendor thickening and filtration tests, transportable moisture limits (TML) for shipment, rheology tests for concentrate and tailing pipelines and further tailing characterisation work. In addition, selected sample will be used for crushing tests and pyrite concentrate will be produced for further leach evaluation. If warranted, tailing will be evaluated for more detailed magnetite recovery.

OPERATIONS REPORT (continued)

Other Projects (Ecuador)

A comprehensive, nation-wide desktop study was undertaken by the Company's independent experts to analyse the available regional topographic, geological, geochemical and gravity data over the prospective magmatic belts of Ecuador, with the aim of understanding the controls to copper-gold mineralization on a regional scale. The Company has delineated and ranked regional exploration targets for the potential to contain significant copper-gold deposits. As a result of this study, the Company formed and initially funded, four new 100% owned subsidiary companies in Ecuador; Carnegie Ridge Resources S.A., Green Rock Resources S.A., Cruz del Sol S.A. and Valle Rico Resources S.A. These subsidiaries currently hold 72 mineral concessions over approximately 3,200 km2.

Based on the results of this initial exploration, 13 priority targets have been identified for second phase exploration in Ecuador. Ongoing exploration will continue to focus on advancing these priority projects, through geophysical surveys and detailed soil geochemistry, with a view to progress to drill testing as soon as permissions are in place. The 13 priority projects are as follows:

·; Blanca

·; La Hueca

·; Porvenir

·; Cisne Loja

·; Timbara

·; Rio Amarillo

·; Chillanes

·; Salinas

·; Sharug

·; Cisne Victoria

·; Coangos

·; Chical

·; Cisne Loja (Celen)

The ongoing exploration program on these projects continues to focus on:

·; Drill Testing targets

·; Collection of geophysical data

·; Mapping and geochemical sampling of new areas

OPERATIONS REPORT (continued)

Queensland Projects (Australia)

In Queensland, Australia, the Company has identified the following major project areas:

·; Rannes

·; Mount Perry

·; Normanby

·; Westwood

·; Mt Pring

·; Cracow West

SolGold continues to hold tenements across central and southeast Queensland, through its wholly owned subsidiaries, Central Minerals Pty Ltd and Acapulco Mining Pty Ltd. Central Minerals Pty Ltd currently holds 5 exploration permits: EPM 25300 (Cooper Consolidated, Rannes Project); EPM 18760 (Westwood); EPM 18032 (Cracow West); EPM 27211 (Mt Pring); and EPM 19639 (Goovigen Consolidated, Rannes Project). Acapulco Mining Pty Ltd currently holds exploration permits at EPM 25245 (Mount Perry) and EPM 19410 (Normanby).

The Exploration activities completed during this period were on the Rannes Project and included:

·; Work on the Rannes Project during Q4, 2019 focused on drillhole data validation and completion of a 3D workspace to allow integration of 3DIP, VTEM and magnetic inversion model data.

·; VTEM inversion modelling during Q3, 2019 identified a number of high priority basement conductors that appear to be located down-plunge from the inferred and indicated resources at both the Crunchie and Kauffman's prospects.

Further details on exploration programs on other Queensland tenements will be finalised in coming months with a commitment to maintain and progress the concessions.

Solomon Islands Projects

The Kuma project lies just to the south-west of a series of major NW-SE-trending arc parallel faults, associated with numerous Cu and Au anomalies in streams and soils. The project area overlies a 3.5‐kilometre wide, annular, caldera‐like topographic feature. Annular and nested topographic anomalies in the region suggest the presence of extensive batholiths of the Koloula Diorite beneath the volcanic cover of the Suta Volcanics. The prospect geology is dominated by a 4km by 1km lithocap. This extensive zone of argillic and advanced argillic alteration is caused by hydrothermal fluids that emanate from the top of porphyry copper-gold mineralising systems, and thus provides a buried porphyry copper-gold target.

The geochemically anomalous portion of the Kuma lithocap (north-west end) lies within the annular topographic anomaly. Kuma has a spectacular oxidised float boulder trail along the Kuma River and was traced to Alemba and Kolovelo creeks which lead to discovery of broad hydrothermal alteration zones and lithocap.

Previous exploration completed at Kuma under the Guadalcanal Joint Venture between SolGold and Newmont included extensive geochemical sampling (BLEG, rock chip and channel samples), geological mapping, a magnetic survey and an electromagnetic survey. Geochemical results define a central zone of manganese depletion (Mn < 200 ppm) inferred to indicate the destruction of mafic minerals by hydrothermal alteration. Zinc > 75 ppm forms an annulus to this zone, and Molybdenum > 4 ppm lies along the margins of the manganese low indicating potential for porphyry CuAu mineralisation at depth. TerraSpec spectral analysis of sieved coarse fraction soil samples covering the Kuma lithocap in integration with known geology in the prospect area has highlighted a primary porphyry target centre in the northern portion of the lithocap that SolGold plans to drill test upon granting of tenure.

Low temperature quartz veins with comb textures have been observed in outcrop the Kuma and Alimuno Rivers. Surface alteration, geochemistry, and Terraspec results have been encouraging.

Further work is planned to test the high sulfidation Kuma prospect that focuses on the upper part of Kuma ridges and a drilling program is planned for 2020.

Activities completed in this period include the establishment of an exploration office and commencement of community work.

OPERATIONS REPORT (continued)

Equity

On 20 September 2019, the Company issued a combined total of 3,150,000 unlisted share options over ordinary shares of the Company to a Director following approval granted by shareholders at the Company's AGM on 20 September 2019. The options are exercisable at £0.60 and expire on 20 December 2021.

On 2 December 2019, the Company issued 77,000,000 new ordinary shares at £0.2215 to BHP Billiton Holdings Limited ("BHP"). As part of the share subscription, BHP were issued 19,250,000 options exercisable at £0.37 which expire on 27 November 2024.

Corporate

The Group achieved several milestones during the half year ended 31 December 2019. These included:

·; Entering into an agreement with BHP Billiton Holdings Limited to successfully complete a placement of 77 million shares at 22.15p to raise US$22 million (£17 million).

·; Scout drilling permits were granted for several Regional projects during the period.

·; First drill hole at the Blanca projects intersected a 30cm wide mineralised vein with visible gold along with multiple thin sulphide rich veins and mineralised fault zones.

The Group is required to raise further funds to bring projects into development and production and currently has insufficient working capital for the foreseeable future. The Group is exploring a number of options to raise funds for the next stage of development and the Directors are confident that they will be successful in securing sufficient funds to meet liquidity requirements. Further details are given in note 1.

Matters subsequent to the half yearly financial period

The Directors are not aware of any significant changes in the state of affairs of the Group or events after balance date that would have a material impact on the half year consolidated financial statements.

Signed in accordance with a resolution of the board of Directors.

Nicholas Mather

Executive Director

Brisbane

13 February 2020

interim condensed Consolidated Statement of Profit or loss and other Comprehensive Income

for the HALF YEAR ended 31 DECEMBER 2019

The above consolidated statement of profit or loss and other comprehensive income should be read in conjunction with the accompanying notes.

interim condensed Consolidated Statement of Financial Position

at 31 DECEMBER 2019

The above consolidated statement of financial position should be read in conjunction with the accompanying notes.

interim condensed Consolidated Statement of Changes in Equity

for the HALF YEAR ended 31 DECEMBER 2019

The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes.

interim condensed Consolidated Statement of Cash Flows

for the HALF YEAR ended 31 DECEMBER 2019

The above consolidated statement of cash flows should be read in conjunction with the accompanying notes.

NOTES TO THE interim condensed CONSOLIDATED FINANCIAL STATEMENTS

for the HALF YEAR ended 31 DECEMBER 2019

NOTE 1 summary of significant accounting policies

Basis of preparation

This general purpose half year condensed consolidated financial report for the half year ended 31 December 2019 has been prepared in accordance with International Accounting Standard 34 Interim Financial Reporting, as issued by the International Accounting Standards Board ("IASB"), International Accounting Standards 34, Interim financial Reporting, as adopted by the European Union and the Listing Rules.

The half year condensed consolidated financial statements are presented in United States dollars ("US$") and have been prepared on the historical cost basis, apart from financial assets held at fair value.

The half year condensed consolidated financial report does not include all notes of the type normally included within the annual financial report and therefore cannot be expected to provide as full an understanding of the financial performance, financial position and financing activities of the consolidated entity. The financial information does not constitute statutory accounts within the meaning of section 434 of the companies Act 2006. The auditors' reports on the accounts for 30 June 2019 were unqualified, did not draw attention to any matters by way of emphasis, and did not contain a statement under 498(2) or 498(3) of the Companies Act 2006.

It is recommended that the half year condensed consolidated financial report be read in conjunction with the annual report for the year ended 30 June 2019 and considered together with any public announcements made by SolGold plc and its controlled entities during the during the six months ended 31 December 2019.

Going concern

The interim condensed financial statements have been prepared on a going concern basis which contemplates the continuity of normal business activities and the realisation of assets and discharge of liabilities in the ordinary course of business.

For the six months ended 31 December 2019 the Group generated a consolidated loss after tax of US$4,982,381 and incurred operating cash outflows of US$4,428,384. As at 31 December 2019 the Group had US$23,071,680 in cash and cash equivalents and a net working capital surplus of US$17,520,801 (30 June 2019: US$38,122,935). It should be noted that the current working capital levels will not be sufficient to bring the Group's projects into full development and production and, in due course, further funding will be required.

The ability of the Group to continue as a going concern is dependent upon the Group being able to manage its liquidity requirements by taking some or all of the following actions:

1. Raising additional capital or securing other forms of financing, as and when necessary to meet the levels of expenditure required for the next 12 months from the date of this report, and to meet the Group's working capital requirements;

2. Reducing its level of capital expenditure through farm-outs and/or joint ventures;

3. Reducing its working capital expenditure; and

4. Disposing of non-core assets.

These conditions give rise to a material uncertainty which may cast significant doubt over the Group's ability to continue as a going concern.

Notwithstanding the above, the Directors consider it appropriate to prepare the financial statements on a going concern basis after having regard to the following matters:

1. The Group has a proven ability to raise the necessary funding or settle debts via the issuance of shares. The Group has in the last reporting period raised US$22,044,235 and is in late stage negotiations on a number of various other strategic financing options.

Should the Group be unable to continue as a going concern, it may be required to realise its assets and liabilities other than in the ordinary course of business, and at amounts that differ from those stated in the financial statements.

The financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts, or to the amount and classification of liabilities that might be required should the Group not be able to achieve the matters set out above and thus be able to continue as a going concern.

NOTES TO THE interim condensed CONSOLIDATED FINANCIAL STATEMENTS

FOR THE HALF YEAR ENDED 31 DECEMBER 2019

NOTE 1 summary of significant accounting policies

Basis of preparation (continued)

Comparatives

When required by Accounting Standards, comparatives have been adjusted to conform to changes in presentation for the current financial year. The accounting policies for the comparatives are consistent with those followed in the preparation of the Group's consolidated financial statements for the year ended 30 June 2019.

Significant accounting policies

The group has applied the same accounting policies and methods of computation in its half year consolidated financial statements as in its 2019 annual financial statements, except for those that relate to new standards and interpretations effective for the first time for periods on (or after) 1 January 2019, and will be adopted in the 2020 annual financial statements.

New standards impacting the Group that have been adopted in the half year financial statements for the six months ended 31 December 2019, and which have given rise to changes in the Group's accounting policies are:

o IFRS 16 Leases

o IFRIC 23 Uncertainty over Income Tax Treatment

IFRS 16 Leases is applicable to annual reporting periods beginning on or after 1 January 2019. The standard replaces IAS 17 'Leases' and for lessees will eliminate the classifications of operating leases and finance leases. Subject to exceptions, a "right-of-use' asset will be capitalised in the statement of financial position and measured at the present value of the future lease payments to be made over the term of the lease. A liability corresponding to the capitalised lease will also be recognised. The Group depreciates the right-of-use assets on a straight-line basis from the lease commencement date to the end of the lease term and an interest expense on the recognised lease liability.

The Group has adopted IFRS 16 using the modified retrospective approach and therefore the comparative periods have not been restated.

Upon recognition on 1 July 2019, a 'right-of-use' asset of US$1,894,736 was capitalised in the balance sheet and recognised in Property Plant & Equipment with a corresponding lease liability recognised of US$1,894,736. All 'right-of-use' assets relate to lease contracts on office buildings.

IFRIC 23 interpretation addresses the accounting for income taxes when there is uncertainty over tax treatments. It clarifies that an entity must consider the probability that the tax authorities will accept a treatment retained in its income tax filings, assuming that they have full knowledge of all relevant information when making their examination. In such a case, the income taxes shall be determined in line with the income tax filings.

Management has made a preliminary assessment and has determined that is it probable the tax authorities will accept the tax position, and therefore tax balances will be calculated under the existing accounting standard. There are no additional actions required.

NOTES TO THE interim condensed CONSOLIDATED FINANCIAL STATEMENTS

FOR THE HALF YEAR ENDED 31 DECEMBER 2019

NOTE 1 summary of significant accounting policies

Basis of preparation (continued)

(i) Subsidiaries

The half year condensed consolidated financial statements comprise the financial statements of SolGold plc and its controlled entities as at 31 December 2019.

Where the company has control over an investee, it is classified as a subsidiary. The company controls an investee if all three of the following elements are present: power over the investee, exposure to variable returns from the investee, and the ability of the investor to use its power to affect those variable returns. Control is reassessed whenever facts and circumstances indicate that there may be a change in any of these elements of control.

The condensed consolidated financial statements present the results of the company and its subsidiaries ("the Group") as if they formed a single entity. Intercompany transactions and balances between group companies are therefore eliminated in full.

The condensed consolidated financial statements incorporate the results of business combinations using the acquisition method. In the statement of financial position, the acquiree's identifiable assets, liabilities and contingent liabilities are initially recognised at their fair values at the acquisition date. The results of acquired operations are included in the consolidated statement of comprehensive income from the date on which control is obtained. They are deconsolidated from the date on which control ceases.

The results of subsidiaries acquired or disposed of during the year are included in the condensed consolidated statement of comprehensive income from the effective date of acquisition or up to the effective date of disposal, as appropriate. Where necessary, adjustments are made to the financial statements of subsidiaries to bring the accounting policies into line with those used by the Group.

Non-controlling interests are allocated their share of net profit after tax in the statement of comprehensive income and presented within equity in the condensed consolidated statement of financial position, separately from the equity of the owners of the parent.

(ii) Transactions eliminated on consolidation

Intra-group balances and any unrealised gains and losses or income and expenses arising from intra-group transactions, are eliminated in preparing the consolidated financial statements.

Derivative Financial Instruments

The Company has issued options that are exercisable in a currency other than the functional currency of the entity issuing. As such these options are treated as derivative liabilities which are measured initially at fair value and gains or losses on subsequent re-measurement are recorded in the profit or loss.

NOTES TO THE interim condensed CONSOLIDATED FINANCIAL STATEMENTS

FOR THE HALF YEAR ENDED 31 DECEMBER 2019

NOTE 2 OPERATING SEGMENTS

The Group determines and separately reports operating segments based on information that is internally provided to the Directors, who are the Group's chief operating decision makers.

The Group has outlined below the separately reportable operating segments, having regard to the quantitative threshold tests provided in IFRS 8 Operating Segments, namely that the relative revenue, asset or profit / (loss) position of the operating segment equates to 10% or more of the Group's respective total. The Group reports information to the Board of Directors by project areas. That is, the financial position of each project area is reported discreetly, together with an aggregated corporate and administrative cost centre.

* The Cascabel project is held by the subsidiary Exploraciones Novomining S.A. which is 15% owned by a non-controlling interest.

NOTES TO THE interim condensed CONSOLIDATED FINANCIAL STATEMENTS

FOR THE HALF YEAR ENDED 31 DECEMBER 2019

NOTE 2 OPERATING SEGMENTS (continued)

Geographical information

NOTE 3 operating loss

NOTES TO THE interim condensed CONSOLIDATED FINANCIAL STATEMENTS

FOR THE HALF YEAR ENDED 31 DECEMBER 2019

Options granted are not included in the determination of diluted earnings per share as they are considered to be anti-dilutive.

NOTES TO THE interim condensed CONSOLIDATED FINANCIAL STATEMENTS

FOR THE HALF YEAR ENDED 31 DECEMBER 2019

Note 5 intangible Assets

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

Note 6 INVESTMENTS

(a) Financial assets held at fair value through OCI

Financial assets comprise an investment in the ordinary issued capital of Cornerstone Capital Resources Inc., listed on the Toronto Venture Exchange ("TSV") and an investment in the ordinary issued capital of Aus Tin Mining Ltd, a company listed on the Australian Securities Exchange.

NOTES TO THE interim condensed CONSOLIDATED FINANCIAL STATEMENTS

FOR THE HALF YEAR ENDED 31 DECEMBER 2019

Note 6 INVESTMENTS (continued)

(b) Fair value

Fair value hierarchy

The following table details the consolidated entity's assets and liabilities, measured or disclosed at fair value, using a three level hierarchy, based on the lowest level of input that is significant to the entire fair value measurement being:

Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date.

Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly.

Level 3: Unobservable inputs for the asset or liability.

The fair values of financial assets and financial liabilities approximate their carrying amounts principally due to their short-term nature or the fact that they are measured and recognised at fair value.

The following table represents the Group's financial assets and liabilities measured and recognised at fair value.

The financial assets are measured based on the quoted market prices at 31 December 2019 and 30 June 2019.

The derivative liability at fair value through profit or loss has been valued using the Monte Carlo Simulation method.

NOTES TO THE interim condensed CONSOLIDATED FINANCIAL STATEMENTS

FOR THE HALF YEAR ENDED 31 DECEMBER 2019

Note 7 LOAN RECEIVABLES

The Company Funded Loan Plan (the "Plan") is a plan established by the Company to assist employees in exercising share options. On 29 October 2018, the Company assisted employees to exercise 19,950,000 options previously issued to employees of the Company in 2019 via the Plan. As at 31 December 2019 there have been no repayments against the loans provided.

The key terms of this Plan are as follows:

·; The employee may only use a loan under the Plan to pay for the exercise of Employee Options granted by the Company.

·; The loan will be granted for a maximum period of 2 years.

·; No interest will be charged on the loan.

·; The loan is secured by the shares granted on the exercise of the Employee Options.

·; The loans provided are full recourse.

As the loan provided by the Company was at a favourable rate of interest for the employees, the loan receivable under the Plan was fair valued. The fair value of the loan was estimated based on the future cash flow and a market rate of 7%. In future reporting periods, the loan will be measured at amortised cost. The loans provided are full recourse loans. If the sale of shares does not cover full repayment the balance will be recovered from employees. This transaction was a non cash transaction with employees. Management have considered the likelihood of default is low and the expected credit losses under the loans will be immaterial and accordingly, no impairment has been recognised at 31 December 2019. The loan is a non-cash transaction. The loan was reclassified from non-current to current for the period ending 31 December 2019, as there is less than 12 months until the receivable falls due.

Security bonds relate to cash security held against office premises, Level 27, 111 Eagle St, Brisbane, Queensland Australia, Octagon Point, 5 Cheapside, St Paul's London United Kingdom, cash security held by Queensland Department of Natural Resources and Mines against Queensland exploration tenements held by the Group and on cash backed bank guarantees held by the Ecuadorian Ministry of Environment against Ecuadorian exploration tenements held by the Group.

NOTES TO THE interim condensed CONSOLIDATED FINANCIAL STATEMENTS

FOR THE HALF YEAR ENDED 31 DECEMBER 2019

Note 8 LEASE LIABILITIES

Note 9 OTHER FINANCIAL LIABILITIES

NOTES TO THE interim condensed CONSOLIDATED FINANCIAL STATEMENTS

FOR THE HALF YEAR ENDED 31 DECEMBER 2019

Note 10 SHARE CAPITAL

NOTES TO THE interim condensed CONSOLIDATED FINANCIAL STATEMENTS

FOR THE HALF YEAR ENDED 31 DECEMBER 2019

NOTE 11 share options

At 31 December 2019 the Company had 182,662,000 options outstanding for the issue of ordinary shares (31 December 2018: 162,512,000).

Options

Share options are granted to employees under the company's Employee Share Option Plan ("ESOP"). The employee share option plan is designed to align participants' interests with those of shareholders.

Unless otherwise documented by the Company, when a participant ceases employment prior to the vesting of their share options, the share options are forfeited after 90 days unless cessation of employment is due to termination for cause, whereupon they are forfeited immediately. The Company prohibits key management personnel from entering into arrangements to protect the value of unvested ESOP awards.

The contractual life of each option granted is generally two to three years. There are no cash settlement alternatives.

Each option can be exercised from vesting date to expiry date for one share with the exercise price payable in cash.

Share options issued

There were 22,4000,000 options granted during the period ended 31 December 2019 (31 December 2018: 115,750,000).

On 20 September 2019, the Company issued a combined total of 3,150,000 unlisted share options over ordinary shares of the Company to a Director following approval granted by shareholders at the Company's AGM on 20 September 2019. The options are exercisable at £0.60 and expire on 20 December 2021.

On 2 December 2019, the Company issued 77,000,000 new ordinary shares at £0.2215 to BHP Billiton Holdings Limited ("BHP"). As part of the share subscription, BHP were issued 19,250,000 options exercisable at £0.37 which expire on 27 November 2024.

NOTES TO THE interim condensed CONSOLIDATED FINANCIAL STATEMENTS

FOR THE HALF YEAR ENDED 31 DECEMBER 2019

NOTE 11 share options (continued)

The share options outstanding at 31 December 2019 are as follows:

*2,250,000 options previously issued to John Bovard were forfeited during the prior year as a result of his retirement.

1Options issued to BHP as part of the share subscriptions on 2 December 2019 and exercisable at £0.37 within 5 years. These options fall outside the scope of IFRS 2 and is classified as a derivative financial liability.

NOTES TO THE interim condensed CONSOLIDATED FINANCIAL STATEMENTS

FOR THE HALF YEAR ENDED 31 DECEMBER 2019

NOTE 11 share options (continued)

Share-based payments

The number and weighted average exercise price of share options are as follows:

The options outstanding at 31 December 2019 have exercise prices of £0.37, £0.40, and £0.60 (31 December 2018: £0.40 and £0.60) and a weighted average contractual life of 1.73 years (31 December 2018: 2.33 years).

Share options held by Directors are as follows:

NOTES TO THE interim condensed CONSOLIDATED FINANCIAL STATEMENTS

FOR THE HALF YEAR ENDED 31 DECEMBER 2019

NOTE 11 SHARE OPTIONS (continued)

Share-based payments (continued)

The fair value of services received in return for share options granted is measured by reference to the fair value of share options granted. This estimate is based on the Black-Scholes model considering the effects of the vesting conditions, expected exercise period and the dividend policy of the Company.

The calculation of the volatility of the share price on the above was based on the Company's daily closing share price over the two year period, dependant on the exercise period attributable to the tranche of options, prior to the date the options were issued.

NOTES TO THE interim condensed CONSOLIDATED FINANCIAL STATEMENTS

FOR THE HALF YEAR ENDED 31 DECEMBER 2019

NOTE 12 RELATED PARTIES

Transactions with Directors and Director-Related Entities

(i) The Company had a commercial agreement with Samuel Capital Ltd ("Samuel") for the engagement of Nicholas Mather as Chief Executive Officer and Executive Director of the Company. For the half year ended 31 December 2019 US$204,425 was paid or payable to Samuel (2018: US$323,840). The total amount outstanding at 31 December 2019 was US$nil (31 December 2018: US$ nil, 30 June 2019: US$925).

(ii) The Company has a long-standing commercial arrangement with DGR Global Ltd, an entity associated with Nicholas Mather (a Director) and Brian Moller (a Director), for the provision of various services, whereby DGR Global provides resources and services including the provisions of its administration and exploration staff, its premises (for the purposes of conducting the Company's business operations), use of existing office furniture, equipment and certain stationery, together with general telephone, reception and other office facilities ("Services"). In consideration for the provision of the Services, the Company shall reimburse DGR Global Ltd for any expenses incurred by it in providing the Services. DGR Global shall also invoice the Company from time to time for the provision of in-house legal counsel services. DGR Global Ltd was paid US$123,273 (2018: US$126,720) for the provision of administration, management and office facilities to the Company during the half year ended 31 December 2019. The total amount outstanding at 31 December 2019 is US$48,179 (31 December 2018: US$16,981, 30 June 2019 US$15,788).

(iii) Mr Brian Moller (a Director), is a partner in the Australian firm Hopgood Ganim Lawyers. For the half year ended 31 December 2019, US$82,355 was paid or payable to Hopgood Ganim (2018: US$102,871) for the provision of legal services to the Company. These services were based on normal commercial terms and conditions. The total amount outstanding at 31 December 2019 is US$31,183 (31 December 2018: US$12,504, 30 June 2019 US$ nil).

(iv) Mr James Clare (a Director), is a partner in the Canadian firm Bennett Jones lawyers. For the half year ended 31 December 2019, US$521,921 was paid or payable to Bennett Jones (2018: US$32,879) for the provision of legal services to the Company. The services were based on normal commercial terms and conditions. The total amount outstanding at 31 December 2019 is US$244,713 (31 December 2018: US$ nil, 30 June 2019 US$ nil).

NOTE 12 COMMITMENTS AND CONTINGENT ASSET AND LIABILITIES

A 2% net smelter royalty is payable to Santa Barbara Resources Limited, who were the previous owners of the Cascabel tenements. These royalties can be bought out by paying a total of US$4 million. Fifty percent (50%) of the royalty can be purchased for US$1 million 90 days following the completion of a feasibility study and the remaining 50% of the royalty can be purchased for US$3 million 90 days following a production decision. The smelter royalty is considered to be a contingent liability as the Group has not yet completed a pre-feasibility study at 31 December 2019 as such there is significant uncertainty over the timing of any payments that may fall due.

NOTES TO THE interim condensed CONSOLIDATED FINANCIAL STATEMENTS

FOR THE HALF YEAR ENDED 31 DECEMBER 2019

NOTE 13 COMMITMENTS AND CONTINGENT ASSET AND LIABILITIES (continued)

SolGold elected to undertake the Optional Subscription under the terms of the Term Sheet (Term Sheet) signed between SolGold plc and Cornerstone Capital Resources Inc. (CGP), CGP's subsidiary Cornerstone Ecuador S.A, (CESA) and Exploraciones Novomining S.A, (ENSA) and holds an aggregate registered and beneficial equity position in ENSA of 85% under the terms of the Term Sheet. CGP and CESA elected to obtain the benefit of the Financing Option whereby SolGold will solely fund all operations and activities of ENSA until the completion of a Feasibility Study, including CESA's contribution as the registered and beneficial holder of an aggregate equity position in ENSA of 15%. After completion and delivery of the Feasibility Study, SolGold and CESA shall jointly fund the operations and activities of ENSA based on their respective equity positions in ENSA's on a proportionate basis. Furthermore, the Term Sheet allows for SolGold to be fully repaid for the financing provided, including interest at LIBOR plus 2% for the expenditures incurred by SolGold from the time CGP and CESA elected the Financing Option. SolGold is to be repaid out of 90% of CESA's distribution of earnings or dividends from ENSA or the Cascabel Tenement to which CESA would otherwise be entitled. If CESA does not elect to contribute and its equity stake in ENSA is diluted to below 10%, its equity stake in ENSA will be converted to a 0.5% interest in the Net Smelter Return and SolGold may acquire this interest for the US$3.5 million at any time.

The amount receivable from CESA at 31 December 2019 was US$28,682,502 (2018: US$17,860,536). As there is uncertainty as to whether ENSA will be able to distribute earnings or dividends, a provision for impairment has been recognised on the entire amount receivable from CESA.

There are no other significant changes to commitments and contingencies disclosed in the most recent annual financial report.

NOTE 13 SUBSEQUENT EVENTS

The Directors are not aware of any significant changes in the state of affairs of the Group or events after balance date that would have a material impact on the half year condensed consolidated financial statements.

DIRECTORS' RESPONSIBILITY STATEMENT AND REPORT ON PRINCIPAL RISKS AND UNCERTAINTIES

Responsibility statement:

We confirm to the best of our knowledge:

a) The condensed set of financial statements have been prepared in accordance with IAS 34 Interim Financial Reporting as adopted by the EU

b) The interim management report includes a fair review of the information required by:

I. DTR 4.2.7R of the Disclosure and Transparency Rules, being an indication of important events that have occurred during the first six months of the financial year and their impact on the condensed set of financial statements: and a description of the principal risks and uncertainties for the remaining six months of the year; and

II. DTR 4.2.8R of the Disclosure and Transparency Rules, being related party transactions that have taken place in the first six months of the current financial year and that have materially affected the financial position or performance of the entity during the period, and any changes in the related party transactions described in the last annual report that could do so.

This report contains forward-looking statements. These statements are based on current estimates and projections of management and currently available information. Future statements are not guarantees of the future developments and results outlined therein. Rather, future developments and results are dependence on a number of factors; they involve various risks and uncertainties and are based upon assumptions that may not prove to be accurate. Risks and uncertainties identified by the Group are set out on page 53 of the 2019 Annual Report and Accounts. We do not assume any obligation to update the forward-looking statements contained in this report.

Signed in accordance with a resolution of Directors.

On behalf of the Directors

Nicholas Mather

Executive Director

Brisbane

13 February 2020

INDEPENDENT REVIEW REPORT TO SOLGOLD PLC

Introduction

We have been engaged by the Company to review the condensed set of financial statements in the half-yearly financial report for the six months ended 31 December 2019 which comprises the interim condensed consolidated statement of profit or loss and other comprehensive income, interim condensed consolidated statement of financial position, interim condensed consolidated statement of changes in equity, interim condensed consolidated statement of cash flows and notes to the interim condensed consolidated financial statements.

We have read the other information contained in the half-yearly financial report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.

Directors' responsibilities

The half-yearly financial report is the responsibility of and has been approved by the directors. The directors are responsible for preparing the half-yearly financial report in accordance with the Disclosure Guidance and Transparency Rules of the United Kingdom's Financial Conduct Authority.

As disclosed in note 1, the annual financial statements of the group are prepared in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European Union. The condensed set of financial statements included in this half-yearly financial report has been prepared in accordance with International Accounting Standard 34, ''Interim Financial Reporting'', as issued by the International Accounting Standards Board (IASB) and International Accounting Standard 34, "Interim Financial Reporting", as adopted by the European Union.

Our responsibility

Our responsibility is to express to the Company a conclusion on the condensed set of financial statements in the half-yearly financial report based on our review.

Scope of review

We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410, ''Review of Interim Financial Information Performed by the Independent Auditor of the Entity'', issued by the Financial Reporting Council for use in the United Kingdom. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Material uncertainty related to going concern

We draw attention to Note 1 to the interim financial statements, which indicates that the group's ability to continue as a going concern is dependent on its ability to secure additional funding. As stated in Note 1, these events or conditions indicate that a material uncertainty exists which may cast significant doubt over the group's ability to continue as a going concern. Our conclusion is not modified in respect of this matter.

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the half-yearly financial report for the six months ended 31 December 2019 is not prepared, in all material respects, in accordance with International Accounting Standard 34, ''Interim Financial Reporting'', as issued by the International Accounting Standards Board (IASB), International Accounting Standard 34, "Interim Financial Reporting", as adopted by the European Union and the Disclosure Guidance and Transparency Rules of the United Kingdom's Financial Conduct Authority.

Use of our report

Our report has been prepared in accordance with the terms of our engagement to assist the Company in meeting its responsibilities in respect of half-yearly financial reporting in accordance with the Disclosure Guidance and Transparency Rules of the United Kingdom's Financial Conduct Authority and for no other purpose. No person is entitled to rely on this report unless such a person is a person entitled to rely upon this report by virtue of and for the purpose of our terms of engagement or has been expressly authorised to do so by our prior written consent. Save as above, we do not accept responsibility for this report to any other person or for any other purpose and we hereby expressly disclaim any and all such liability.

BDO LLP

Chartered Accountants

London, UK

13 February 2020

BDO LLP is a limited liability partnership registered in England and Wales (with registered number OC305127).