SolGold Regulatory News (SOLG)

4 Mar 2008 07:02

Solomon Gold PLC04 March 2008 4 March, 2008 Announcement to London Stock Exchange Solomon Gold plc INTERIM REPORT FOR THE SIX MONTHS ENDED 31 DECEMBER 2007 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 6LB United Kingdom Registered Number 5449516 Australian Office Level 5, 60 Edward Street, Brisbane QLD 4000 Phone: + 61 7 3303 0660 Fax: +61 7 3303 0681 Email: info@solomongold.com Web Site: www.solomongold.com Auditors PKF (UK) LLP Farringdon Place, 20 Farringdon Road London EC1M 3AP Nominated Advisor RFC Corporate Finance Ltd Level 14, 19-31 Pitt Street Sydney NSW 2000, Australia Broker Hanson Westhouse Ltd One Angel Court, London EC2R 7H United Kingdom Bankers Macquarie Bank Ltd (Brisbane Branch) 300 Queen Street, Brisbane QLD 4000 Australia Solicitors Faegre & Benson LLP 7 Pilgrim Street, London EC4V 6LB United Kingdom Australian Solicitors Hopgood Ganim Level 8, Waterfront Place 1 Eagle Street, Brisbane QLD 4000 Registrars Computershare Investor Services plc The Pavilions, Bridgwater Road Bristol BS99 7NH CHAIRMAN'S STATEMENT During the six month period to the end of December 2007, Solomon Gold made itsmost impressive gold discovery to date. The Company intersected 32m @ 9.45 g/tgold in the Valehailala Creek area of the Sutakiki Prospect, on Guadalcanal, themain island of Solomon Islands. The discovery, within a mineralized zone some50 m wide, was encountered at a depth of 108 to 140 metres in drillhole SK11.Mineralogical studies on the samples concluded that the mineralization was partof a significant intrusive system which has encouraged Solomon Gold to explorefor extensions to the mineralization at depth and along strike. Importantly themineralization in the host rocks besides the vein shows characteristics typicalof extensive zones of mineralization commonly found in large porphyry-relatedmineral systems, providing the Company with more extensive targets. To date,two successful holes, SK 11 and SK13 have been drilled. Unfortunately SK12 hadto be abandoned before reaching the predicted depth of the mineralized zoneowing to bad ground conditions. The Company is awaiting assay results for SK13.Drillhole SK14 is currently at 167 metres depth and has a total planned depthof 500 metres. Solomon Gold geologists have identified mineralizationassociated with the main structure at Sutakiki, the Sutakiki fault, over astrike length of 800 metres. Since floating on AIM in February 2006 Solomon Gold has been exploring theisland of Guadalcanal, Solomon Islands, on the South West Pacific "Rim of Fire",the highly active earthquake and volcanic zone at the margin of the Australasianand Pacific Continental plates. Similar locations around the Pacific arerenowned for being highly metalliferous and hosting numerous large gold andcopper deposits. On Guadalcanal, Solomon Gold has identified a set ofstructural features which are believed to have channeled mineralizing fluids andshould be prospective for significant copper-gold deposits as a result. Themain structure, the Guadalcanal transform fault appears to localize severalcopper and gold prospects over a length of 20km in Solomon Gold's prospectlicence areas at Kolokoo, Chikora, Mbina, Sutakiki and culminates in the 2m ozGold Ridge gold deposit north of Solomon Gold's Sutakiki license area. Thepresence of the Gold Ridge deposit, interpreted to be located on the northernedge of the mineralized system located in Sutakiki is encouraging testimony tothe gold endowment of the system. Solomon Gold geologists have identified acomplex mineralized area now outcropping over 30km2. Our strong view is thatthis represents a highly mineralized porphyry system which is the most likelyhost for a significant discovery. Encouragingly, Sutakiki is located within thistarget zone. The discovery at Sutakiki underscores the potential for a world class gold andcopper deposit in the Solomon Gold exploration tenements. Since the discoverywork has been focused in the area on the delineation of the controllingstructures and mineralizing processes. This has involved a very extensivemapping and sampling program, complete with altitude differential surveys toenable accurate positioning of the data points in rough terrain. As part of this focused effort at Sutakiki, the company has contracted for anairborne electromagnetic survey which is designed to show conductive sulphidebodies and resistive quartz vein structures, in order to prioritise the manytargets which have been generated by Solomon Gold field mapping and samplingprograms. The gold rich intersection in drillhole SK11 is sulphide rich and itis expected that such zones will show up well on the airborne electromagneticsurvey, making it a very good diagnostic tool. It is expected that the surveywill be undertaken over an area of some 155 km2 over the Sutakiki and Koloulavalleys in late March and April 2008. The survey will also collect a new stateof the art set of magnetic data which will be interpreted along with the EMdata. The Company currently has three drilling rigs contracted, conducting core holedrilling in the Koloula and Sutakiki Valleys. Recently the Company hasrelocated a second drilling rig to the Sutakiki Project area to expedite thetesting of numerous targets including a zone at least 50 m wide along an 800metre strike length. Six additional drill pads have been prepared and thecompany expects that the focused effort will deliver faster results withimproved efficiencies. During the half year the Company drilled 4,408 metres, making a total of 9452metres drilled on the Solomons project to date. The Company drilled 4 holes for1,789 metres at Mbina, 2 holes for 697 metres at Chikora and 13 holes for 6,057metres at Sutakiki where the bulk of the effort was focused. Extensive zones oflow grade gold mineralization were located at the Mbina prospect and theconcentration of gold in narrow, sulphide rich veins grading up to 6.7 g/t goldin core and over 70 g/t in outcrop lends support to the airborne electromagneticprogram as a diagnostic tool. The Company also commenced exploration work on areas prospective for nickellaterites on Makira, East Guadalcanal and Ngella in the Floridas Group.Nickeliferous laterites were found to exist over some 10km 2 in the Ngella areaand a detailed program of pitting, augering and sampling was conducted. TheCompany is waiting completion of assay results over the main areas at Ngella. Solomon Gold also applied for exploration areas over Fauro Island in the westernprovinces, south of the Island of Bougainville, where the massive PangunaPorphyry system is located. Solomon Gold employs three Australian geologists, one PNG expat geologist andfour local Solomon Island geologists supported by a team of local field handsand labourers from Villages located within the project areas. The Company enjoysunprecedented access to areas not previously investigated by exploration crews,based on the relationships developed between Solomon Gold plc and the localpeople. Happily the Company had no lost time injury incidents during the period andattribute this to the high level of planning which goes into the conduct of thefield operations. Cameron Wenck Chairman Date: 4 March 2008 CONSOLIDATED INCOME STATEMENT FOR THE SIX MONTHS ENDED 31 DECEMBER 2007 Six months Six months Year Ended to 31 Dec to 31 Dec 30 June 2007 2006 2007 Notes A$ A$ A$Continuing operationsRevenue - - -Cost of sales - - -Gross Profit - - -Other operating income 60,825 3,278 3,302Administrative expenses (858,722) (611,941) (1,552,102)Exploration costs written off - - -Operating loss (797,897) (608,663) (1,548,800) Finance income 72,449 179,223 347,154Loss for the period (725,448) (429,440) (1,201,646) Six months Six months Twelve months to 31 Dec to 31 Dec to 30 June 2007 2006 2007 Notes A$ A$ A$Basic and diluted loss per ordinary share- basic and diluted 5 (0.0164) (0.0160) (0.0448) CONSOLIDATED BALANCE SHEET AT 31 DECEMBER 2007 31 Dec 31 Dec 30 June 2007 2006 2007 Notes A$ A$ A$AssetsProperty, plant and equipment 252,640 272,050 273,969Intangible assets 10,552,359 3,776,726 6,799,726Total non-current assets 10,804,999 4,048,776 7,073,695 Other receivables and prepayments 3,764,270 348,595 381,724Cash and cash equivalents 3,546,668 6,714,363 3,450,530Total current assets 7,310,938 7,062,958 3,832,254 Total assets 2 18,115,937 11,111,734 10,905,949 EquityIssued share capital 1,033,527 631,679 631,679Share premium 17,428,590 10,752,408 10,752,408Other reserves 1,396,576 423,616 849,251Retained losses (2,579,416) (1,081,762) (1,853,968)Total equity 17,279,277 10,725,942 10,379,370 LiabilitiesTrade and other payables 836,660 385,792 526,579Interest-bearing loans and borrowings - - -Total current liabilities 836,660 385,792 526,579Total liabilities 836,660 385,792 526,579 Total equity and liabilities 18,115,937 11,111,734 10,905,949 Cameron Wenck Chairman Date: 4 March 2008 CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY Note Share Share Share Warrants Retained loss Total capital premium option reserve reserve A$ A$ A$ A$ A$ A$Balance at 1 July 2006 631,679 10,752,408 217,071 172,803 (652,322) 11,121,639Loss for the period - - - - (429,440) (429,440)Employee share option scheme:- value of services provided - - 33,742 - - 33,742Balance 31 Dec 2006 631,679 10,752,408 250,813 172,803 (1,081,762) 10,725,942Loss for the period - - - - (772,206) (772,206)Adjustment to share capital - - - - - - Employee share option scheme: - value of services provided - - 425,635 - - 425,635Balance 30 June 2007 631,679 10,752,408 676,448 172,803 (1,853,968) 10,379,370Loss for the period - - - - (725,448) (725,448)Adjustment to share capital 401,848 6,831,422 - - - 7,233,270Share Issue costs - (155,240) - - - (155,240)Employee share option scheme:- value of services provided - - 547,325 - - 547,325Balance 31 Dec 2007 3 1,033,527 17,428,590 1,223,773 172,803 (2,579,416) 17,279,277 CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE SIX MONTHS ENDED 31 DECEMBER 2007 Six months to Six months to Year Ended 31 Dec 31 Dec 30 June 2007 2006 2007 Notes A$ A$ A$Cash flows from operating activitiesOperating loss from continuing operations (725,448) (429,440) (1,201,646)Depreciation 26,362 11,553 28,955Share based payment expense 4 547,325 33,742 459,377(Increase)/decrease in other receivables and prepayments 26,765 (90,918) (124,046)(Decrease)/increase in trade and other payables 310,082 (27,914) 39,947Forgiveness of loan liability - (72,924) -Cash used in operations 185,086 (575,901) (797,413) Net cash outflow from operating activities 185,086 (575,901) (797,413) Cash flows from investing activitiesAcquisition of property, plant and equipment (5,033) (212,414) (231,735)Acquisition of intangible assets (3,752,633) (1,574,778) (4,597,778)Payment for subsidiaries net of cash acquired - - -Net cash (outflow)/inflow from investing activities (3,757,666) (1,787,192) (4,829,513) Cash flows from financing activitiesProceeds from the issue of ordinary share capital 3,823,958 - -Refund/(payment) of issue costs (155,240) - -Net cash inflow from financing activities 3,668,718 - - Net (decrease)/increase in cash and cash equivalents 96,138 (2,363,093) (5,626,926)Cash and cash equivalents at beginning of period 3,450,530 9,077,456 9,077,456Cash and cash equivalents at end of period 3,546,668 6,714,363 3,450,530 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Note 1: Basis of Preparation of Financial Statements The consolidated financial statements are presented in Australian dollars ("A$")and have been prepared on the historical cost basis or the fair value basis,where the fair valuing of relevant assets and liabilities has been applied. The Company was incorporated on 11 May 2005. The Group has elected, fromincorporation, to prepare annual consolidated financial statements in accordancewith IFRSs. The interim financial information set out on pages 5 to 8 have been prepared onthe same basis and using the same accounting policies as were applied in drawingup the company's statutory financial statements for the year ended 30 June 2007. The financial information for the six months ended 31 December 2007 isunaudited. In the opinion of the directors the financial information for thisperiod presents fairly the financial position, results of operations and cashflows for the period in conformity with generally accepted accountingprinciples. The financial information for the twelve months ended 30 June 2007has been derived from the Group's audited financial statements for the period asfiled with the Registrar of Companies. It does not constitute the financialstatements for that period. The auditors' report on the statutory financialstatements for the period ended 30 June 2007 was unqualified and did not containany statement under Section 327(2) or (3) of the Companies Act 1985. 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 stage, specific financing will be required. The Company recently completed (in December 2007) an equity fund raising thatenables it to proceed with its approved annual plan of expenditure and toprovide adequate working capital. The directors have therefore concluded thatthe Group is a going concern. The directors are of the opinion that a capital raising towards the end of 2008may be required to supplement existing reserves so as to ensure the Company hasadequate cash reserves to meet its ongoing exploration and appraisal activities.Whilst the directors are confident that such funding will be available there canbe no guarantee that this will be the case. Note 2: Segment Reporting The Group currently operates one business and geographical segment being mineralexploration in Solomon Islands. Note 3: Capital and Reserves Shares issued During the period the company issued 17,500,000 shares for a cash considerationof A$7,233,271 (less share issue costs of A$155,240). Share options and warrants The share option reserve is in respect of the expense recognised in the IncomeStatement based on the fair value of share options issued since February 2006.The Company issued share options in December 2007 (see note 4 for details). Other reserves A separate warrants reserve holds the cumulative expense based on the fair valueof the 326,000 warrants issued to Williams de Broe (renamed Evolution SecuritiesLimited). Dividends The directors do not recommend the payment of a dividend. Note 4: Share Based Payments The Company granted 1,380,000 share options to management and staff on 31December 2007 at exercise prices between 25 pence and 75 pence per ordinaryshare. The closing price of the Company's shares on the previous day was 20pence. The options are exercisable between 31 December 2007 and 31 December2010. The share options granted on 31 December 2007 had a total fair value ofA$371,445 being fully expensed during the half year ended 31 December 2007. On 31 December 2007, the Company also granted 500,000 share options for nilconsideration to RFC Corporate Finance Limited ("RFC"), the Company's nominatedadvisor ("NOMAD"). These share options were granted at an exercise price of 20pence per ordinary share and can be exercised up to 8 November 2010. The shareoptions granted had a total fair value of A$161,898 and were fully expensedduring the half year ended 31 December 2007. Note 5: Loss Per Share The calculation of total loss per ordinary share on total operations is based onlosses of A$725,448 (six months to 31 December 2006: A$429,440 and period to 30June 2007: A$1,201,646) and the weighted average number of ordinary sharesoutstanding of 44,325,001 (26,825,001 for the six months to 31 December 2006 and26,825,001 period to 30 June 2007). There is no difference between the dilutedloss per share and the loss per share presented as the share options in issuewere not considered dilutive. At 31 December 2007 there were 4,269,997 (30 June 2007: 2,389,997, and 31December 2006: 2,389,997) share options on issue. Note 6: Commitments As noted in the Company's 2007 Annual Report, pursuant to a contract for theprovision of a helicopter to assist in exploration and drilling, the Group has acommitment to pay A$772,800 (2006: A$720,000) (in equal monthly payments)between 12 May 2007 and 12 May 2008. The commitment relates to a minimum usage(flying hours) of the helicopter over the commitment period. The remainingcommitment at 31 December 2007 was A$257,600 (2006: A$120,000). The Groupexpects to utilise the minimum flying hours over the remaining commitmentperiod. Note 7: Related Parties (a) Transactions with Directors and Director-Related Entities i. Solomon Gold Plc has entered into an Administration andservices agreement with D'Aguilar Gold Ltd, an entity associated with NicholasMather (a director) and Brian Moller (a director) whereby D'Aguilar Gold Ltd hasagreed to provide certain services including the provision by D'Aguilar Gold ofits premises (for the purposes of conducting the Company's business operations),use of existing office furniture, equipment and certain stationery, togetherwith general telephone, reception and other office facilities (''Services''). Inconsideration for the provision of the Services, the Company shall reimburseD'Aguilar Gold Ltd for any expenses incurred by it in providing the Services.Under the terms of the Administration and Services Agreement, D'Aguilar Gold isrequired to provide its services for a period ending on 10 February 2008. TheAdministration Services Agreement may be terminated upon the occurrence of aninsolvency event of the other party, a failure to remedy a material breach ofthe Administration Services Agreement by the other party or upon three monthswritten notice to the other party. D'Aguilar Gold Ltd was paid A$12,282 (2006:A$8,376) for the provision of administration, management and office facilitiesto the Company during the half year. ii. Mr Brian Moller (a director), is a partner in theAustralian firm Hopgood Ganim Lawyers. Hopgood Ganim were paid A$32,635 (2006:A$85,170) for the provision of legal services to the Company during the year.There services were based on normal commercial terms and conditions. iii. Solomon Gold Plc has a professional services agreementwith Australian Resource Management (ARM) Pty Ltd to provide certain managementservices to ARM. During the period, A$14,031 (2006: A$32,256) was paid to theCompany for the provision of professional services. Note 8: Subsequent Events On 31 January 2008 the Company granted 1,000,000 share options, for nilconsideration, to directors of the Company. By order of the Board DP Cornish Company Secretary Contacts: Mr Duncan Cornish Secretary Tel: +61 7 3303 0660 or dcornish@solomongold.com Mr Stephen Weir RFC Corporate Finance Nominated Advisor Tel +61 2 9250 0048 or Stephen.Weir@rfc.com.au This information is provided by RNS The company news service from the London Stock Exchange