SolGold Regulatory News (SOLG)

30 Mar 2007 07:03

Solomon Gold PLC30 March 2007 30 March 2007 SOLOMON GOLD PLC ("Solomon Gold" or the "Company") INTERIM REPORT FOR THE PERIOD ENDED 31 DECEMBER 2006 HIGHLIGHTS Sutakiki * Ongoing exploration suggests extensive mineralised system * Further geological mapping to test epithermal and porphyry style gold copper mineralisation Mbetilonga * Further drilling will be undertaken to test porphyry copper mineralisation Kuma * Signing of access agreement and grant of extended prospecting license CHAIRMAN'S STATEMENT The six months to 31 December 2006 have seen the Company intensify itsexploration program on Guadalcanal in Solomon Islands. The exploration efforthas been conducted in a challenging physical, socio political and marketenvironment which has imposed difficult operating pressures on the field andexecutive teams. Nevertheless the Company in May 2006 concluded access arrangements into theSutakiki Valley, 30km south east of the capital Honiara, where a mineral system,which the directors believe has the potential to host a world-class target, wasdiscovered by Solomon Gold geologists. Early mapping and sampling establishedthe project as having the size and characteristics necessary for an ore body ofsimilar scale to the great bulk open cut copper gold ore bodies of the SouthwestPacific, particularly Ok Tedi and Bougainville. The drilling programme underway at Sutakiki is planned to intensify over theforthcoming months. The Company has two drills currently operating at Sutakikiand a third has been ordered. Significant progress has been made with four holesnow completed and the fifth in progress. The successful exploration of Sutakikiwas founded on the establishment of trusted relationships with the landowners inthe area. These form a sound basis for the ultimate development of a miningoperation, in the event of an economic discovery. The Sutakiki project isgrowing in size with additional discoveries and opportunities being identifiedparticularly to the west and northwest of previous drill sites. Since the Preliminary results announcement, dated 29 September 2006, theCompany's work at Kuma, south east of Sutakiki, has resulted in the successfulsigning of an access agreement with the Landowners and the granting of theProspecting License over the Kuma area on Guadalcanal. This again proves theCompany's ability to negotiate successfully with both Landowners and Governmentto pave the way for exploration into new and exciting areas never beforereached. We already enjoy a good working relationship with the Kuma people. Theprocess of educating, training and employing local Kuma people is underway andwe have commenced fieldwork in the area. An extensive mineralisation system hasalready been identified and is currently being mapped and sampled. Market conditions for exploration companies on the AIM boards of the LSE overthe last year have been difficult. However the Directors are confident that asignificant discovery has been made which may ultimately lead to the delineationof a drill defined resource. Solomon Gold continues to seek opportunities whichwill potentially add value to the Company's asset base without the high coststypically associated with such acquisitions. The identification of andapplication for prospecting licences showing lateritic nickel prospectivity inFlorida, East Guadalcanal and Makira in the Solomon Islands are examples of thisstrategy of low cost asset acquisition. The Board is confident that the Company's exploration strategy combined withclose local relationships and continued promotional effort will lead to enhancedshareholder value in the next half year. Cameron WenckChairman30 March 2007 OPERATIONAL UPDATE Mbetilonga Extensive work has been completed on the core area of the Mbetilonga prospectinglicence, 15km south of the capital Honiara. This has included soil sampling overa large grid, detailed mapping and sampling and drilling. The Company'sgeologists have determined that structure, host rocks, level of emplacement andstyles of mineralisation are the main controls on gold and copper mineralisationin the Mbetilonga basin. Hambusimoloso, Vatuchichi and Vuralangomma are discreteareas of copper and gold mineralisation with distinct structural controls onmineralisation. North east trending faults control copper mineralisation at the Hambusimolosocopper prospect. The faults are open and fractured at surface with surfaceenriched clays and mineralised boulders in landslips. Narrow flat lying quartzveins formed in close proximity to the faults contain copper, lead and zincminerals, chalcopyrite, galena and sphalerite. The Vatuchichi gold prospect is located in the centre of the Mbetilonga basin inan area of structural tension and uplift. Hornblende and quartz rich diorites(classically considered highly favourable indicators for porphyry copper goldmineralisation) are emplaced at high levels and an intrusive breccia occurs onthe margin of the Hahala Diorite. East west faults are strongly mineralised andmark the limestone contact. Porphyry copper, epithermal high and lowsulphidation gold and copper skarn mineralisation all occur in close proximity.Anomalous tellurium values indicate a high level of emplacement/erosion in themineralising system. Hornblende diorite dykes are emplaced at high levels along north east trendingfaults at Vuralangomma copper prospect on the east side of the Mbetilonga basin.Economic grade porphyry copper mineralisation was intersected in drilling, byUtah in the early 1970's, on the margin of the porphyry and, at the nearbyKichia prospect high sulphidation epithermal gold mineralisation is located atRambo Creek where a number of rock and trench samples recorded high gold valuesup to 28.0g/t gold. Further drilling will be undertaken to test porphyry copper mineralisation atdepth at Kichia and Vuralangomma along with drill testing the Rambo area forsulphide rich gold mineralisation. In addition the Vatuchichi headwaters require drill testing of the low sulphidegold systems as do the Koki high sulphide gold system and skarn styles ofmineralisation and the intrusive breccia at Grovers Hill. Drill testing of these prospects is anticipated in the next 12 months. Sutakiki The Sutakiki prospect was discovered by Solomon Gold in June 2006 and appears tobe a significant gold and copper system that has yet to be fully tested. Complexstructural controls define the extent of the gold rich quartz vein systemsassociated with both porphyry and epithermal style gold-copper mineralisation. Multiphase intrusives are elongated along east west faults which are intersectedby a major north east trending transform fault along Tabora Creek where veiningand mineralisation are best developed. The strongly oxidised vein sets are up to1.5 metres wide and interspersed over 80 metres width. They are thought tocontinue beneath boulder scree for at least 300 metres to the west and 200metres to the east and up to 500m to the north, under the Sutakiki Rivergravels. The veins and fracture coatings host porphyry style gold-coppermineralisation and among a large number of grab and rock chip samples values ofup to 1090 g/t gold and 3.29% copper were recorded. Five metre composite channelsamples along lower Taburoura Creek recorded 85 metres at 0.79 g/t gold. Furtherepithermal style fractured and banded quartz-carbonate veins outcropping athigher elevations north and south of the main vein system recorded values of upto 2.25 g/t gold. Analytical results for the first hole drilled at Sutakiki (SK001) recordedsignificant intersections of porphyry style mineralisation of 309m at 0.54 g/tgold and 0.13% copper including 148m at 0.79 g/t gold and 0.21% copper from 291mdepth. Some higher grade intersections were recorded within this including 2m at12.4 g/t gold at 445m depth within epithermal veins. At surface the quartz veins pinch and swell at fault intersections. Themineralised vein sets may be offset 100m to the north east where they outcrop inthe Sutakiki River. This will be drill tested in the current drill program. Between the north east faults copper mineralisation, as chalcopyrite and pyriteis fracture controlled along east west faults. Epithermal (high level, low temperature) gold mineralisation outcropping athigher elevations north and south of the Sutakiki River was intersected 445meters below surface in drill hole SK001. The up thrown Suta volcanics are apermeable host for the development of wider significant gold mineralisation atthe intrusive contact closer to surface. Gold bearing brecciated colloform veinsoutcrop north and south of the Sutakiki River at higher elevations in theheadwaters of Taburoura and Valehailala Creeks. This epithermal style goldmineralisation will be tested nearer to surface. This style of mineralisation isexemplified at the 2m oz Gold Ridge deposit 13km to the north (not an asset ofSolomon Gold). Geological mapping is currently being tied into the re-interpreted aeromagneticand radiometric data. Interpretation of the geophysical information which isbeing followed up by mapping and sampling along with drilling by Solomon Goldindicates the Sutakiki project to be extensive. Further detailed geological mapping will aid in locating drill holes at higherelevations to test both the epithermal and porphyry style gold coppermineralisation. Regional geological mapping and sampling will continue to followup highly anomalous sampling results of up to 179 g/t gold, 1660 g/t silver,5.05% zinc, and 2.27% copper. Koloula A number of limited exploration programmes have been completed at Koloula sinceprospecting recommenced in December 2005. This has included a structuralanalysis of the Mbina and Chikora areas, along with vein density mapping andsampling. Drill pads have been selected and the two prospects will be drilledsubject to rig availability. The area of gold anomalism north of Mbina Camp #1 is hosted by intermediateintrusive rocks of the Koloula Intrusive complex and finer grained andesite ofthe Suta Volcanics. The rocks are strongly fractured and the anomalism isbroadly coincident with abundant pyrite as fracture coatings, fissure infillveins and less commonly fine stockwork and finely disseminated within the hostrocks. The anomalous gold zone in particular is coincident with strong pervasivesilica-sericite-clay alteration and haloed by a much broader propylitic zone ofchlorite-epidote-pyrite alteration. Close inspection of the alteration zones show strong structural control. Strongalteration is predominantly peripheral to the main north east trending transformfault structures, the same structure that runs through the Sutakiki project 5kmto the north east. The width of alteration zones varies from fine selvages ofless than 1cm up to zones more than 10m wide. It is believed that previous drilling by Utah at Mbina in the early 1970's wasnot sufficiently deep and may have targeted transported copper anomalism.Additionally gold was not assayed for in the drilling samples. Solomon Golddrilling will target the intersection of the north east trending structure withthis anomaly at depth. Utah tested the central Chikora porphyry with vertical holes which ended incopper mineralisation. A deep inclined drill hole will be targeted beneath thecentral area of the porphyry. Kuma A large number of orange-red, iron oxide coated boulders have been observed inthe Kuma River from the helicopter by Solomon Gold geologists since 1996.Oxidized outcrops exposed in Alimuno Creek, a tributary of the Kuma River, werethought to be the source of the boulders but fieldwork could not be undertakenprior to March 2007 when landowner agreements were finally negotiated andpermission was granted to begin fieldwork on the project. The pyritic boulders were strongly silica-clay-pyrite altered intrusives andthese were traced to outcrops in the Alimuno and Kolosecaseca (tributary ofAlimuno) Creeks. There is a fine grained clay-pyrite altered porphyry intruding limestone along anorth west trending shear zone. The limestone is recrystallised and brecciatedand contains banded magnetite, garnets and sulphides exhibiting very good skarnpotential. Rock float and outcrop sampling along with reconnaissance mapping of the maindrainages has located an outcropping mineralised intrusion associated with anextensive leached cap. North trending faults cutting the cap show alterationpyrite and arsenopyrite mineralisation and acid leaching features suggestive ofconcealed gold mineralisation. An extensive leached cap over the area has beenlocated and initially mapped and sampled. Additionally a quartz diorite similarto the Sutakiki intrusives has been located peripheral to the leached cap.Mapping and sampling of these prospective areas is underway to define drilltargets as soon as possible. CONSOLIDATED INCOME STATEMENT FOR THE SIX MONTHS ENDED 31 DECEMBER 2006 Six months Six months Period* to to 31 Dec to 31 Dec 30 June 2006 2005 2006 Notes A$ A$ A$Continuing operationsRevenue 7 - - -Cost of sales - - -Gross Profit - - - Other operating income 3,278 72,924 72,924Administrative expenses (611,941) (155,804) (908,064)Exploration costs written off - - (10,000)Operating loss (608,663) (82,880) (845,140) Finance income - net 179,223 13,685 192,818Loss for the period (429,440) (69,195) (652,322) Six months Six months Twelve months to 31 Dec to 31 Dec to 30 June 2006 2005 2006 Notes A$ A$ A$Basic and diluted loss per ordinary share- basic and diluted 5 (0.0160) (0.0119) (0.0431) *Period is from 11 May 2005 to 30 June 2006 CONSOLIDATED BALANCE SHEET AT 31 DECEMBER 2006 31 Dec 31 Dec 30 June 2006 2005 2006 Notes A$ A$ A$AssetsProperty, plant and equipment 272,050 50,020 71,189Intangible assets 3,776,726 956,651 2,201,948Total non-current assets 4,048,776 1,006,671 2,273,137 Other receivables and prepayments 348,595 51,164 257,677Other (IPO Costs) - 174,374 -Cash and cash equivalents 6,714,363 552,522 9,077,456Total current assets 7,062,958 778,060 9,335,133 Total assets 2 11,111,734 1,784,731 11,608,270 EquityIssued share capital 631,679 397,129 631,679Share premium 10,752,408 1,316,056 10,752,408Other reserves 423,616 - 389,874Retained losses (1,081,762) (68,919) (652,322)Total equity 10,725,942 1,644,266 11,121,639 LiabilitiesTrade and other payables 385,792 140,465 486,631Interest-bearing loans and borrowings - - -Total current liabilities 385,792 140,465 486,631Total liabilities 385,792 140,465 486,631 Total equity and liabilities 11,111,734 1,784,731 11,608,270 CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY Note Share Share Share Warrants Retained Total capital premium option reserve loss reserve A$ A$ A$ A$ A$ A$Balance at 1 July 2005 397,129 1,316,056 - - 276 1,713,461Loss for the period - - - - (69,195) (69,195)Balance 31 Dec 2005 397,129 1,316,056 - - (68,919) 1,644,266Loss for the period - - - - (583,402) (583,402)Adjustment to share capital 234,550 9,436,352 - - - 9,670,902Employee share optionscheme:- value of services provided - - 217,071 172,803 - 389,874Balance 30 June 2006 631,679 10,752,408 217,071 172,803 (652,322) 11,121,639Loss for the period - - - - (429,440) (429,440)Employee share optionscheme:- value of services provided - - 33,742 - - 33,742Balance 31 Dec 2006 3 631,679 10,752,408 250,813 172,803 (1,081,762) 10,725,942 CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE SIX MONTHS ENDED 31 DECEMBER 2006 Six months to Six months Period* to 31 Dec to 31 Dec 30 June 2006 2005 2006 Notes A$000 A$000 A$000Cash flows from operating activities Operating loss from continuing operations (429,440) (68,919) (652,322) Depreciation 11,553 3,694 12,290 Share based payment expense 4 33,742 - 217,071(Increase)/decrease in other receivables and prepayments (90,918) (221,448) (253,587) (Decrease)/increase in trade and other payables (188,519) (209,170) (23,608) Forgiveness of loan liability (72,924) (72,924) (72,924) Cash used in operations (736,506) (568,767) (773,080) Net cash outflow from operating activities (736,506) (568,767) (773,080) Cash flows from investing activitiesAcquisition of property, plant and equipment (212,414) (42,382) (72,147) Acquisition of intangible assets (1,574,778) (296,415) (1,541,712) Payment for subsidiaries net of cash acquired - 17,497 17,497 Net cash (outflow)/inflow from investing activities (1,787,192) (321,300) (1,596,362) Cash flows from financing activitiesProceeds from the issue of ordinary share capital - 1,442,589 13,240,362 Refund/(payment) of issue costs 160,604 - (1,793,464) Net cash inflow from financing activities 160,604 1,442,589 11,446,898 Net (decrease)/(increase) in cash and cash equivalents (2,363,093) 552,522 9,077,456Cash and cash equivalents at beginning of period 9,077,456 - - Cash and cash equivalents at end of period 6,714,363 552,522 9,077,456 *Period is from 11 May 2005 to 30 June 2006 Notes to the Consolidated Financial Statements NOTE 1 BASIS OF PREPARATION OF FINANCIAL STATEMENTS The consolidated financial statements are presented in Australian dollars ("A$")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 IFRS. 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 2006. The financial information for the six months ended 31 December 2006 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 2006has 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 2006 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 directors are of the opinion that a capital raising during 2007 will berequired to supplement existing reserves so as to ensure the Company hasadequate cash reserves to meet its planned accelerated exploration and appraisalactivities for the next 12 months. Whilst the directors are confident that suchfunding will be available there can be 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 (a) Shares issued During the period ended 31 December 2006 no ordinary shares were issued. (b) Share options and warrants The Company issued share options in September 2006 (see note 4 for details). (c) Other reserves A share option reserve includes an expense based on the fair value of shareoptions issued since February 2006. A separate warrants reserve holds thecumulative expense based on the fair value of the 326,000 warrants issued toWilliams de Broe (renamed Evolution Securities Limited). (d) Dividends The directors do not recommend the payment of a dividend. NOTE 4 SHARE BASED PAYMENTS The Company granted 650,000 share options to directors and management on 12September 2006 at exercise prices between 50 pence and 100 pence per ordinaryshare. The closing price of the Company's shares on the previous day was 24.5pence. The options are exercisable (ie.vest) between 1 January 2007 and 1January 2011 and expire between 1 January 2010 and 1 January 2011. The shareoptions granted on 12 September 2006 had a total fair value of A$61,403 withA$33,742 being expensed during the half year ended 31 December 2006. NOTE 5 LOSS PER SHARE The calculation of total loss per ordinary share on total operations is based onlosses of A$429,440 (six months to 31 December 2005: A$69,195 and period to 30June 2006: A$652,322) and the weighted average number of ordinary sharesoutstanding of 26,825,001 (5,838,452 for the six months to 31 December 2005 and15,122,193 period to 30 June 2006). 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 2006 there were 2,389,997 (30 June 2006: 1,739,997, and 31December 2005: 0) share options on issue. NOTE 6 COMMITMENTS As noted in the Company's 2006 Annual Report, pursuant to a contract for theprovision of a helicopter to assist in exploration and drilling, the Group has acommitment to pay A$720,000 (in equal monthly payments) between 12 May 2006 and12 May 2007. The commitment relates to a minimum usage (flying hours) of thehelicopter over the commitment period. The remaining commitment at 31 December2006 was A$120,000. The Group expects to utilise the minimum flying hours overthe remaining commitment period. NOTE 7 RELATED PARTIES a) Transactions with Directors and Director-Related Entities (i) Solomon Gold Plc has entered into an Administration and services agreementwith D'Aguilar Gold Ltd, an entity associated with Nicholas Mather (a director)and Brian Moller (a director) whereby D'Aguilar Gold Ltd has agreed to providecertain services including the provision by D'Aguilar Gold of its premises (forthe purposes of conducting the Company's business operations), use of existingoffice furniture, equipment and certain stationery, together with generaltelephone, 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$8,376 for theprovision of administration, management and office facilities to the Companyduring the half year. (ii) Mr Brian Moller (a director), is a partner in the Australian firm HopgoodGanim Lawyers. Hopgood Ganim were paid A$85,170 for the provision of legalservices to the Company during the year. There services were based on normalcommercial terms and conditions. (iii) Solomon Gold Plc has a professional services agreement with AustralianResource Management (ARM) Pty Ltd to provide certain management services to ARM.During the period, A$32,256 was paid to the Company for the provision ofprofessional services. b) The Company granted 650,000 share options to directors and management on 12September 2006 as noted in Note 4 above. NOTE 8 SUBSEQUENT EVENTS There have been no events since the end of the financial year that impact uponthe financial report as at 31 December 2006. This information is provided by RNS The company news service from the London Stock Exchange